The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 40.0°F | A Few Clouds and Breezy
Article Tools

The embattled chief executive of Siemens, Klaus Kleinfeld, said Wednesday that he would step down when his contract expired in September, the latest casualty in a widening corruption scandal that has shaken corporate Germany.

Events at Siemens, a giant engineering company and manufacturer, have generated headlines and radio and television reports in a country where corruption was rarely discussed, spurring debate about how German companies do business.

“In times like these,” Kleinfeld said in a statement, “the company needs clarity about its leadership. I have therefore decided not to make myself available for an extension of my contract.”

His decision followed a meeting on Wednesday of the Siemens supervisory board, where the matter of his contract had long been on the agenda. Until days ago, there had been little question that Kleinfeld, 49, would be retained in the job he had held the last two years.

But the 20-member board, which represents major shareholders and labor unions, rapidly turned against Kleinfeld as the scandal deepened and members saw a need for a fresh start.

The resignation came six days after Heinrich von Pierer, a senior industrialist who led Siemens from 1992 to 2005, announced that he would quit as chairman of the supervisory board to help Siemens return to “calmer waters.”

Both men have denied any wrongdoing. Siemens said Wednesday that independent investigations to date by the law firm of Debevoise & Plimpton “have found no indications of personal misconduct or that Kleinfeld had any knowledge of events related to the affairs.”

The accusations are among the most far-reaching in corporate history in Germany, and they have all but obscured the robust financial performance of the company, which is 160 years old. As accusations about how Siemens conducted business overseas began to seep out last fall, von Pierer’s legacy came under question.

To some extent, Siemens is a victim of a shift in the ethical climate of corporate Germany: bribery of foreign officials had been tax-deductible in this country until 1999. Kleinfeld’s downfall may be an indication that standards may be rapidly changing.

In this case, some Siemens board members, who have been caught up in scandals elsewhere, appear reluctant to take actions — like standing behind a chief executive — that might later call into question their own oversight.

Investors reacted to the news by selling Siemens stock. Shares slid 0.9 percent in Frankfurt, to 88.36 euros ($120.52), reversing earlier gains. Later in the day in New York, Siemens’ American depository receipts fell $6.67, or more than 5 percent, to $117.75. The share price had risen nearly 50 percent during Kleinfeld’s tenure.

The Siemens board will now search for a successor to Kleinfeld, who had been hand-picked by von Pierer.