Siemens Boss to Step Down

Klaus Kleinfeld announced on Wednesday that he would not renew his contract as CEO of Siemens after Sept. 30. It comes after the company was investigated for allegedly spending millions of dollars in bribes to help it land telecommunications deals and follows the resignation last week of Heinrich von Pierer, Chairman of the Siemens Supervisory Board.

Though Kleinfeld had not been directly investigated, he explained that it was in “times like these” that Siemens needed clarity about its leadership. “I have therefore decided not to make myself available for an extension of my contract,” he said. “The company must have complete freedom of action.”

Kleinfeld, who’d been CEO since 2005 and with Siemens for two decades, had pledged to restore the company’s sullied image. Police in Germany, Italy and Switzerland had investigated deals going back seven years, in which company executives allegedly funneled money into secret bank accounts, then paid bribes to secure business overseas.

When Siemens carried out its own investigation into the allegations, it found that around 420 million euros ($554 million) worth of transactions were suspicious, more than double the initial police estimates after the company’s offices were raided in November 2006.

Kleinfeld, a 49-year-old marathon runner, probably could have easily had his contract renewed this year. Adding to investors’ surprise is the fact that his announcement came just days after the resignation of Seimens Chairman Heinrich von Pierer.

There will be concerns that the double departure will leave the company’s current restructuring efforts on shaky ground. Siemens does not have an immediate replacement for Kleinfeld lined up.

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