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Fri, Apr 27, 2007 - Page 10 News List

Siemens' CEO sets quitting date

SEPTEMBER SWAN SONG Klaus Kleinfeld said he was not going to seek an extension of his contract, amid a widening probe into corporate corruption


The embattled chief executive of Siemens, Klaus Kleinfeld, said on Wednesday that he would step down when his contract expires in September, the latest casualty in a widening corruption scandal that has shaken corporate Germany.

Events at Siemens, a giant engineering company and manufacturer, have generated headlines and radio and TV reports in a country where corruption was rarely discussed, spurring debate about how German companies do business.

"In times like these," Kleinfeld said in a statement, "the company needs clarity about its leadership. I have therefore decided not to make myself available for an extension of my contract."

His decision followed a meeting on Wednesday of the Siemens supervisory board, where the matter of his contract had long been on the agenda. Until days ago, there had been little question that Kleinfeld, 49, would be retained in the job he had held the last two years.

But the 20-member board, which represents major shareholders and labor unions, rapidly turned against Kleinfeld as the scandal deepened and members saw a need for a fresh start.

The resignation came six days after Heinrich von Pierer, a senior industrialist who led Siemens from 1992 to 2005, announced that he would quit as chairman of the supervisory board to help Siemens return to "calmer waters."

Both men have denied any wrongdoing.

Siemens said Wednesday that independent investigations to date by the law firm of Debevoise & Plimpton "have found no indications of personal misconduct or that Kleinfeld had any knowledge of events related to the affairs."

Investors reacted to the news by selling Siemens stock. Shares slid 0.9 percent in Frankfurt, to 88.36 euros (US$120.52), reversing earlier gains. Later in the day in New York, Siemens' American depository receipts fell US$6.67, or more than 5 percent, to US$117.75. The share price had risen nearly 50 percent during Kleinfeld's tenure.

The Siemens board will now search for a successor to Kleinfeld, who had been hand-picked by von Pierer. Any insider is at risk of being ensnared in the scandal as investigations unfold. An outsider would need time to get a grip on a vast company that employs 475,000 and makes home appliances, computers and power plants.

"It would mean six months of stagnation at Siemens," said Daniela Bergdolt, head of the Bavarian division of a private investors' association, DSW.

German news reports have focused on Wolfgang Reitzle, a former executive at BMW who is chief executive of Linde, which produces industrial gases and is based, like Siemens, in Munich.

Reitzle has turned around Linde by spinning off units, and led the recent acquisition of a larger rival, the BOC Group of Britain. He is close to Josef Ackermann, the chief executive of Deutsche Bank, and the Siemens supervisory board member who reportedly led the opposition to renewing Kleinfeld's contract.

Uwe Wolfinger, a spokesman for Linde, said Reitzle "would remain as Linde's chief."

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