Top executives at the MAN subsidiary are under investigation for alleged corrupt practices in connection with the building of an aluminium plant in Nigeria during the reign of military dictator Sani Abacha.
Nigeria's captial Lagos
Germany's Ferrostaal AG, a subsidiary of engineering giant MAN AG, is being investigated for its role in alleged corruption involving Nigeria's former military dictator Sani Abacha and his clan.
The office of public prosecution at the German town of Bochum launched an investigation into top executives at Ferrostaal on suspicion that they "aided embezzlement" in what may prove to be the biggest ever embezzlement case in Africa's economic history. The Essen-based company is active in commodity trading and plant construction.
The professional conduct of Ferrostaal's chief executive, Klaus von Menges, is also under investigation. Von Menges, who has been working for Ferrostaal for more than 26 years and has led the company since 1993, received a Federal Service Cross last Thursday for his role in promoting German exports.
Investigators said the case could take several years to be cleared up.
The first evidence of a possible case of corruption was first unearthed by officials at Essen's revenue office, who came across invoices for sums that were clearly inflated. Following an audit at Ferrostaal, Bochum's office for public prosecution took over the investigation.
The ruthless reign of General Sani Abacha in Nigeria provides the backdrop to the affair. Between 1993 and 1998, Abacha and his supporters systematically plundered the country's vast raw-materials resources. Several billion dollars were channeled into Abacha's accounts in Europe via a far-reaching, complex network.
Investigations into the case have since also been launched in Liechtenstein, Luxembourg and Switzerland. There's proof that Ferrostaal transferred several hundred million D-Marks via Liechtenstein and Switzerland into secret accounts of Abacha's son Mohamad with the Luxembourg subsidiary of Hamburg-based bank M.M. Warburg.
According to people in Swiss banking circles and lawyers, there is no doubt that these transfers took place.
Mohamad Abacha, who acted as the family's treasurer, also controlled the development of the Aluminum Smelter Company of Nigeria, or Alscon. The construction of the gigantic plant in the south east of Nigeria was carried out by Ferrostaal.
The German company and its contractors have been working on the mammoth project since 1989, and the costs have spiralled in this time. The plant has yet to produce any aluminium. Nevertheless, Ferrostaal continued to pump funds into Abacha's accounts in Europe.
According to the people in Swiss banking circles, Ferrostaal claimed that the invoices of "Nigerian contractors" had been paid via these accounts.
But there are numerous indications that the payments were bribes paid by Ferrostaal in return for the award of the contract to construct Alscon. This was indirectly confirmed by Switzerland's financial-industry regulator in a report about the transfers. M.M. Warburg described the funds as commission payments "without which, in our view, no orders can be won in international plant production".
Overall, it sounds like a common case of bribery: contractors submit inflated or bogus invoices and the difference to the actual price is pocketed by the member of a country's power elite who is responsible for the project. In the case of Ferrostaal, this was Abacha's son Mohamad.
Bochum's public prosecutor will now have to determine to what extent Ferrostaal's executives broke the law. Ferrostaal declined to comment, because of the ongoing investigation.