Rising in the ranks: VW brand chief Herbert Diess is to be promoted to CE, sources say. Picture: REUTERS
Rising in the ranks: VW brand chief Herbert Diess is to be promoted to CE, sources say. Picture: REUTERS

Frankfurt — Volkswagen's (VW’s) supervisory board criticised a remark made by CEO Herbert Diess that appeared to play on the slogan on the gates of the Auschwitz concentration camp, “Work sets you free”.

The CEO apologised in a LinkedIn post for saying “Ebit macht frei” during an internal VW event this week, in a reference to the abbreviation for earnings before interest and tax, evoking the Nazi slogan “Arbeit macht frei”.

Diess’s remark “is in this context considered inappropriate”, the supervisory board said in an e-mailed statement to Bloomberg. The board “strongly distances itself from this, but at the same time takes note of the immediate apology from Mr Diess.”

The comments are all the more unfortunate considering VW's history. The car maker was founded by the German government in 1937 to mass produce a low-priced car, and was originally operated by the German Labour Front, a Nazi organisation. VW, whose factory was repurposed during World War II to build military equipment and vehicles, is today the world’s biggest automotive group with brands including Audi, Bugatti and Porsche.

Diess’s misstep coincided with a notice that the US Securities and Exchange Commission has sued VW over the diesel emissions cheating scandal.

‘Historical responsibility’

“It was in fact, a very unfortunate choice of words and I am deeply sorry for any unintentional pain I may have caused,” Diess wrote in a post on his LinkedIn page. “For that I would like to fully and completely apologise.”

The expression “Ebit macht frei” was made in an internal management presentation in connection with operating margins from various company brands, Diess said. Within VW, “brands with a higher margins have more freedom within the group to make their own decisions. My comment was made within this context,” he said.

The CEO said it wasn’t his intention to make this expression in a way that could be misinterpreted, and he didn’t consider the possibility that it could be.

“Volkswagen has undertaken many activities over the last 30 years that have made the company, myself personally and our employees fully aware of the historical responsibility Volkswagen bears in connection with the Third Reich,” Diess wrote.

VW’s powerful works council welcomed Diess’s “swift clarification and unequivocal apology” for the remark, adding that remembrance and responsibility are part of the company’s DNA. German government spokesperson Steffen Seibert declined to comment.

“The history of the Volkswagen group and the resulting responsibility is an important part of its corporate identity,” the supervisory board said in the statement.

Since Diess took over as CEO in April 20, he’s struggled to put the three-and-a-half-year-old diesel cheating scandal in the past. In the latest twist, the SEC said Thursday it was suing the car maker for failing to disclose to investors that its diesel vehicles violated emission standards.

“The investors did not know that VW was lying to consumers to fool them into buying its ‘clean diesel’ cars and lying to government authorities in order to sell cars in the US that did not comply with US emission standards,” the SEC alleged.

VW said the SEC complaint was “legally and factually flawed” and the company would “contest it vigorously”. It accused the SEC of “piling on to try to extract more from the company” more than two years after settlements with the US justice department.

With Lena Lee

Bloomberg