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Deutsche Telekom’s Obermann Says Allegation Baseless

Deutsche Telekom AG Chief Executive Officer Rene Obermann said bribery allegations made against him in connection with a probe by Bonn prosecutors are baseless.

The case concerns wrongdoing by the company’s Magyar Telekom unit dating back to 2005 and have been reported in company filings since 2006, Deutsche Telekom spokesman Mark Nierwetberg said in an e-mailed statement today. German prosecutors are investigating the case as part of a U.S. request for assistance, he said.

“Rene Obermann explicitly notes that the allegations against him concerning bribery are baseless,” Nierwetberg said. “Deutsche Telekom has been cooperating with authorities for five years. The current action of the authorities is unclear.”

Bonn prosecutors opened their own bribery probe after they were asked by the U.S. Securities and Exchange Commission for assistance, Friedrich Apostel, a spokesman for the prosecutors, said in an interview today. He declined to comment on a report by German magazine Wirtschaftswoche saying Obermann is a suspect in the German probe and his home was searched Aug. 31.

Prosecutors raided private homes of people at Bonn-based Deutsche Telekom AG, Europe’s biggest phone company, as well as offices of other companies in late August as part of the probe, said Apostel.

The searches were conducted with the help of Germany’s Federal Criminal Police Office and included several other companies, Apostel said. The SEC hadn’t asked for raids, he said.

Early Stage

“I won’t name any names because we can search homes and offices of people even if they aren’t suspected of wrongdoing,” Apostel said. “In the end, nothing may come out of all of this and we don’t want to burden people by throwing their names in the arena at such an early stage.”

Deutsche Telekom said in a Feb. 25 SEC filing that an independent investigation initiated by Magyar Telekom’s audit committee in 2006 revealed sham contracts may have been used by a Montenegrin subsidiary and in Macedonia in 2005.

In 2008, the investigation revealed that former Magyar Telekom executives and Deutsche Telekom employees previously assigned to the unit authorized the expenditure of about 24 million euros ($31 million) “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.

Deutsche Telekom earlier this month confirmed that its headquarters were raided as part of the probe related to Magyar Telekom.

Nierwetberg declined to comment on whose homes or offices were targeted in the raids.

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.

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