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Spying Scandal Rocks Deutsche Telekom

CEO 'shaken to core' by allegations of illegal use of call records by German carrier giant's internal security staff

May 26, 2008

2 Min Read
Spying Scandal Rocks Deutsche Telekom

What is it with Germany and telecom scandals?

With Siemens AG (NYSE: SI; Frankfurt: SIE) still trying to put its corruption issues behind it, Deutsche Telekom AG (NYSE: DT) has picked up the scandal baton by announcing an investigation into the illegal "misuse of call records" that was organized by its own security staff. (See Siemens Fined, Unhappy With NSN.)

The German carrier says that having already dealt with an individual case of such misuse dating back to 2005, it has now received allegations of broader and more serious incidents that involve illegal access to the call data records of Deutsche Telekom staff.

"I am shaken to the core by these allegations," said DT's CEO René Obermann in an official statement issued over the weekend. "We take the situation most seriously. We have called in the public prosecutor's office and will support them in their full investigation of these allegations."

"By taking this approach we want to ensure the greatest possible level of transparency and allow criminal prosecutors to bring those responsible to justice," stated the CEO. The carrier says it can't comment any further while the criminal investigation is ongoing, but notes that the calls in question were not tapped and listened to: Instead, it is alleged that the call data records were accessed as DT's security team tried to trace patterns of calls that involved the carrier's own staff.

According to German media reports, the spy scandal relates to calls between Deutsche Telekom executives and journalists in 2005 and 2006 when details of the carrier's strategy were allegedly being leaked to the press. Kai-Uwe Ricke, Obermann's predecessor, was the CEO at the time. (See Deutsche Telekom's CEO Quits, DT Has a Dream…, and DT Plans Acquisitions.)

DT's probe is just the latest scandal to hit the German business sector, according to a report by Spiegel, which got wind of the incumbent carrier's investigation before it was officially unveiled Saturday.

The DT rumpus is reminiscent of the spying scandal at HP Inc. (NYSE: HPQ) back in 2006, when the IT giant tried to identify the source of information leaks. (See Spy: The HP Way.)

But it doesn't seem to be bothering investors: DT's share price is up nearly 1.2 percent today to €10.89 on the Frankfurt exchange.

— Ray Le Maistre, International News Editor, Light Reading

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