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Consumer Products / Retail
Munich, Germany
Nationality of Foreign Officials: Kazakhstan, Slovenia, Unspecified
Summary of Allegations:
In May 2009, the Munich Public Prosecutor's Office opened an investigation into allegations that MAN paid unlawful commissions to its customers in order to obtain contracts. MAN's second and third quarter 2009 Interim Reports stated that prosecutors searched numerous corporate offices and homes of employees or recipients of payments. MAN reported that prosecutors initially suspected that between 2002 and 2005 hidden commissions of EUR 1 million were paid in Germany, and several million euros abroad, although prosecutors were investigating transactions through 2009. The payments abroad were characterized either as commissions or consultant fees and were often paid through various shell corporations.
Following the company's settlement with the Munich Public Prosecutor's Office in December 2009, MAN reported that EUR 51.6 million in suspect payments, in connection with 80 instances of possible bribery, had been identified during its internal investigation.
In July 2009, the Munich Public Prosecutor's Office announced that it was also investigating certain responsible managers at the relevant subgroups, including MAN Turbo and MAN Ferrostaal. According to press reports, on 11 December 2009, Munich prosecutors filed charged against Heinz Juergen Maus, the former chief executive of MAN Turbo, in connection with EUR 9 million in bribes - described as "market entry fees" - allegedly paid to Kazakh officials between 2005 and 2008 in order to secure a gas pipeline modernization contract and gas turbine compressor orders in Kazakhstan. According to press reports, the CEO of MAN Diesel & Turbo, Klaus Stahlmann, resigned on 22 February 2011 and is also the target of the Munich prosecutors' investigation.
Approximate Alleged Payments to Foreign Officials: EUR 51.6 million
Business Advantage Allegedly Obtained: Unspecified
Agencies: Germany: Munich Public Prosecutor's Office
Results: Criminal Fine, Prosecution of Individuals
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
On 10 December 2009, the public prosecution authorities at the Munich District Court imposed a EUR 75.3 million fine against MAN Nutzfahrzeuge and a EUR 75.3 million fine against MAN Turbo. Both companies acquiesced in the decisions. These fines mark the closure of the investigations against the companies of the MAN Group regarding the alleged bribery between 2002 and 2009. According to MAN, the settlements were possible due to the extensive measures taken by MAN's Executive Board and Supervisory Board to conduct an internal investigation and cooperate with the public prosecution authorities.
Individual Prosecutions
According to press reports, on 11 December 2009, Munich prosecutors filed charged against Heinz Juergen Maus, the former chief executive of MAN Turbo, in connection with EUR 9 million in bribes - described as "market entry fees" - allegedly paid to Kazakh officials between 2005 and 2008 in order to secure a gas pipeline modernization contract and gas turbine compressor orders in Kazakhstan. According to press reports, the CEO of MAN Diesel & Turbo, Klaus Stahlmann, resigned on 22 February 2011 and is also the target of the Munich prosecutors' investigation.
On 5 September 2012, it was reported that prosecutors in Germany were investigating former Man SE Chief Executive Officer Hakan Samuelsson and former Chief Financial Officer Karlheinz Hornung for allegations of corruption. Weinmann, Hornung and CEO Hakan Samuelsson left the company in November 2009.
MAN reportedly terminated 20 employees in connection with the bribery allegations and is considering whether to sue certain former employees for damages.
According to press reports, the cost of MAN's internal investigations have totaled around EUR 50 million since commencing in May 2009.
On 22 August 2013, the former CEO of MAN, Hakan Samuelsson, agreed to settle a German investigation into possible corruption in Slovenia linked to his tenure by paying EU 500,000 to charity and EU 1.25 million to MAN in response to a financial claim brought by the company related to the probe.
On 10 April 2014, MAN AG disclosed in the proxy materials for its annual general meeting of shareholders that the five-year old bribery scandal has cost the company ?250 million (approximately USD $344 million) in fines and penalties and investigation costs, exceeding earlier estimates.
Although the cases are not highly publicized (especially during the investigation stage), German authorities reportedly have the second highest rate of foreign bribery cases after the United States.