20080116 bernd pischetsrieder vw bribery trial
Former Volkswagen head Bernd Pischetsrieder in court. Pischetsrieder faces questioning over whether he knew of bribery and company-paid prostitution visits involving members of the Volkswagen works council while he was chairman of VW. - 


Scott Jagow: In Detroit this week, the cars of the future are on display at the big auto show. But in Germany, something else is on display: the seedy underbelly of the car industry.

Megan Williams tells us about the Volkswagen trial.

Megan Williams: Bribery, pleasure trips and prostitutes -- these are the accusations leveled at past and present executives of Germany's Volkswagen.

The car company allegedly set up a multi-million dollar account from which executives illegally paid off employee representatives to back their policies. Prosecutors say one former employee rep pocketed about $4 million in exchange for doing management's bidding.

German business correspondent Tobias Piller says the trial exposes the pitfalls of a German labor system called co-determination -- one that gives employee representatives the same power as shareholders on executive boards. Piller says that's been a mixed bag:

Tobias Piller: Social peace in the company and higher wages but also big temptation to bribe, favours and things that aren't really very presentable.

Defense lawyers are arguing that even if the accusations are true, the conduct sure didn't hurt business.

I'm Megan Williams for Marketplace.