Apr 26, 2007 (10:04 AM EDT)
Siemens Loses Its CEO, Gains An SEC Probe
Read the Original Article at InformationWeek
Reeling from a series of scandals, the bad news continued for Germany's Siemens as it disclosed Thursday that the Securities and Exchange Commission is investigating the firm. The disclosure came just hours after CEO Klaus Kleinfeld resigned abruptly Wednesday.
The giant engineering firm said the SEC is examining "possible criminal violations of U.S. law."
Kleinfeld had received high marks from stockholders and employees alike for cleaning up much of the mess at Siemens, and he hasn't been implicated so far in any of the corruption probes.
The Wall Street Journal reported that German prosecutors had been focusing much of their investigation on the firm's telecommunications unit. Kleinfeld was in charge of the unit earlier in the decade before he took over the helm of Siemens in January 2005. The telecommunications unit was Siemens' Achilles' heel, and Kleinfield disposed of much of the problem by transferring the operation to a new joint venture to be headed by Nokia.
The corruption charges have taken on a life of their own in recent months, and the firm said its internal investigators have found nearly $600 million of dubious payments during recent years.
Kleinfeld was well-known and widely respected in U.S. electronics and high-tech circles; he was in charge of the firm's U.S. operation in the early 2000s.
The CEO released glowing financial results earlier this week -- profits jumped 36% over the previous year's quarter to $1.72 billion. It wasn't enough, however, and the rolling investigations just keep growing.
In announcing his resignation, Kleinfeld said: "In times like these, the company needs clarity about its leadership. I have therefore decided not to make myself available for an extension of my contract."