Corruption Investigation

Corruption Investigation
Germany's Ferrostaal Suspected of Organizing Bribes for Other Firms

By Jörg Schmitt

Ferrostaal's headquarters in Essen.


German engineering group Ferrostaal is under suspicion of paying bribes to secure contracts and of organizing bribery payments on behalf of other firms for a fee. The case could have repercussions for the whole of German industry, says one former executive of MAN, Ferrostaal's former parent company.

It was enough to arouse suspicions. For many years, there had been recurring stories about presumed bribe payments by Essen-based plant construction group Ferrostaal. In one case, the company allegedly paid 200,000 deutsche marks (€102,258, $138,099) to former Indonesian President Bacharuddin Jusuf Habibie. In another, the family of former Nigerian dictator Sani Abacha is believed to have received 460 million deutsche marks for the construction of a metal-processing plant.

Few of these allegations have stood up in court, however, partly because some of the payments occurred during a period when so-called "useful expenditures," or payments made to procure contracts, were not yet illegal in Germany.

But since Wednesday of last week, there are many indications that bribery payments were commonplace at Ferrostaal. Klaus Lesker, a member of the executive board, was arrested last week, and the Munich public prosecutor's office is also investigating two former board members and other senior executives for "a particularly serious case of bribing foreign officials in connection with international business arrangements," as well as for suspected tax evasion.

The prosecutors' list of suspects now includes about a dozen people. Investigators have their sights set on five projects, worth a total of almost one billion euros, which the group is believed to have secured through bribery.

The investigators also believe that the numbers could quickly rise in the coming days. "What we have now is just the beginning," says one official.

A few key documents already fell into the hands of prosecutors last year, during their corruption probe into Ferrostaal's former parent company, engineering group MAN. Last July, authorities conducted a raid on Ferrostaal offices in Essen because they suspected that bribes had been paid in connection with the sale of eight oceangoing tugs to a Hamburg shipping company.

Potential Blow to Image of German Industry (Mais informação)