April 25 (Bloomberg) -- Volkswagen AG and Francisco Javier Garcia Sanz, a member of its management board, are under investigation by German prosecutors over allegations they failed to prevent corruption at the company.
Prosecutors in Stuttgart, Germany, are reviewing whether Garcia Sanz and Volkswagen didn’t prevent an illegal sponsorship for the German soccer club VfL Wolfsburg, Claudia Krauth, a spokeswoman for the authorities, said today. They are probing administrative, not criminal violations, she said.
Prosecutors charged three former employees and consultants of Deutsche Telekom AG’s T-Systems unit and two Volkswagen employees with bribery in 2011. The probe is looking into whether T-Systems managers tried to get an order for telecommunications supplies from Volkswagen worth 345 million euros ($450 million) in exchange for continuing a sponsorship deal with the soccer club for 16 million euros.
“The administrative probe is linked to the criminal case and may later be added to the court case, but that’s still unclear,” Krauth said.
Eric Felber, a spokesman for Wolfsburg, Germany-based Volkswagen, said the company won’t comment on a pending case. The allegations that Volkswagen didn’t do enough to prevent bribery are “baseless,” he said.
The sponsorship was discovered after an internal review at Bonn-based Deutsche Telekom, which alerted prosecutors and dropped the deal. Deutsche Telekom spokesman Stefan Koenig said it’s up to the courts to handle the issue.
The Stuttgart Regional Court, which ruled that the charges may proceed, hasn’t scheduled a day for the trial opening.
Prosecutors said in the indictment the sponsorship deal was an aggravated case of bribery because of the amount of the payment the club would have received. Part of the action took place in the Stuttgart region, so prosecutors brought the case there.
Under German law, companies can’t be suspects in criminal cases. They can be investigated under administrative rules that punish failures for organizing a company in a manner that prevents illegal actions. The rules were also used in the a bribery case against Munich-based Siemens AG.
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