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Former Volkswagen Trader Confesses Complicity in Currency Fraud

September 14, 1987

FRANKFURT, West Germany (AP) _ West German authorities said Burkhard Junger, the former chief currency trader of Volkswagen AG, has confessed to complicity in the foreign-exchange fraud that cost the automaker 473 million West German marks.

Carl Hermann Retemeyer, chief prosecuting attorney for the Braunschweig state prosecutor’s office, said Sunday that Junger admitted last week to complicity with fugitive currency trader Joachim Schmidt, owner of a small foreign-exchange brokerage in Frankfurt. Schmidt is believed to have fled the country and is being sought under an international arrest warrant.

″Junger confessed last week that he and Schmidt had colluded in falsifying currency contracts in the name of the National Bank of Hungary,″ Retemeyer said.

″Junger stated that the National Bank of Hungary wasn’t involved and didn’t know about the contracts made in its name,″ he said. The prosecutor and the Justice Ministry for the state of Lower Saxony in Hannover wouldn’t give further details of Junger’s statement. Junger’s lawyer and family were unavailable for comment.

Junger’s statement appeared to exonerate the National Bank of Hungary, in whose name many of the contracts were made. From the outset of the investigation, the Hungarian central bank has vehemently denied any knowledge of the fraudulent transactions.

Volkswagen attorneys have been trying to recoup from the National Bank of Hungary part of the shortage resulting from the fraud. West German court hearings on Volkswagen’s claim are set to open in Frankfurt on Sept. 22. It wasn’t immediately clear whether Volkswagen would withdraw its case against the bank in light of Junger’s disclosure.

Volkswagen said it first discovered the fraud in February, when the National Bank of Hungary refused to honor a contract calling on it to buy dollars from Volkswagen.

Authorities say the motive behind the swindle remains unclear. Some foreign-exchange experts have suggested that the scheme was intended to cover up earlier trading mistakes in the hope that the dollar would bounce back up later.

Junger’s statement reverses his previous contention of innocence. The authorities didn’t explain the reason for the change in Junger’s position.

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