VW orders bribery investigation

Bernd Pischetsrieder, Volkswagen's chief executive, yesterday ordered an independent auditor to investigate a growing bribery scandal at Europe's largest carmaker.

KPMG, the international accounting group, was contacted by VW "to review independently all that has happened", Mr Pischetsrieder said. The scandal, in which two workers are alleged to have asked for bribes for contracts in India and Africa, has led to the investigation of two VW employees by state prosecutors. Klaus Volkert, the powerful head of VW's works council who worked closely with the carmaker's management, resigned unexpectedly on Thursday due to media reports claiming his involvement in the affair.

He has denied committing any criminal act and the prosecutor is not investigating him.

VW executives said the scope of the scandal remained unclear. Some analysts said that it could prove an opportunity for the firm to clear out less reform-minded executives. "While in the short-term VW could be tied up in this scandal, we believe it could be a great opportunity for VW to get rid of old-school management," wrote an analyst at Dresdner Kleinwort Wasserstein.

Wolfgang Bernhard, the new head of the VW brand who is viewed as someone to shake up the company, will present his cost-cutting plans to a meeting of senior managers today.

VW executives said Mr Volkert's replacement, Bernd Osterloh, would not change the ability to negotiate with workers in spite of his more hardline reputation.