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Germany

Unexpected raids at home of Deutsche Telekom CEO in US fraud

German authorities have reportedly searched home and office of Deutsche Telekom CEO Rene Obermann on behalf of US authorities investigating allegations surrounding the purchase of several eastern European units in 2005.

Rene Obermann in a black suit in front of a white poster

Yet another thorny issue for Obermann to address

According to German media reports prosecutors have raided the home and office of Deutsche Telekom Chief Executive Rene Obermann as part of an investigation into graft allegations surrounding the purchase of several Eastern Europe subsidiaries.

The weekly magazine Wirtschaftswoche and the daily Sueddeutsche Zeitung report that investigators removed extensive material both from Obermann as well as several other top Deutsche Telekom executives on August 31st. Around 70 local authorities conducted the searches on behalf of the US Securities and Exchange Commission (SEC) and the US Justice Department.

The two US authorities are investigating bribery allegations surrounding the purchase of Deutsche Telekom's Hungarian subsidiary, Magyar Telekom and other east European subsidiaries. Deutsche Telekom is accused of paying millions of Euros to government officials in bribes in order to influence regulators and receive preferential treatment in acquiring mobile phone licenses. Sueddeutsche Zeitung reports ten contracts are being investigated.

Investigators ask: who was in charge of the deals?

The accusations go back five years, when Obermann was the CEO of T-Mobile, the Deutsche Telekom mobile unit that owns the Hungarian company. The T-Share, now suspended, was still being traded on the New York Stock Exchange at the time.

Deutsche Telekom Headquarters in Bonn

Bonn prosecutors are regular visitors here, these days

A Deutsche Telekom spokesperson said that "Rene Obermann rejects any accusations." The spokesman added that Obermann, as head of T-Mobile in 2005, was not legally responsible for the purchase of Magyar Telekom but that another member of the board had been at the time.

Bonn prosecutors have issued no comments.

The US keeps a close watch on alleged cases of bribery and is also investigating a deal made by Deutsche Telekom in Macedonia.

Sueddeutsche Zeitung reports that accountants at Price Waterhouse first discovered irregularities during an audit of documents in 2005. The paper writes that DeutscheTelekom launched its own inquiries, but lawyers hired to investigate the matters complained that a great deal of evidence had been destroyed.

Obermann has had regular encounters with the Bonn prosecutors. He has been both a witness and filed complaints. The CEO also has his hands full trying to restore confidence at Deutsche Telekom which is currently embroiled in a high-profile data protection scandal. Top Deutsche Telekom executives are accused of spying on dozens of supervisory board members, journalists and trade unionists in 2005 and 2006.

Author: Wilhelmina Lyfft (Reuters/dpa)
Editor: Andreas Illmer

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