Siemens scandal touches T-Systems

news
May 31, 20072 mins

T-Systems CEO steps down; Pauly previously led a Siemens communications division that is at the center of a bribery probe

The bribery scandals at Siemens have forced the resignation of a former senior executive who left the company nearly two years ago to head the IT services subsidiary of German telecommunications operator Deutsche Telekom.

Lothar Pauly, management board member and CEO of T-Systems Enterprise Services, is leaving after asking to be relieved of his duties, the Bonn, Germany, company said in a terse statement Thursday. His departure is “by mutual consent.”

Chief Financial Officer Karl-Gerhard Eick will take over Pauly’s duties until a replacement is found.

Pauly’s departure comes at a difficult time for T-Systems, which has been seeking a strategic international partner to expand its footprint and increase sales. The unit provides IT services to about 60 multinationals and 160,000 smaller companies. Last year, it acquired Gedas, the former computer services subsidiary of German car maker Volkswagen, with subsidiaries around the world, including Brazil, China, Japan, and the U.S.

The communications division that Pauly led at Siemens from October 2004 to September 2005 is at the center of a probe that has led to the resignation of the company’s two top guns: CEO Klaus Kleinfeld and Supervisory Board Chairman Heinrich von Pierer.

Several Siemens managers in Pauly’s former division are suspected of committing breach of trust against the company by setting up secret funds outside Germany to pay bribes to secure telecom contracts.