Deutsche Telekom AG, Europe’s biggest phone company, said the raid by prosecutors on the home of Chief Executive Officer Rene Obermann last month in a corruption probe was ‘disproportionate.’
Obermann, 47, is one of eight suspects in the investigation that centers on alleged bribery payments at central and eastern European units, Manfred Balz, Deutsche Telekom’s management board member for legal affairs, told reporters today on a conference call. German prosecutors searched the home of Obermann and didn’t confiscate any items, he said.
The case, which is also being investigated by U.S. securities regulators, concerns Deutsche Telekom units in Hungary and Macedonia. The prosecutors are investigating whether Obermann in 2005 said he would only approve dividend payments at the Makedonski Telekom unit if Macedonia didn’t open the telecommunication market to competition. The allegations against Obermann are false and the raid on his home was ‘disproportionate,’ Balz said.
“Prosecutors link this to alleged bribery payments made by third persons,” Mark Nierwetberg, a Deutsche Telekom spokesman, said yesterday. “The chief executive rejects the allegations of criminal wrongdoing made against him as false.”
Bonn prosecutors opened their own bribery probe after they were asked by the U.S. Securities and Exchange Commission for assistance. Some of the suspects aren’t company employees, Nierwetberg said. Prosecutors raided private homes of people at Bonn-based Deutsche Telekom as well as offices of other companies in late August as part of the probe.
Obermann Home Raid
Obermann testified as a witness in the U.S. investigation at the end of 2009 and has never been a suspect in the U.S. probe, Nierwetberg said. Deutsche Telekom has always fully cooperated with U.S. authorities, he said.
Deutsche Telekom said in a Feb. 25 SEC filing that an independent investigation initiated by the audit committee at the Hungarian unit, Magyar Telekom, revealed sham contracts that may have been used for bribes.
The alleged misconduct spread from 2000 to 2007 and includes 27 contracts totaling 32 million euros ($41.5 million) of possible wrongful payments, Balz said today.
Some payments were authorized by former Magyar Telekom executives and Deutsche Telekom employees previously assigned to the units. They were made “through over 20 suspect consultancy, lobbying, and other contracts.” No legitimate purpose for the contracts could be established, the company said in the filing.
Macedonian Charges
Macedonian authorities filed charges against four individuals in 2008, including one Deutsche Telekom employee, the company said in the filing. Hungarian authorities are also investigating.
Since taking over Deutsche Telekom in 2006 Obermann has tried to revive the company’s U.S. and U.K. units, both of which have lagged behind market leaders. In March, the company won European Union approval to combine its U.K. operations with France Telecom SA’s Orange U.K., creating the largest British mobile operator. The companies estimated the deal would save more than 4 billion euros.
U.S. Push
In the U.S., Deutsche Telekom’s T-Mobile USA began rolling out a third-generation mobile network that dwarfed those of larger rivals AT&T Inc. and Verizon Wireless in some regions. Still, the German company’s U.S. unit, which accounts for a quarter of revenue, lost 93,000 customers in the second quarter of this year and posted an 11 percent decline in operating income.
Deutsche Telekom shares dropped 0.2 percent to 10.445 euros in Frankfurt as of 12:06 p.m.
Obermann joined Deutsche Telekom in 1998 and became a board member in 2002. His telecom career began when he co-founded ABC Telekom, a retailer of answering and fax machines, as a 23-year- old student at the University of Muenster.
Deutsche Telekom was also investigated from 2008 through 2010 over allegations that its managers attained phone records of journalists and supervisory board members to search for the sources of news leaks. A former security manager is currently on trial in Bonn in that case.
To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net.
source: http://www.bloomberg.com/
Obermann, 47, is one of eight suspects in the investigation that centers on alleged bribery payments at central and eastern European units, Manfred Balz, Deutsche Telekom’s management board member for legal affairs, told reporters today on a conference call. German prosecutors searched the home of Obermann and didn’t confiscate any items, he said.
The case, which is also being investigated by U.S. securities regulators, concerns Deutsche Telekom units in Hungary and Macedonia. The prosecutors are investigating whether Obermann in 2005 said he would only approve dividend payments at the Makedonski Telekom unit if Macedonia didn’t open the telecommunication market to competition. The allegations against Obermann are false and the raid on his home was ‘disproportionate,’ Balz said.
“Prosecutors link this to alleged bribery payments made by third persons,” Mark Nierwetberg, a Deutsche Telekom spokesman, said yesterday. “The chief executive rejects the allegations of criminal wrongdoing made against him as false.”
Bonn prosecutors opened their own bribery probe after they were asked by the U.S. Securities and Exchange Commission for assistance. Some of the suspects aren’t company employees, Nierwetberg said. Prosecutors raided private homes of people at Bonn-based Deutsche Telekom as well as offices of other companies in late August as part of the probe.
Obermann Home Raid
Obermann testified as a witness in the U.S. investigation at the end of 2009 and has never been a suspect in the U.S. probe, Nierwetberg said. Deutsche Telekom has always fully cooperated with U.S. authorities, he said.
Deutsche Telekom said in a Feb. 25 SEC filing that an independent investigation initiated by the audit committee at the Hungarian unit, Magyar Telekom, revealed sham contracts that may have been used for bribes.
The alleged misconduct spread from 2000 to 2007 and includes 27 contracts totaling 32 million euros ($41.5 million) of possible wrongful payments, Balz said today.
Some payments were authorized by former Magyar Telekom executives and Deutsche Telekom employees previously assigned to the units. They were made “through over 20 suspect consultancy, lobbying, and other contracts.” No legitimate purpose for the contracts could be established, the company said in the filing.
Macedonian Charges
Macedonian authorities filed charges against four individuals in 2008, including one Deutsche Telekom employee, the company said in the filing. Hungarian authorities are also investigating.
Since taking over Deutsche Telekom in 2006 Obermann has tried to revive the company’s U.S. and U.K. units, both of which have lagged behind market leaders. In March, the company won European Union approval to combine its U.K. operations with France Telecom SA’s Orange U.K., creating the largest British mobile operator. The companies estimated the deal would save more than 4 billion euros.
U.S. Push
In the U.S., Deutsche Telekom’s T-Mobile USA began rolling out a third-generation mobile network that dwarfed those of larger rivals AT&T Inc. and Verizon Wireless in some regions. Still, the German company’s U.S. unit, which accounts for a quarter of revenue, lost 93,000 customers in the second quarter of this year and posted an 11 percent decline in operating income.
Deutsche Telekom shares dropped 0.2 percent to 10.445 euros in Frankfurt as of 12:06 p.m.
Obermann joined Deutsche Telekom in 1998 and became a board member in 2002. His telecom career began when he co-founded ABC Telekom, a retailer of answering and fax machines, as a 23-year- old student at the University of Muenster.
Deutsche Telekom was also investigated from 2008 through 2010 over allegations that its managers attained phone records of journalists and supervisory board members to search for the sources of news leaks. A former security manager is currently on trial in Bonn in that case.
To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net.
source: http://www.bloomberg.com/
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