German Krankheit: Undisclosed Private Equity Fund Asks Government to Pay Employees at Ex-Siemens Plants

Finally, they've gone all the way: An undisclosed group og German-American investors asks fomer empoyees at the BenQ-Siemens plants in Germany to work at no charge. German politicians are seriously pondering financial state guarantees for the deal.

Finally, the craze in German corporate overfriendlyness has gone 360. An undisclosed groups of investors at three German plants, reports German daily paper WAZ in its Saturday online edition, ask for six months free labor on behalf of the workforce in exchange for investing at the bankrupt BenQ-Siemens plants. Earlier last year, Siemens had sold off its consumer communications equipment making divisions to Taiwanese electronics company BenQ. In late 2006, BenQ had obviously stopped payments to its factory, sending the former Siemens division into bankruptcy.

The BenQ-Siemens disaster also adds to management-generated problems at Siemens, which had a tarnished public image over exuberant recompensations for board members (allowing themselves a pay rise of 30%, despite sharp reductions in personnel), a reported mutiny by Siemens-employees at the discussion board of Siemens-CEO Klaus Kleinfeld, which had been reported by DER SPIEGEL, obviously insurmountable quality problems in its rail transportation unit, and a bribery scandal resulting in numerous subpoenas for high-ranking members of the management.

The undisclosed investors' request for free labor raises two questions:

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  the EU Commission is likely to observe possible recompensations for workers unpaid by a new investor as forbidden state subsidies,


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  more interesting still, the development begs the question why the German authorities would not choose the path of paying creditors of BenQ-Siemens and the workforce at the three plants to continue research, development and production independently of any investor. Experience such as the fate of former British auto maker Rover indicates that chances of private equity funds guaranteeing a sustainable development at BenQ would be slim at any rate.

The now reported development an BenQ is only the latest in a row of potential or real misjudgements on behalf of an all but clueless German political class having yielded completely to the process of globalization it very obviously does not understand beyond the mechanical repetition of empty formulas of globalization, almost always at the expense of labor rights.