German court opens proceedings over Volkswagen labour pay

 A German court on Tuesday said it had opened proceedings against current and former Volkswagen managers, including management board members, on suspicion they awarded excessive pay to labour leaders in breach of fiduciary duties.

Wasting corporate funds is legally a breach of fiduciary duty in Germany.

A regional court in Braunschweig, Lower Saxony, where the carmaker is based, said it had opened proceedings at the behest of prosecutors in the area.

Two former VW management board members as well as the current and former managers in charge of personnel are being investigated, the Braunschweig court said in a statement.

Those being probed were responsible for setting salaries and bonus payments for works council members, the court said, adding that prosecutors believed VW likely wasted more than 5 million euros ($5.9 million) in excessive pay for labour leaders between May 2011 and May 2016.

VW said it saw no wrongdoing in the way executives awarded pay and bonuses for works council members and said the hearings were an opportunity to clarify legal questions about how pay was awarded. VW said the company itself was not under investigation.

In 2016, prosecutors and tax investigators raided offices of senior VW officials probing overpayment and tax evasion.

In 2017, VW said it had cut salaries and suspended the bonuses of 14 works council members, including council head Bernd Osterloh, as public prosecutors investigated alleged earlier overpayment.

At the time, Matthias Mueller, the former VW chief executive, said the cuts in pay were a precautionary measure taken until the legality of pay levels was clarified.