Deutsche Telekom chief implicated in corruption case
updated 06:20 pm EDT, Tue September 14, 2010
Deutsche Telekom's Obermann suspect in corruption
T-Mobile's parent company Deutsche Telekom this evening confirmed that its CEO Rene Obermann was a suspect in a German corruption investigation. He and seven other targets are being checked for involvement in a scheme that allegedly saw DT refuse to pay dividends to Macedonia's Makedonski Telekom in 2005 unless it agreed to shut out the possibility of competition. The investigation, started in Bonn, was prompted by the US Securities and Exchange Commission after it wanted help for its own probe, which hasn't considered Obermann as a suspect.
A spokesman for the telecom giant, Mark Nierwetberg, repeatedly claimed to Bloomberg that the claims were false and that some weren't working for DT at the time.
An SEC filing on February 25, however, revealed that about $40.4 million in fake contracts existed both in Macedonia and Montenegro, over 20 of which were conducted through suspicious contract work that involved consulting and lobbying. While the connections haven't been confirmed, they suggested that outside contractors may have been used to distance the connections between DT and the payments.
Obermann has been in full charge of DT since 2006 and has faced an uphill struggle ever since. A failing UK unit led to a virtually necessary merger with Orange UK to keep it alive. In the US, T-Mobile has been stuck as the fourth largest carrier for several years and is only getting smaller, both due to the absence of halo devices like the iPhone but also because of its network reach and the use of a rare 3G frequency that prevents it from getting the same devices in a timely fashion.
