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September was supposed to be a particularly festive month for the German car manufacturer Porsche. Company headquarters in Stuttgart celebrated the 100th birthday of Ferdinand Anton Ernst (Ferry) Porsche (1909-1998), the son of the dynasty's founder and the man who designed the first model of the sports car to bear the family name: the Porsche 356. The shop in the city's Porsche Museum, dedicated earlier this year, offered discounts on a variety of "birthday presents." These included "100 Years of Porsche, Mirrored in Contemporary History," an elegant book with photos from the life of the man who made the company one of the world's leading sports cars manufacturers.

Everything seemed perfect, until local newspapers began publishing passages from a new book that reveals that Porsche's Nazi connections were closer than it had previously allowed, and that it had employed hundreds of forced laborers in its German factories during World War II. The company claimed to be surprised by the new findings, but immediately decided to fund a comprehensive and independent study of its past.

Unlike other huge German companies, such as Volkswagen and Siemens, Porsche has remained vague about certain aspects of its activities in the 1930s and '40s. The word "Nazi" does not appear in an anniversary historical brochure it issued this summer. Instead, it mentions "political pressures" in the form of close state supervision of the manufacturing process as well as government orders to produce tanks.

The brochure does, however, contain lovely stories about the vision of Ferry Porsche, who believed that he was born in a car. Unable to find the car of his dreams, he built it.

In the late 1990s, in the wake of a reparations claim submitted by a Polish citizen who had been a forced laborer in a Porsche factory, the company admitted that it had employed forced laborers. But it claimed that they were few - between 10 and 20 - and that the company was only a small engineering plant at the time. Porsche later changed its story and admitted to employing about 50 forced laborers.

German historian Ulrich Viehover, who specializes in the auto industry, easily proved that the company was much too large to call itself a "small plant." In its archives Viehover found records from the summer of 1944 indicating that Porsche's plant in the Zuffenhausen suburb of Stuttgart employed 656 workers, not including forced laborers. Companies of that size routinely employed many forced laborers, and there was no reason to assume that Porsche was different. Viehover eventually discovered that Porsche had employed at least 300 forced laborers. No evidence has been found that any of them were Jews.

In his new book, "The Nazi Criminals of Stuttgart," Viehover surveys the role of the city's residents in the Third Reich. A significant chapter is devoted to Porsche's founder, Ferdinand Porsche (1875-1951). Viehover describes him as "Hitler's favorite engineer" and says the men knew each other.

In 1935 Ferdinand, an automotive engineer, founded the company that bears his name. At first it developed motors for large German companies. It soon began receiving assignments from the Nazi regime: The first was to design a cheap popular car ("volks wagen," or the "people's car), which eventually became the famous "Beetle." The Nazi regime gave the company two conditions: It must be developed within 10 months, and its price must not exceed 1,000 reichsmark.

"The most important point was to leave out anything that wasn't absolutely necessary, so we made the smallest car we could, which enabled it to navigate paths through fields and narrow village streets," Ferry Porsche later recalled. Development took longer than planned, and in February 1936 it made its maiden voyage, through Berlin's streets. A year later a separate company was formed, "Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH" (Society for the Preparation of the German People's Car Co. Ltd.), headed by Ferdinand Porsche. After his retirement it became Volkswagen, with Porsche as one of its owners.

While developing the Beetle, Porsche also made tanks and engines for the Nazi war machine. After the outbreak of World War II it used forced laborers in its plants in Wolfsburg, in northern Germany, as well as in the Zuffenhausen facility. "Ferdinand was conscienceless in his war profiteering," Viehover says.

Jan Karolczak, 88, from Krotoszyn in central Poland, was a forced laborer in a Porsche factory. He was 21 in March 1942, when he was ordered by the German occupation regime to report for work. "I wasn't exactly overjoyed to get the letter," he recalled last week in a telephone interview. He had to travel for several days to reach the car factory in Stuttgart, where he was placed with 70 other forced laborers - 20 from Poland, and the remainder from Holland, Morocco, France, Italy and Russia.

In the day Karolczak assembled Volkswagen crankshafts; at night he slept in a dirty building that was open to the elements. His monthly salary was minuscule, and deductions were made for taxes, health insurance and his meager food rations. In the end I was left with about one third of the gross pay, he recalled.

Giacomo Belleri of Italy, 90, relates that in 1944, after returning from military service in Africa, he was arrested by German soldiers near his home in Brescia province of northern Italy and taken for forced labor in Germany.

Company managers made sure that Karolczak and the others wore the letter "P" on their clothing at all times. It stood not for "Porsche," but for "Poland." It was intended to mark out the forced laborers to insure that they would be barred from theaters, cinemas and even bomb shelters during air raids. Karolczak says that during aerial strikes the forced laborers were ordered to stay in the factory to put out any fires that were ignited.

After the war, in 1945, Ferdinand and Ferry Porsche were arrested by the French secret service in Germany but released a few months later. Over the years the company expanded into sports and family cars, and today it is considered one of the most profitable auto manufacturers in the world.

In 1999 the company awarded compensation of 10,000 marks (about NIS 25,000 at the time) to seven former forced laborers, and established a fund of 5 million euros (about NIS 25 million) to compensate all the former forced laborers.

Dr. Dieter Landenberger, the director of the Porsche archive, has devoted the past four years to setting up the company's new museum. Landenberger now admits he was surprised by the new findings regarding the extent of Porsche's use of forced laborers. "Until now we thought their number was much lower," he told Haaretz last week. He says that the company will treat the new findings with due seriousness and will commission a comprehensive external historical study before the end of the year.

In doing so Porsche will be joining a long list of giant German firms that have published studies about their connections with the Nazis. Prof. Moshe Zuckermann, a Tel Aviv University historian, explains that the trend has grown in recent years: "In some cases, the media, the public or lawyers force the companies to investigate their past, and in other cases they do so of their own free will, in the wake of the change in the public climate, which is more open to studies of this kind."

Until the 1960s Germans preferred to turn a blind eye to the Nazi past of firms such as Porsche, to facilitate their participation in the country's rehabilitation. "Apparently things had to be kept quiet, so they didn't touch those involved," Zuckermann said. Later, aided by the 1968 student revolt and the change in public discourse, thousands of German companies opened their archives and exposed their Nazi past.

For example, the electronics giant Siemens, which ran a plant inside the Auschwitz extermination camp, admitted that it also employed forced laborers who produced the electricity for the camp. A decade ago it created a compensation fund. Dresdner Bank, the country's second largest, admitted that it helped to build Auschwitz and granted loans to the Nazi regime. In the 1990s car manufacturers Volkswagen and Daimler-Chrysler transferred large sums to compensate the forced laborers they had employed. The German media corporation Bertelsmann also paid into a compensation fund and admitted that it had employed dozens of Jewish forced laborers in its printing plants.

"It doesn't undermine the status of these companies at all and doesn't have an adverse effect on their business. The significance is mainly symbolic," says Zuckermann. He mentions the case of chemicals manufacturer Degesch, which supplied Zyklon-B gas to the Nazi death camps but also makes the preparation protecting the concrete cubes of the memorial to European Jews that stands in the heart of Berlin today. "Nobody today thinks that Volkswagen is still a Nazi company," Zuckermann says. "It's true that the Beetle was invented by Hitler, but even I, the son of Auschwitz survivors, drive one."