McCreevy told not to meddle in affairs of Volkswagen

EU INTERNAL market commissioner Charlie McCreevy should stop meddling in the affairs of Volkswagen, a senior German politician has said, and spend more time helping Ireland ratify the Lisbon Treaty.

Mr McCreevy was accused yesterday of acting like a "Prussian ruler" by demanding an end to state influence over Europe's largest car maker.

At the main company works in Wolfsburg, near Hanover, yesterday a record 40,000 Volkswagen workers protested against continual EU interest in the company and the looming takeover by luxury car maker Porsche.

"I think that perhaps the Irish commissioner McCreevy, after the failure of the EU Commission in the the referendum in Ireland, should pay greater attention that we get a majority in Ireland for the European constitution to move on in Europe," said Mr Christian Wulff, head of the Lower Saxon state government, a 20.1 per cent VW shareholder.

This holding is under fire from Brussels because important company decisions require more than 80 per cent shareholder support, impossible without Lower Saxony support.

This provision is secured in the 1960 "VW law" that privatised the company while protecting it from hostile takeovers, and has been a source of friction between Berlin and Brussels for years.

The German government has already been forced by the European Court to water down the law and yesterday the VW board voted on the changes.

Lower Saxony's right to appoint board members has been scrapped, as has a provision limiting outside shareholders' voting influence to 20 per cent, regardless of how many shares owned.

But the Lower Saxony blocking minority remains.

Mr Wulff said it is common practice, in VW's interests and in line with German shareholder law. Brussels risked damaging the EU's reputation in Germany by pursuing a matter over which, he said, it had no competence.

"We don't want to see an anti-European mood spreading here with a commissioner who doesn't want to see that he has no influence in this area," he told German public television. "Shareholder law is national law not EU law and a commissioner cannot act like a Prussian ruler but instead accept there are some areas that aren't decided in Brussels but Berlin."

A spokesman for Mr Creevy had no comment on Mr Wulff's remarks.

The commission unanimously agreed in June to take Berlin to court once more because, in its view, Germany had not addressed all concerns raised in last year's court ruling.

German officials disagree and say they are confident the revised VW law, working its way through parliament, will not result in any further legal action.

German politicians have defended the blocking minority as a legitimate means of guaranteeing the rights of workers in Lower Saxony from any other dominant shareholders.

The VW law is an emotional issue at company headquarters in Wolfsburg, particularly as Porsche is nearing its goal of a full take-over that is becoming more hostile by the day.

The luxury carmaker began buying up VW shares in 2005 and now, with at least 31 per cent, wants full control with no interference from a minority state shareholder.

Yesterday over 40,000 workers demonstrated against the terms of the looming takeover, complaining that it will give the Stuttgart-based sports carmaker too much influence over VW.

"In the age of globalisation and finance market capitalism we need more democracy and not less," said Berthold Huber, head of the influential IG Metall union, accusing Porsche of trying to degrade VW managers to "marionettes". He said: "We want to be involved in important company decisions."

The takeover was launched in 2005 as a friendly merger between two German icons of the car world.

It was portrayed as a family affair: former VW chief executive Ferdinand Piëch, now supervisory board chairman, is a grandson of Porsche founder Ferdinand Porsche and is a cousin of the current company heads.

But Mr Piëch's family ties made many in Wolfsburg consider him a Porsche stalking horse, selling out VW interests from the inside.

The relationship between the two companies has soured and yesterday, in a surprise boardroom twist, Porsche shareholders failed in their attempt to lift the 20 per cent blocking minority rule.

Mr Piëch surprised everyone by by staying away from the board meeting to decide on the blocking minority.

Mr Piëch transferred his vote by proxy to a board member representing VW workers, throwing his weight behind VW employees and giving them one vote more than Porsche.

The Stuttgarters agreed they were beaten - for now at least - and could make changes at VW in future only with employee consultation and approval.

Mr Piëch has won his employees' thanks but he won't be expecting any Christmas cards from his cousins this year.

Porsche president Wendelin Wiedeking, said: "I am outraged about the voting behaviour of the chairman."

The battle for control of VW continues.