Nokia could face series of court cases in Germany

Nokia rejects demands that subsidies be repaid

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The announced closure of the Nokia mobile telephone factory in the German city of Bochum threatens to put the company through a round of court cases.
     The State of North Rhine-Westphalia announced on Tuesday that it expects Nokia to pay back EUR 41.3 million in investment subsidies that the company received in 1998 and 1999.
     
The basis of the demands is the contention that Nokia has not fulfilled its contractual obligations, under which it was to have created 2,860 permanent jobs in the factory.
     "From 2002, the annual average number of jobs has been between 2,500 and 2,600", said State spokesman Joachim Neuser to Helsingin Sanomat by telephone.
     Soon after the announcement, Nokia issued a press release, expressing astonishment at the demands. "Based on the facts available to the company and Deutsche Bank, its adviser throughout the entire period, both parties strongly feel that such an attempt is without merit."
     Nokia feels that it has not only met its obligations under the terms of the subsidies, but has actually exceeded them.
     Nokia's combined investments in Bochum since 1999 have been EUR 350 million, which is considerably more than had been agreed, the press release said.
     
"Since 2001 an annual average of some 3,200 Nokia and third-party employees have been employed at the facility."
     State officials have latched on to the expression "third parties", saying that temp workers cannot be taken into account when calculating the number of jobs created.
     As Nokia sees it, there "appear to be two interpretations" on the matter. The company said on Wednesday that it has operated in the spirit of the agreement, and has no intention of paying back the subsidies.
     
Nokia is also asking why the state and its bank, the NRW-Bank, did not take up the matter when Nokia submitted detailed information on how it used the subsidies.
     Nokia emphasises that it had no cause to suspect that anything was wrong in the matter.
     Nokia has a week to respond to the demands, after which the authorities will decide on how to proceed.
     Neuser says that if Nokia's response is not satisfactory, and if the company still refuses to refund the money, North Rhine-Westphalia will consider taking the matter to court.
     
The German federal administration said on Wednesday that it would look into the possibilities of demanding repayment of EUR 10 million in research grants, according to the on-line version of the newspaper Die Welt.
     According to the report, in light of the closure of the Bochum plant, there is doubt as to whether or not Nokia has used the results of the research grant in Germany, as had been agreed.
     Last week, prosecuting authorities in Bochum, reacting to complaints by individuals, began to examine if there was reason to suspect Nokia of criminal fraud in the use of public subsidies.


Previously in HS International Edition:
  German magazine: Nokia factory in Bochum made EUR 134 million in profit last year (31.1.2008)
  Nokia´s Kallasvuo apologises to Germans (25.1.2008)
  Anti-Nokia sentiment unites Ruhr region in massive protest (23.1.2008)
  Anger at Nokia swells in Germany; top politicians join fray over plant closure (21.1.2008)
  Nokia shutting down plant in Germany, moving manufacture to Romania (16.1.2008)

Links:
  Nokia press release: Nokia astonished by intention of NRW to attempt to recall subsidies from 1999 (Feb. 6, 2008)

Helsingin Sanomat