Had it not been for the money, there is a good chance that the entire "unsavory story" -- as a senior executive at German telecommunications giant Deutsche Telekom AG called it last week -- would never have come to light. Most of all, though, it was a fax that revealed the story -- and exposed an absurd concoction of economic spying, power-hungry megalomania, paranoia, and a complete disregard for the freedom of the press.
German telecommunications giant Deutsche Telekom may be guilty of spying on its own supervisory board and on business journalists.
It was, at the very least, a reckoning in two parts: The head of a Berlin management consulting company, from whom the fax came, was calling on Telekom's head lawyer to contact him without delay. The goal, he wrote, was to achieve "a controlled termination of our business relationship protected against indiscretion." At the same time, the letter was the formal end to long-term activities that apparently served one overriding purpose: to spy on German business journalists, members of the supervisory board and senior company executives, including monitoring their telephone communications with one another.
Journalists, Board Members and Shareholders
The company itself, led by then CEO Kai-Uwe Ricke and monitored by a supervisory board headed up by then Deutsche Post CEO Klaus Zumwinkel, is accused of being behind the alleged spying. And the Berlin consulting firm, whose chief executive sent the April 28 fax, was hired to carry it out. The goal of the "Clipper" and "Rheingold" surveillance programs, as well as other "secondary projects," the fax makes clear, was to "analyze several hundred thousand landline and mobile connection data sets of key German journalists reporting on Telekom and their private contacts."
But that wasn't all. The same procedure, according to the memo, was repeated with "several supervisory board members on the employee side" -- "for a total period of one-and-a-half years."
All of this, according to written allegations, was ordered "directly by management (in close cooperation with the then chairman of the supervisory board) and paid for directly by the chairman of the board, through the office of the supervisory board." But apparently not all fees were paid and a dispute eventually erupted.
It is still unclear how much of the alleged spying operation is in fact true. Telekom confirmed that it has turned the matter over to the public prosecutor's office. Company representatives, citing the ongoing investigation, have declined to comment on details of the case but said the operation was apparently coordinated with the supervisory board and its chairman. "We take this situation very seriously. We will do everything within our power to support the prosecutor's office in its efforts to conduct a thorough investigation," says current Telekom CEO René Obermann.
A Host of Criminal Charges
Lothar Schröder, Telekom's chief union negotiator and deputy head of the supervisory board, who may have been a target of surveillance himself, is outraged: "If the accusations are confirmed, it would be an unprecedented breach of trust and an unbelievable scandal, and those responsible for it should be brought to justice as quickly as possible." Schröder nevertheless said that he was convinced the current management is interested in a speedy and thorough investigation.
Former Telekom CEO Kai-Uwe Ricke.
But such an investigation, company officials believe, is only a matter of time. Even if only a fraction of the allegations are true, the company could face a host of criminal charges, ranging from violation of the secrecy of telecommunications to bribery and even extortion.
There were many indications last week that at least some low-level spying must have taken place against several labor representatives and members of the supervisory board, including Wilhelm Wegner, the head of the group works council. There was also mounting evidence that agreements had in fact been made with the Berlin-based company that contacted Telekom in February to demand payment of supposedly unpaid invoices ranging in the six figures. Moreover, there are indications that former CEO Ricke and his Supervisory Board Chairman Zumwinkel were frustrated that reports of confidential board meetings were repeatedly leaked to the press.
Trouble Was Brewing
The Berlin consulting firm was allegedly hired in the spring of 2005 to explore where the leaks could be coming from. The firm was asked to compare the telephone records of members of the supervisory board with those of well-known business journalists who reported on Telekom.
The snooping campaign against the head of the works council happened in a turbulent phase for Telekom. Following the dramatic plunge of Telekom's stock from a high in March 2000, CEO Ron Sommer resigned in July 2002 under pressure from the German government, a major shareholder in the company. Ricke took over the post in November. He reorganized Telekom management and turned his back on his glamorous predecessor's global visions. With his tough cost-cutting measures and the sale of several divisions Ricke, whose father had also run Telekom in the past, returned the company to financially sound footing.
Even analysts and shareholders began to respect the awkward and graying Ricke. But trouble was brewing inside Telekom. Employees were becoming increasingly concerned about job security. In early 2005, Ricke had announced that Telekom would have to cut at least 8,500 jobs a year in the future.