STUTTGART -- German diesel engine manufacturer Tognum is to review its compliance procedures, after going public with an internal probe revealing contract irregularities with Asian sales partners of its MTU Asia unit.
The company, which is being acquired by Daimler AG and Rolls-Royce Group Plc, launched the probe in January after a tip off from a third party and then instructed Ernst & Young GmbH to investigate the matter a month later.
"Our goal is for the matter to be completely cleared up," CEO Joachim Coers, who took office on Oct. 1, said in a memo to employees obtained by Reuters on Thursday.
It has now received parts of the auditor's final report, and Coers said Tognum's new supervisory board will meet to discuss the matter on Oct. 27.
"We are evaluating the results and are examining possible consequences," Coers said.
Tognum ordered the investigation after it uncovered at least 23 million euros ($32 million) in commissions at its MTU Friedrichhafen unit that may have been wrongfully paid in connection with sales of defense-related products in South Korea.
Some funds were used to host members of the Korean military at Asian vacation resorts and night clubs in the Bangkok red-light district, according to draft report of a summary obtained by Bloomberg News that was presented to Tognum by Ernst & Young.
The document, part of an internal review, also focused on commissions paid to a South Korean businessman.
German companies have beefed up anti-corruption efforts since Siemens AG was embroiled in a bribery scandal involving 1.3 billion euros of "unclear payments" that led to a $1.6 billion settlement with German and U.S. prosecutors.
Daimler last year agreed to pay a total of $185 million to resolve a U.S. probe of bribes paid in 22 countries.
Sources: Reuters and Bloomberg