ABB, the European industrial conglomerate has never been far away from controversy.
Ever since its creation in 1987 with the merger of the Swedish Asea and the Swiss Brown Boveri groups, in one of the largest deals at that time, ABB has hardly been out of the headlines.
Under its founder and former CEO, Percy Barnevik, once considered to be the Jack Welch of Europe, ABB went on a spectacular spending spree of acquisitions
By the turn of the century, revenues exceeded $35 billion, employment topped 200,000 and share prices were rising steadily. But then it hit the rocks with a series of poor financial results and a number of scandals which sent the share price tumbling.
It wrote off nearly $2 billion over some potential asbestos liabilities in the US and later paid $16.4 million to settle a bribery case brought by the US Department of Justice and the Securities and Exchange Commission.
Then in 1996, against the backcloth of a dwindling share price and continuing heavy losses Barnevik was forced to resigned as CEO with the board later pressing him to pay back some of the roughly $80 million in pension benefits.
Since then ABB has been streamlined into two operating divisions and has been winning major contracts around the world, including a $46 million deal to improve London’s gas supply.
But today ABB was surrounded in another controversy which investors are hoping will not become ‘an Enron’, when it admitted it had made ‘suspect payments’ in a number of countries.
The company has started an investigation into certain payments involving ‘a country in the Middle East’ and other countries and had warned the US regulators that it may have violated the US Foreign Corrupt Practices Act or similar laws.
This crisis will come as a testing time for Fred Kindle moved from the Swiss-based technology company Sulzer AG to take over as ABB’s Chief Executive just 12 months ago.
Kindle, 44, had been with Sulzer since 1992; before that he spent four years as a consultant with McKinsey in New York and Zurich, and also worked with technology company Hilti AG. He has dual Swiss/Liechtenstein citizenship.
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