German car scrap scheme 'abused'

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Up to 50,000 cars meant to be scrapped under a German scrappage scheme have been illegally sold abroad instead, the country's police union says.

Lax controls, criminal gangs and a poor scrap metal market have been blamed for the cars being transported for sale in Africa and eastern Europe.

The government has launched an inquiry into the alleged abuse.

Under the scheme, drivers receive 2,500 euros ($3,600; £2,150) if they scrap their old car and buy a new one.

Flood of applicants

Germany's criminal police union, the BDK, says the abuse affects up to 10% of cars that should have been scrapped.

Police say they recently found a container in the port of Hamburg which was crammed with more than 40 old cars bound for Africa.

According to police, the owners had already received the government subsidy under the scrappage scheme, but instead of being destroyed the cars ended up in the hands of criminal gangs who sold them on.

This is not an isolated case and police say a number of factors are to blame.

Thanks to the global downturn the scrap metal market has crashed, so many scrapyard dealers are sitting on a mountain of old cars they need to get rid of.

There are lax controls and criminal gangs are becoming more savvy.

Environmental campaigners say they are not surprised by the new report as they claim there is widespread abuse of the government scheme.

Since Germany launched the scheme in February, there has been a flood of inquiries.

So far, more than 1.7 million applications have been received by the authorities.

The scheme, which has counterparts in other countries including the US and the UK, was introduced to kick-start the struggling car industry.

Finance Minister Peer Steinbrueck says the government will launch an inquiry into the possible abuses.