Siemens CEO Forced to Resign

BERLIN ~ The chief executive of Siemens, Europe’s biggest engineering company, said this week he would step down later this year to allow the group to focus on weathering a corruption scandal.

“Dr. Klaus Kleinfeld, president and CEO of Siemens, has announced that he is not available for a renewal of his contract which expires on September 30, 2007,” the company announced.

It said that Kleinfeld, who has not personally been implicated in the ongoing slush fund investigation, had refused to accept a postponement of the decision on extending his contract.

“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,” said Kleinfeld, 49, as quoted in the Siemens statement.

“The company must have complete freedom of action.”

A simmering corruption scandal at Siemens threatened to boil over in late March when a board member, Johannes Feldmayer, was arrested and kept in custody as part of a probe into alleged payments made to a union official.

Prosecutors have also raided Siemens offices in Munich, Erlangen and Nuremberg.

In a separate case, prosecutors are investigating whether company managers skimmed off as much as 200 million euros (US$273 million).

The company said that Kleinfeld had helped Siemens confront “past wrongdoing without compromise.”

Siemens’ former chief executive and the current head of the supervisory board, Heinrich von Pierer, also formally stepped down on Wednesday.

Members of the Siemens supervisory board had said behind closed doors in recent days that the company needed to make a fresh start with new management as it contended with an ongoing slush-fund probe.

The incoming supervisory board chief, Gerhard Cromme, thanked Kleinfeld for his “decisive and successful leadership” of Siemens over the past two years.

“Siemens is in better condition than ever before. Under the management of Dr. Kleinfeld, the company was given a strategic reorientation that will ensure sustained success,” Cromme said.

“This strategy should be continued in the future. The supervisory board is grateful to Dr. Kleinfeld that he will remain available to serve until September 30, 2007.”

It was not immediately clear who would replace him.

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