Letter from Berlin Spy Scandal Rattles Deutsche Bahn Top Managers

The German national rail service, Deutsche Bahn, is involved in a deepening scandal over years of evident spying on its own employees. Much of top management is implicated -- and CEO Harmut Mehdorn has never been closer to losing his job.

"I thought the days of the Stasi were over," said an irritated Andreas Scheuer, a conservative politician from Bavaria, alluding to the infamous internal spy agency in Communist East Germany. "But at Deutsche Bahn they apparently continue."

Scheuer was quoted Wednesday in his local paper, the Passauer Neue Presse, but the spy scandal at German rail operator Deutsche Bahn has assumed national proportions. Three relatively low-ranking Bahn officials did their boss no favors on Wednesday when they turned up before a parliamentary committee to tell lawmakers, essentially, nothing. The German national railroad firm is accused of misusing personal data from almost all its 227,000 employees in a campaign to root out internal corruption. The scandal keeps growing, and the suspicion that top Bahn officials know more than they let on may yet topple the company's chief, Hartmut Mehdorn.

After months and even years of denial, it's now clear  that Deutsche Bahn has spied on its own workers regularly for almost a decade. In 2002 and 2003 the company hired an IT firm called Network Deutschland to compare the "master data," or basic personal details, of some 173,000 Bahn employees with the details of around 80,000 external suppliers in search of irregularities that might suggest internal corruption.

All told, Network Deutschland has taken 43 assignments from Deutsche Bahn over at least eight years, and a small detective agency in Cologne, called Argen, has also worked for the rail service. The Argen Detective Agency was last heard from in the German media after a spy scandal involving Deutsche Telekom, the one-time national phone monopoly, broke last summer -- an affair with a number of parallels to the Bahn scandal.

One question is whether Deutsche Bahn has broken any major data-protection laws: On what legal basis, in other words, did its management conduct the investigation? Another is how much Mehdorn knew. So far he claims to have heard nothing, or very little, while the spying went on. But in 2005 -- when Network Deutschland ran another big data-comparison job, this time using details from all Bahn employees -- Mehdorn found it politic to write, in a management publication, "Our corporate security (policy) has fallen even more emphatically in line over the last few months with the advice of experts who can help in the fight against just these sorts of betrayals of trust."

Either Mehdorn knew about the massive employee screenings far sooner than he now admits, or he was unaware of an operation developing just under his nose, belying the tough-talking Mehdorn's reputation for being a control freak. Neither story flatters him. The man responsible for the spy operation -- which came under a larger corruption investigation called "Babylon" -- was Josef Bähr, head of internal auditing, who reports directly to Mehdorn.

Bähr made no friends in German parliament on Wednesday when, instead of showing up for a meeting of the parliament's transportation committee, he chose to go on vacation. The three Bahn officials who did appear -- including Wolfgang Schaupensteiner, the man in charge of rooting out corruption at the company -- disappointed both committee members and journalists by adding little to the fund of knowledge about the affair.

Lawmakers from across the political spectrum are skeptical that top management at Deutsche Bahn could have been ignorant of so much cavalier data screening for almost a decade. If it's true, said Achim Grossmann, a Social Democrat, "we have to be very concerned that laws could be broken for almost 10 years without anyone in management noticing."

Bahn officials have defended the Babylon project by pointing out that corruption was a serious internal problem, and it was management's responsibility to fight it. "During the past 10 years, Deutsche Bahn was repeatedly the victim of the worst cases of business crime and corruption," spokesman Oliver Schumacher said according to a statement released on the company's Web site. "In the interest of all honest customers, taypayers and workers, Deutsche Bahn will continue to take whatever action it can within the law to put a stop to such behavior."

But critics say Schaupensteiner in particular was "overzealous" in pushing data from so many employees through the Babylon screening process without the slightest regard for evidence of bad behavior. The screening turned up 300 "abnormal cases," and 100 possible instances of corruption.

Cases of corporate spying are sensitive in Germany because of the country's Nazi and Communist past. A story about managers at Lidl grocery stores  systematically using surveillance cameras to learn more about employees caused a scandal in 2007. But the Bahn case specifically resembles a scandal at Deutsche Telekom that broke in 2008. The phone company had scanned salary and bank details for some 136,000 employees. Both Bahn and Telekom suffered from corruption as well as internal leaks which management wanted to stop; both produced piles of useless but sensitive data in their investigations; and both hired the same firms to screen their data. 

The head of the Argen Detective Agency in Cologne is a British-born man named David Cowling who moved to Germany in 1971. He denies having worked for both corporations, and he's denied to SPIEGEL that he ever spied on journalists on behalf of Deutsche Telekom. But Telekom has admitted to hiring the Argen agency for investigations "since at least the year 2000," and in spite of a denial from Hartmut Mehdorn that the scandals are related, it remains unclear why two huge German corporations with massive state involvement might do business with the same minor detective agency in Cologne.

German Justice Minister Brigitte Zypries has now called for a new law to regulate the use of e-mail, video surveillance and personal data in the fight against corporate corruption. But she doesn't expect that a draft will be ready before the end of this parliamentary session in early July.

The spy scandal threatens to derail a long-term project of Mehdorn's to privatize parts of Deutsche Bahn. Now his enemies in the German parliament -- mainly Social Democrats who oppose the privatization plan -- have more to use against him. His support among Social Democrats is down to "almost zero," said Ralf Stegner, a member of the party's executive committee, and his colleague Björn Böhning was even clearer last week: "Mehdorn must go," he said.

As CEO of Deutsche Bahn since 1999, Mehdorn is one of the best-known figures in German corporate life. But calls for his resignation have grown louder as details about the spy scandal have surfaced, and his chances of surviving a 10th year on the job are looking worse and worse.

With reporting by SPIEGEL Staff
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