Third MAN exec quits as the German group struggles with scandal

1st December 2009, Comments 0 comments

The German conglomerate has been slammed by a corruption affair that could cost it hundreds of millions of euros in fines and fiscal sanctions.

Frankfurt -- The head of the heavy truck unit at German conglomerate MAN has resigned, the group said Monday, becoming the third director to quit as MAN grapples with a scandal over allegedly corrupt practices.

"The well-being of the company is my primary focus. This has led me to the conviction that I will back MAN's fresh start on the management level," Anton Weinmann said in a statement distributed by the company.

Weinmann's resignation took effect immediately.

MAN has been slammed by a corruption affair that could cost it up to 300 million euros (450 million dollars) in fines and fiscal sanctions, a report in the Sueddeutsche Zeitung daily said earlier in the day.

A MAN spokesman told AFP the amount was just "speculation," and added: "The only firm figure is 50 million euros in internal investigation costs that have already been booked."

But according to the newspaper report, MAN expected to also pay a fine of between 200-250 million euros and a tax charge.

The group is the subject of a German judicial probe into alleged corruption involving about 10 million euros in foreign payments and around 1 million euros in Germany.

The money was allegedly paid as bribes to obtain contracts and sales of MAN busses and heavy trucks.

German investigators are looking at deals in Algeria, Greece, Italy, Israel, Libya and other countries.

One major contract in Greece concerned the sale of electric trolley busses supplied ahead of the 2004 Summer Olympics in Athens.

That deal was suspected of involving serious corruption, the newspaper said.

MAN's former financial director and boss have already resigned for "personal reasons," and German media had reported that other board members could also leave the group.

But former finance director Karlheinz Hornung stressed in a statement when notifying MAN of his resignation that "this step is not to be seen as related to the compliance investigation that is currently ongoing."

The head of the group's supervisory board, Ferdinand Piech, is now said to be placing top aides on the management board with a view to merging MAN with Swedish truck maker Scania, which belongs to Volkswagen.

Piech is also head of VW's supervisory board, and Europe's largest automaker owns almost 30 percent of MAN.

MAN's heavy truck division has been hit hard by the scandal and a concurrent global downturn in the transportation sector, reporting a net profit of just 6 million euros in the third quarter of 2009, down from 302 million in the same period a year earlier.

MAN also manufactures diesel engines and turbo machinery, and employs around 49,500 people worldwide.

Its sales last year totalled around 14.9 billion euros.


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