German state premier on defensive over close ties with VW

[BERLIN] The government of Germany's Lower Saxony, which holds a fifth of Volkswagen's voting rights, denied on Sunday a newspaper report that its premier softened speeches critical of the carmaker in the diesel emissions scandal at the company's request.

Premier Stephan Weil, already facing an unexpected election after the defection of a member of his ruling coalition to Chancellor Angela Merkel's conservatives, is under fire for what some see as a too-cosy relationship with VW.

The mass circulation newspaper Bild am Sonntag quoted a VW employee as saying that the company "rewrote and watered down" an October 2015 speech by Mr Weil to the state legislature about the diesel scandal after Mr Weil shared a draft with the company.

"This was no fact check," the paper quoted the employee as saying.

Mr Weil, who is a member of VW's supervisory board, called VW "a pearl of German industry" in the speech, but other passages were removed, the newspaper reported, including one in which he called for company officials to be held accountable "regardless of their place in the hierarchy."

Mr Weil's office issued a two-page statement on Sunday denying the charges and calling the report "distorting and misleading." Later it released two versions of the text of the speech, which showed that some changes were accepted, while others were not.

In the statement, Mr Weil's office acknowledged that it had asked the company to fact-check the speech given the sensitivity of "difficult" discussions with US authorities about the rigging of US emissions tests.

It said only very few changes suggested by VW were actually adopted, adding: "There were definitely no substantial changes between the first draft and the speech as ultimately delivered." Mr Weil told reporters on Sunday that the allegations reported by Bild am Sonntag were "without foundation." Mr Weil also sharply criticised the VW leadership in the speech for not disclosing its emissions rigging until a year after it first began discussions with US officials, his office said.

It said there had been no consultation about speeches or remarks with VW for several months, since the "situation between VW and the US authorities has now been cleared up." A spokesman for Volkswagen said that it was common practice for supervisory board members to coordinate statements about corporate issues with the company.

"Every member of the supervisory board has an obligation with regard to the company's interests and, based on the stock corporation act, has to adhere to the confidentiality interests of the company," the spokesman said in emailed comments.

VW executive Oliver Schmidt pleaded guilty last week in a US court in connection with the emissions scandal that has cost the German automaker as much as US$25 billion.

The controversy about Mr Weil's speech erupted amid renewed questions about close ties between German politicians and German car makers, and whether they prevented the German government from acting sooner to address the widening emissions scandal.

Critics have also attacked the outcome of last week's diesel summit, saying that the German government should have insisted on harsher steps to rein in diesel emissions, but was swayed by industry to adopt less onerous measures.

Bild am Sonntag published thumbnail portraits of six German politicians, including Foreign Minister Sigmar Gabriel, who have or have had in the past consulting agreements or other jobs with VW, Daimler or other bodies associated with the car industry.

They included Daimler's chief lobbyist Eckart von Klaeden, a conservative politician who worked under Chancellor Angela Merkel in the chancellery until 2013. His abrupt switch to the Mercedes manufacturer prompted an investigation by Berlin prosecutors and new rules on "cooling off" periods.

Thomas Steg, now VW's top lobbyist, served as spokesman for the government of Lower Saxony for seven years until 2009.

Matthias Wissmann, who served as German transport minister from 1993 to 1998, has served as president of the VDA auto industry lobby since 2007.

Cem Ozdemir, leader of the pro-environment Greens party, said the "conflation of politics and automotive industry" was damaging to Germany's reputation and posed a "threat to the foundation of our market economy."

REUTERS