Tognum Implementing Additional Measures for Compliance Investigation

Tognum has implemented additional measures in connection with the compliance investigation against former sales subsidiary MTU Asia.

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Over the last 12 months, a comprehensive investigation into compliance allegations against the former sales subsidiary MTU Asia Pte Ltd (now Tognum Asia) has been conducted by external experts engaged by the Board of Management and Supervisory Board of Tognum AG. The investigation looked at all payments to distributors and sales agents who mediated or advised on transactions by Group companies with end customers over the period of the last 10 years. According to the findings now available, payments totaling some EUR 160,000 made in connection with customer training conducted by these sales partners were inappropriate solely between 2001 and 2009 during this period. Other suspicions of corruption proved unfounded. Commissions paid to sales partners were in line with the market rate. 

In order to reinforce compliance within the sales organization, a change to the sales organization and assignment of responsibilities has been resolved. Accordingly, a new division, “Government Project Business,” is to be set up in the Engines Business Unit, which will pool former land-based defense business (e.g., engines and power packs for battle tanks and armored personnel carrier) and marine business with public sector customers in navy project systems business (e.g., propulsion systems for submarines and frigates) under one area of responsibility. In addition to this, commercial business with propulsion systems will be merged under Marine (yachts and commercial ship propulsion) and Industrial (e.g., drive systems for rail, agriculture, mining, and oil and gas applications). The separation allows business with members of the armed forces and procurement agencies to be carried out separately within a more advanced compliance framework and reviewed more effectively.

Tognum CEO Joachim Coers is still acting Chief Sales Officer. The former Chief Sales Officer, Peter Kneipp, left the Board of Management and also the Board of Management of MTU Friedrichshafen GmbH as of the end of February by mutual agreement in order to pursue a new professional challenge. Kneipp had been relieved of his duties since the end of October in connection with the compliance investigation. The company intends to appoint a new Chief Sales Officer.

In addition to the reorganisation, the Board of Management has also commissioned external experts to carry out a compliance risk analysis in all countries with external sales partners. Based on the results of this risk analysis, it will be decided whether and to what extent more detailed reviews should be carried out for individual countries. In addition, further investigations are being conducted with the help of external experts into payments made to third countries in other Asian countries.

In order to further develop the compliance management system, the Board of Management also decided to set up a “Business Practice Office and Compliance Advice” unit. This new service department, which under the current plans will have offices in Germany, the United States and Singapore, supports the organization in implementing policies locally and reports directly to the CEO.