BMW in Bribery and Corruption Scandal

An economist estimated this week that $50 billion (£28.5 billion) in bribes passed hands every year in Germany. Wolfgang Schaupensteiner, the Frankfurt State Prosecutor, said: “Whole herds of grey and black sheep are flocking into boardrooms and government offices.”

Television companies have been exposed for secretly and profitably plugging products in soap operas. Others in the firing line include Commerzbank and DaimlerChrysler.

At BMW, a procurement manager is under investigation for taking three payments of $100,000 (£57,000) in return for giving contracts to a spare parts manufacturer. A DaimlerChrysler manager was suspended after it was disclosed that he had used company funds to renovate his girlfriend’s house in Majorca.

At Volkswagen, nightclub dancers were apparently flown from as far away as Brazil to keep directors happy. This, and claims of the setting up of dummy companies to boost boardroom salaries, are under investigation by internal auditors and the state prosecutor.

Volkswagen directors, in particular Peter Hartz, the former head of personnel, were under the protective wing of Gerhard Schröder, the Chancellor, whose constituency is in Lower Saxony where the company is based. The product placement scandal in state television — at least 100 cases of products plugged for cash have been revealed so far — may also have a political background. The most powerful component of the state television network is the West German Broadcasting Corporation (WDR), which is largely run by Social Democratic sympathisers.

Germany is bracing itself for political change. Opinion polls suggest that the Social Democrats will lose power in September’s general election, so any institution or company enjoying their protection — the state has an 18 per cent stake in VW, for instance — is beginning to see that protection crumble.

Shaken by the fact that Germany now ranks only 15th in the Transparency International listing of non-corrupt countries, just ahead of Barbados, the authorities have tried to crack down. Hans Eichel, the Finance Minister, ordered that investigators searching company offices for evidence of wrongdoing can no longer even accept a cup of coffee."