Economy

VW: Voluntary disclosure for expensive rental cars for VIPs and journalists

There was a time when some managers in Wolfsburg believed they could walk across the water. The car bosses flew with their own VW airline on vacation or to the football cracker in Madrid. They counted their millions in bonuses and carted world stars to the factory premises for employee concerts. Volkswagen was a huge show.

In order to maintain this glamorous image, the group had what is probably the most exclusive vehicle fleet in the republic for many years. In addition to the “Volkswagen” Golf and Polo, the so-called press vehicle pool also included the latest models from the large VW family of brands: luxury SUVs such as the Audi Q7, chic convertibles from Bentley, and sports cars from Porsche, Lamborghini and Bugatti. More than 500 bodies were ready, which VW either parked journalists for test purposes or lent free of charge to celebrities, professors, editors-in-chief and who knows who.

Especially under the former VW boss Martin Winterkorn, the marketing strategy followed a clear maxim: be seen, at any price. Obviously, compliance with legal requirements was of secondary importance. According to investigations by the internal auditors, there were serious violations in the private distribution of rental cars. According to information from NewsABC.net, the audit led, among other things, to a voluntary disclosure by Volkswagen to the tax office, since the group had wrongly deducted the costs for the VIP special program (including maintenance, administration, logistics) as a business expense from tax since 2007. When asked, a VW spokesman said: “The expenses for the so-called press vehicle pool were subsequently reported to the tax authorities by Volkswagen AG as“ non-deductible operating expenses ”for a period of several years. As a result, an amount in the low single-digit millions will be paid back. “

Generous (used car) discounts, exceptional leasing rates and free rental cars for selected people were and still are completely common in the entire automotive industry and not a single VW phenomenon. “But while other manufacturers noticeably tightened compliance rules a little earlier, we were generous a little longer,” explains a former VW manager. In the summer of 2014, the Wolfsburg-based company invited a group of car and sports journalists to Rio for a soccer World Cup game. The group covered the costs for flights, first-class hotel, restaurant visits and tickets. There is talk of a high four-digit amount per person.

It was only after a costly conflict with the Swiss investigative authorities in mid-2015 that the VIP fleet was critically questioned internally. At that time, VW had lent German football legend Günter Netzer a Bugatti from the press vehicle pool for a few days. However, the car manufacturer failed to properly declare the one million euro car imported into Switzerland. The mishap with the Netzer gift cost VW around 160,000 euros in the end.

When the diesel scandal became public and Winterkorn resigned as VW boss, the new management gradually pushed an investigation into the old VIP practice. Internal databases showed that numerous German actors, pop singers, athletes and extreme athletes had the free benefit of driving expensive cars for weeks. VW had also signed contracts with some of them as “brand ambassadors”, but later investigations revealed that in many cases the group had allegedly received no consideration. Or the person was considered so insignificant that no added value for VW could be recognized.

Until 2016, VW even made “permanent loans” available to individual persons on the VIP list. They were allowed to use vehicles privately for up to a year. The company donated an open Bentley to an important auto journalist for his wedding – delivery and collection included, of course. A service that cannot be found with the usual press discounts.

Politicians and officials, on the other hand, should not have received any cars from the VIP pool, explain several people who are familiar with the processes. Corresponding inquiries are said to have been processed elsewhere. According to information from NewsABC.net, in delicate cases, individual board members made one of their six company vehicles available to the political celebrity as a loan. In the VW home of Lower Saxony, this was apparently booked under neighborhood help.

The events are reminiscent of the former airline Air Berlin, which for years granted selected personalities flight discounts of up to 100 percent – or was allowed to fly in the company’s founder’s private jet. Here, too, it was only internal investigations that revealed the full extent of the VIP program. And here, too, the question arose: Who paid tax on the monetary benefit?

After research by NewsABC.net, VW informed those affected in the course of the processing in recent years that the private use of the rental car was not taxed at a flat rate by the company. A spokesman explains: “Taxable benefits that may have resulted from non-operational or professional use of the vehicles are taxable by the respective users.” According to reports, those affected also reported voluntarily as a result.

The cross-brand VIP fleet in Wolfsburg has meanwhile been dissolved. The group also rigorously shortened the list of celebrities, canceled their contracts for numerous “brand ambassadors” or let them expire. A VW spokesman says: “In the past few years in particular, many processes and internal regulations in different corporate areas have been intensively checked and evaluated under compliance aspects. As a result, many thousands of processes were adjusted, personnel changes were made and internal processes were improved. In addition, with the implementation of an optimized whistleblower system and internal compliance training for several hundred thousand employees, further measures were implemented to minimize any compliance risks or to counter possible misconduct in the best possible way. “

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