Hochtief Shares Drop on Report of Investigation at Leighton UnitAlex Webb
Hochtief AG, Germany’s largest construction company, dropped 7.9 percent in Frankfurt trading after the Sydney Morning Herald reported allegations of corruption at its Australian unit Leighton Holdings.
The newspaper said hundreds of confidential company documents it obtained in an investigation revealed corruption and kickback payments to clients. Essen-based Hochtief, which is controlled by Spain’s Actividades de Construccion & Servicios SA, owns 56 percent of Leighton, according to Bloomberg data.
Hochtief spokesman Christian Gerhardus declined to comment on the report. A Leighton Holdings spokesman couldn’t be reached for comment outside normal business hours. According to the Sydney Morning Herald, Leighton said in a statement that it was cooperating with police, had strong anti-corruption policies and that its directors executed their duties with care and diligence.
Hochtief dropped 5.15 euros to 60.20 euros in Frankfurt today, the biggest drop in almost two years, valuing the company at 4.6 billion euros ($6.3 billion). The stock has gained 37 percent this year, while Germany’s DAX index rose 13 percent.
Hochtief in August posted a 30 percent decline in second-quarter new orders as investment in natural resources projects in Asia slowed. New orders at Hochtief’s Asia-Pacific division fell 48 percent while business increased in North America and Europe.
Hochtief Chief Executive Officer Marcelino Fernandez Verdes is focusing Hochtief on its main building business, reversing a decade-long strategy of expanding into services.