Corruption is just tip of iceberg: business expert

1st August 2005, Comments 0 comments

1 August 2005, HAMBURG - A German expert on corporate governance warned Sunday that recent revelations of misdeeds at DAX 30 companies such as Volkswagen and Infineon were just the "tip of the iceberg".

1 August 2005

HAMBURG - A German expert on corporate governance warned Sunday that recent revelations of misdeeds at DAX 30 companies such as Volkswagen and Infineon were just the "tip of the iceberg".

Theodor Baums, an academic who chairs the government's commission on corporate governance issues, told the business newspaper Handelsblatt in remarks for publication Monday: "The invisible portion of corruption and fraud is extraordinarily large."

The commission devised the main code in Germany on company ethics and transparency.

He said Germany ought to ban crooked businesspeople from management and make it easier to sue them for compensation for losses they cause.

He also attacked the German system for appointing company directors, in which supervisory boards, half of whose members represent the labour force, must pick directors by a two-thirds majority.

That made managers' careers dependent on the goodwill of labour, "a worrying structure, to put it mildly", he told the paper. The interview was released a day before the paper hits the streets Monday.

Guenter Verheugen, the European Union's commissioner for industry, earlier warned that corruption could reduce German competitiveness.

He told the newspaper Bild am Sonntag that corruption in management suggested monitoring mechanisms were not working.

Volkswagen has been rocked by revelations of influence peddling by an international manager and the labour-relations department hiring prostitutes for labour leaders, while a senior Infineon manager has resigned over allegations that he took kickbacks.

DPA

Subject: German news

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