THE FORMER BOARD Former DT CEO Kai-Uwe Ricke, who is likely to be blamed for the scandal, and the former head of the supervisory board Klaus ZumwinkelCroatian Telecom (HT) has as of the middle of last week been in a state of crisis: all of the members of the board of directors and the managers are concerned if they were over the past years under surveillance by their German bosses in Deutsche Telekom (DT), what information from their private lives could at any moment surface in the public and what the possible damage to the companies could be. And while nobody wants to admit it, there has been a state of shock at HT for a week now, concern and distrust towards every German manager. Since there has been no disclosure for days from the head office in Germany concerning the scandal revealed last week by the German business magazine, HandelsBlatt, the Croatian Telecom board has set up a special crisis team working on the case day and night. It includes lawyers, technicians, PR experts and the heads of security departments: at the orders of the HT leadership they investigated whether the technical resources of the Croatian telecommunications network were used in illegal spying, but it was established that they were not.

An indignant letter from Ivica Mudrinic was sent to Bonn on behalf of HT on Friday afternoon, in which he demanded answers to all questions related to the illegal surveillance of Croatian Telecom employees. The entire HT management has been insulted and angered by their German bosses, because they learned of the entire affair in the press, without an explanation from anyone in Bonn on what in fact was going on. The HT board is also considering how to help those who were hurt and who could sue the head office in Bonn for damages in the millions, and it is not excluded that HT could seek financial indemnity from DT. And while this has not been mentioned in the German press at all so far, Nacional's sources say that the HT CEO allegedly has no doubt that he was followed and spied upon. All these past years, namely, the German owners frequently oversaw and monitored the operations of HT and of his board, but it was unknown until now that a part of this monitoring was quite illegal. It is interesting that the surveillance of several HT managers took place at the same time as a major supervision of HT operations in 2003 and 2004, when there was speculation that the Germans intended to dismiss HT boss Ivica Mudrinic. At the time the consultancy firm of PricewaterhouseCoopers drafted an internal report in which they recommended the dismissal of Ivana Soljan, then a member of the HT board, and the president of the board Ivica Mudrinic. Judging by the report, the investigators sent to Croatia by the German concern investigated in particular the work of the then head of the Telecommunications Centre in Split, Juraj Buzolic, HT board member Eugen Schulz and Brent Muckridge from the Logistics Directorate.

All three soon after left HT, and Schulz was arrested in Germany on corruption charges. From today's perspective it is not impossible that the illegal spies were on a mission to find something compromising that the German bosses would use to "convince" some managers to voluntarily leave the company. Those years the DT leadership of the time was trying in various ways to oust the HT leadership, and among other things, in October of 2004 launched an investigation led by the Croatian interior ministry's white-collar crime section. Since they were aware that Ivica Mudrinic was well connected with Croatian politicians and with Government, the Germans on several occasions tried to reach Prime Minister Ivo Sanader without Mudrinic finding out. As Nacional's sources at HT point out, the company has not for the moment linked periodic and legitimate German audits with illegal surveillance and eavesdropping of the HT leadership. Likewise, although there was intermittent speculation on Mudrinic's ouster, those rumours died down entirely after he was given a third term at the helm of HT.

Nevertheless, even though there are solid indications that some HT employees were, in fact, under observation, the legal battle of those who have been hurt is very uncertain, as the passage of time and the likely destruction of paper trails will make it very difficult to prove who ordered and who concretely carried out the controversial activities in question. According to some sources last week's information on the spying of HT employees was allegedly leaked to the German press from the German State Attorney's Office, which concluded that the Deutsche Telekom spying activities in Croatia had already come under the statute of limitations under German law, and that the only way to punish the company was to let the public in on it.

RENE OBERMANN (right), the current DT boss, has caught the interest of investigators because he knew of the surveillance for a year prior to reporting it; also in the photo are board member Höttges and the head of the supervisory board LehnerAdditionally embarrassing for the German telecommunications company is the fact that the long time spy scandal last week grew both in scope and character: while over the past few years it had been assumed that the illegal Deutsche Telekom spying had only been going on in Germany, it has now become clear that it was also happening in other countries - for the moment instances have been discovered in Croatia, Hungary, Macedonia and Slovenia, and that opens the possibility that it was a practice in other countries in which Deutsche Telekom has operations. The Deutsche Telekom leadership has to date admitted only to analysis of the numbers called from the telephones of some persons, while the latest cases indicate that there was much more to it - unsavoury descriptions of the private lives of monitored persons show that they were also tailed and likely filmed and wiretapped. According to some sources the spies had access to the bank accounts and tax statements of the persons under surveillance, which opens the possibility that the illegal activities also involved individuals from German banks and state institutions.

The real scale of this German telecommunications scandal of the decade will only be apparent when the State Attorney's Office in Bonn makes known the results of a major investigation, already a yearlong affair. According to sources in Germany, Senior State Prosecutor Friedrich Apostel already has almost eight thousand pages of documentation, and fingered so far as the nominal culprits for the illegal spying operations at Deutsche Telekom are three former bosses at the company: former CEO Kai-Uwe Ricke, supervisory board head Klaus Zumwinkel and the former head of the security department Klaus Trzeschan. According to the German press the top man at Deutsche Telekom, Rene Obermann, has as of recently come under the eye of the German State Attorney's Office, informally suspected of trying to cover up to controversial activities of his predecessors.

The entire affair has lasted in Germany for a full nine years, and during that period the powerful bosses of Deutsche Telekom ordered the eavesdropping and tailing of many people: journalists, union representatives, members of the board and supervisory board, managers and employees. For these illegal activities they used a special department of Deutsche Telekom responsible for security that traditionally employed former members of the West German intelligence service, the BND. The immediate perpetrators of the controversial assignments were employees of private detective agencies in Germany, for the most part former members of East German secret services.

A few years ago it was revealed that the first documented case of illegal surveillance was carried out by Deutsche Telekom back in the spring of 2000. Tasso Enzweiler, an investigating journalist with the Financial Times Deutschland business magazine was for long a thorn in the side of the DT board, as he frequently published compromising information about the company in his articles. It was only eight years later that Hans-Jurgen Knoke, then head of security at DT confirmed for the German press that Enzweiler had been under surveillance, and that a detective agency had been engaged for the job, whose employees even succeeded in getting into the reporter's office where they used a secret camera to record documents on which Enzweiler was working.

That, and many other cases, were long hidden from the public, and in the meantime the spying of all those the Deutsche Telekom leadership designated as "security threats" evidently continued. And while these are serious violations of human rights, the DT leadership is to this day trying to justify the activities saying that their only and sole aim was to stop the leaking of secret information. Many were targeted by the DT board at the time: reporters with German business magazines, members of the board and supervisory board, managers and even union representatives. The web of spy activities only began to unravel in May of 2008, when Deutsche Telekom CEO Rene Obermann publicly admitted that there had been controversial cases over the past years. These activities were then immediately attributed to the former heads of the company, Klaus Zumwinkel and Kai-Uwe Ricke. But it was soon discovered that Obermann had known of the illegal activities of his predecessors for at least a year and that he had not reported them to the competent German institutions, and that the top people at Deutsche Telekom had in every way tried to cover up the scandal. They were in fact prevented from doing so by a bizarre event in 2007.

ALEMKA LISINSKI The Croatian Telecom spokesperson has been under siege by journalists these last days as a result of the scandal involving the eavesdropping of employeesOne April morning in 2007, namely, an alarming fax message arrived at the office of Rene Obermann, who had been at the helm of DT for less than half a year. It was a letter from the owner of a private German detective-consultancy company in which he asked the new management to finally pay him for the "services" rendered by his firm to Obermann's predecessors. Among his associates Obermann ordered an internal investigation that revealed various spying activities reaching back to 2000, but the lawyers convinced him that it should remain an internal problem of the company, and that there was nothing illegal in the entire affair that should be reported to German institutions. In the meantime, Obermann, by his own admission, received additional information concerning the spying from an employee at the Deutsche Telekom headquarters during the summer of 2007, but remained silent.

Nevertheless, the rumour of illegal spying slowly started to spread among journalists - according to some, the information leaked from the company itself, while others feel that the owner of the detective agency whose bill DT has yet to pay spoke out to get back at the company. In early May of last year the leadership of Deutsche Telekom got wind of information that the German magazine Spiegel had for months been investigating the entire affair and that it was a matter of days when the shady DT dealings would be made public. Obermann decided to pre-empt the press and in complete secrecy visited the offices of the German state prosecutor, where he filed charges against unknown persons that had for years ordered eavesdropping within Deutsche Telekom. His actions were to have served as a cunning tactic whereby DT could, once the scandal had become public knowledge, claim that the request for an investigation came from the company itself.

By all accounts, state prosecutor Friedrich Apostel was not overly impressed by the comportment of Obermann and the DT management: on the morning of 29 May 2008 state investigators raided the DT headquarters in Bonn, combing all of the offices of the German telecommunications giant, and not even Obermann avoided embarrassing cross-examination. A large number of internal documents were found in the investigation that demonstrated that illegal spying had for years been commonplace at DT. Besides various "reports", such as the one on employees of Croatian Telecom that surfaced last week, the state investigators found a number of paid and unpaid bills made out to DT by various "consultancy" firms and detective agencies. The DT management persistently directed the blame for the controversial affairs on former company bosses Kai-Uwe Ricke and Klaus Zumwinkel.

Given that this is a massive and sensitive investigation, it is no wonder that the German State Attorney's Office has been working on the case for a full year now. Besides Ricke and Zumwinkel, who are under investigation, Klaus Trzeschan, the former head of security at Deutsche Telekom, who allegedly intended to flee Germany as a result of the investigation, was arrested on 17 December of last year. The investigation of the entire case has intensified over the last few months and German prosecutors will, allegedly, go public very soon with their findings. And while no one wants to speak publicly about it, it appears that the State Attorney's Office has found a witness willing to turn state's evidence - according to some sources the person in question is Klaus Zumwinkel, the former president of the Deutsche Telekom supervisory board. This once respected manager was in February of 2008 arrested on charges of tax evasion, when it was discovered that he had tried to "clean" several million euro through a foundation in Liechtenstein. And while he could have been sentenced to several years in prison for the infraction, many in Germany found it interesting that he received a very lenient punishment at the trial held at the Regional Court in Bochum in late January of this year - since he admitted his guilt and paid the taxes, he was sentenced to only a two years suspended sentence and a monetary fine of a million euro, which, considering his wealth, was for him not a problem. That is why there are suspicions that a secret deal was struck between Zumwinkel and the State Attorney's Office, and that the German prosecutor's office was very lenient on him in exchange for information on the eavesdropping scandal. At the trial, namely, the State Attorney's Office only charged him of having evaded taxes on 970 thousand euro. Had the tax evasion exceeded a million euro, by German law Zumwinkel could not have evaded a prison sentence.

In any case, the big eavesdropping scandal at Deutsche Telekom is now at its peak. It appears that the German authorities are serious in their intention to finally investigate all details of the illegal activities that occurred at the company for a full decade.