Nokia faces German inquiry over subsidies

Business Materials 2 February 2008 02:40 (UTC +04:00)

( dpa )- Prosecutors in Germany said Friday they had opened a formal inquiry into allegations that Finnish mobile phone manufacturer Nokia breached promises it gave in exchange for state aid.

The maker of four in 10 phones sold worldwide, Nokia has triggered a political storm in Germany by announcing last month the closure of a 2,300-employee factory at Bochum , an unemployment black spot.

It plans to take advantage of cheaper labour in Cluj , Romania.

From its offices in Espoo , Nokia denied it had breached the terms attached to state subsidies paid in earlier years for the Bochum plant.

It said it had reported regularly on how many employees were working at the site and how it was spending the state money. It added that a bank operated by North Rhine Westphalia state had never questioned those reports.

The state's ministry of the economy had said Thursday that Nokia missed employment targets by 318 jobs in 2002, by 368 in 2003 and by 347 in 2004.

Bernd Bieniossek , a Bochum prosecutor, said the official inquiry, the second stage of an investigation after preliminary checks, was in response to complaints from five private individuals that Nokia may have cheated.

The preliminary checks by prosecutors, who specialized in business crime, had attempted to uncover evidence of possible breaches by Nokia, but had not drawn any conclusions, Bieniossek said.