Siemens chief to stand down during scandal

26th April 2007, Comments 0 comments

26 April 2007, Munich (dpa) - German engineering giant Siemens AG's chief executive Klaus Kleinfeld said Wednesday he was standing down amid a damaging corruption scandal that has rocked the 160-year-old company. The 49-year-old Kleinfeld told a meeting of the company's supervisory board that he did not want to extend his current contract, which expires at the end of September, after meeting resistance to the extension among board members. "The company needs clarity with regard to its leadership during the

26 April 2007

Munich (dpa) - German engineering giant Siemens AG's chief executive Klaus Kleinfeld said Wednesday he was standing down amid a damaging corruption scandal that has rocked the 160-year-old company.

The 49-year-old Kleinfeld told a meeting of the company's supervisory board that he did not want to extend his current contract, which expires at the end of September, after meeting resistance to the extension among board members.

"The company needs clarity with regard to its leadership during these times," Kleinfeld said. "I have therefore decided not to make myself available for an extension of my contract." His successor has not been named.

Kleinfeld refused to accept the board delaying a vote on the contract, company officials said, as a result paving the way for a major shakeout in the group's top management.

His decision to leave the company after a two-decade career followed last week's dramatic announcement by Siemens chairman Heinrich von Pierer that was stepping down.

Although cleared of any wrongdoing, Kleinfeld's future had hung in the balance as the Siemens' board considered whether far-reaching changes of the group's management were necessary to help give the group a new start.

Ahead of Wednesday's meeting the German media had reported that supervisory board members had launched a search for a possible successor for Kleinfeld as part of a push for a major shakeout of the company's top management.

Despite launching an internal company investigation into the scandals and stepping up corporate control procedures, Kleinfeld has come under fire for failing to act sooner in dealing with the corruption scandals.

This included claims that funds totalling as much as 420 million euros (573 million dollars) were siphoned off into illicit accounts over the last seven years

During his two years at the helm of Siemens, Kleinfeld has also won plaudits from investors for his efforts to boost the company's finances through big cuts in the company's workforce and a major acquisitions drive.

Siemens' shares edged down 0.94 per cent to 88.36 euros as trading drew to a close Wednesday.

The almost Herculean task of steering Siemens out of the crisis that has engulfed the company in recent months now falls on German steel giant ThyssenKrupp AG's chairman Gerhard Cromme, who is to takeover as board chairman from von Pierer.

Ending his long career with the company, von Pierer insisted he was not taking personal responsibility for the scandals that have badly shaken the company.

These included allegations that members of management channelled funds into an employer-friendly labour group and have largely overshadowed Siemens' recent solid financial performance.

However, the 66-year-old von Pierer had presided over the company's management both as chief executive and then as chairman during the time the corruption was alleged to have taken place.

Von Pierer stepped aside as chief executive in 2005 to make way for Kleinfeld, who was his protege.

The scandals have, however, also largely overshadowed Siemens' recent solid financial performance.

Data released Tuesday evening by the company showed second- quarter net profit surged 36 per cent to 1.259 billion euros. This beat analysts' forecasts of a rise to 1.193 billion euros.

The group said revenues jumped 10 per cent in the quarter to 20.626 billion euros.

At the same time Siemens said orders increased 9 per cent to 23.469 billion euros, while group profit climbed 49 per cent to 1.964 billion euros.

DPA

Subject: German news

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