Big bill

German truckmaker MAN is playing hardball with its disgraced former executives. It has sent a bill for 237 million euros ($315 million) to former CEO Hakan Samuelsson for damages incurred in a bribery scandal that came to light in 2009, according to a report in the Süddeutsche Zeitung daily.

The record-setting demand came from MAN's supervisory board, which is headed by Ferdinand Piëch, a hard-driving Austrian who is also the chairman of Volkswagen. He is considered one of the world's leading automobile bosses and has a reputation for ruthlessness.

"This is about justice," he said regarding the bill for damages, adding that he's acting "very decisively and systematically."

Samuelsson is not the only former MAN executive who is being asked to pay dearly for past actions, or inaction, in the bribery scandal. Six former board members have received letters in the mail, including Karlheinz Hornung, MAN's former finance chief, and Anton Weinmann, former head of MAN's commercial vehicle arm. Several of the bills are for over 100 million euros.

Fall of a CEO

But Samuelsson is being hit hardest. The 59-year-old Swede studied in Stockholm and worked at truckmaker Scania for more than two decades before moving to Germany's MAN in 2000. He took over the top job there in 2005 as the first foreigner to ever lead the company.

In May of that year, prosecutors opened an investigation into the MAN, suspecting its sales force was paying kickbacks to secure truck and bus contracts. A Munich court fined the company 151 million euros in December 2009 for failing to prevent bribery.

The scandal appeared to have cost Samuelsson his job and when the court fine came, he had already left the company, stepping down in November along with other top figures. However, some analysts have speculated that the real reason for his departure was that he stood in the way of Piëch's plans for an alliance between MAN and Scania under VW control.

Whatever the reason, it appears that Piëch has little love for his former CEO. The 237 million euro fine far overshadows penalties other CEOs have had to pay for their misdeeds.

New dimension

In 2009 Heinrich von Pierer, long-time head of engineering giant Siemens, paid 5 million euros of his own cash in connection with a large-scale corruption scandal. It was seen as a symbolic move to atone for a global bribery scandal that cost the concern some 2.5 billion euros.

Other ex-CEOs, such as those of banks BayernLB and SachsenLB, are under the gun for approving risky investments abroad that led to massive losses. Multi-million euro fines are being discussed, but more in the range of what von Pierer paid - peanuts compared to Samuelsson's bill.

If Samuelsson does have to pay the full bill, he would likely be broke. As the chief executive of MAN, he earned between 3 and 4 million euros a year – not exactly the salary of a high-rolling hedge fund manager.

"The demand is unfounded," said Samuelsson's lawyer, Wolf-Dieter von Gronau.

A recently as a decade ago, foreign bribes could be tax-deducted in Germany as they were widely seen as a normal part of the business culture in certain regions of the world. This attitude has fundamentally changed.

Setting a precedent?

After the MAN scandal broke, Samuelsson introduced new anti-corruption guidelines, replaced regional sales heads and made other efforts to stop long-ingrained, but questionable, practices.

But it was not enough for Piëch at the time, and more than a year Samuelsson's departure, it appears it still isn't. The VW head says Samuelsson and his colleagues didn't have proper checks and controls in place. In addition to the 150-million-euro fine prosecutors demanded, Piece has added the cost of expensive internal investigations to the bill.

It is also whether liability insurance that MAN executives had taken out could cover the bills. According to the report, their "Directors and Officers" insurance policy covered up to 200 million euros in damages.

Some observers wonder if Piëch is setting a new bar for personal liability when it comes to big German companies and corruption scandals. Measured by Piëch's standards, Werner Schmidt, the former head of BayernLB, would be asked for 3.7 billion euros for losses sustained during his tenure.

Author: Kyle James (AFP, dpa)
Editor: Sam Edmonds