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WORLD WATCH

International Business / The Pacific

May 30, 1996

KHD Facing Huge Loss in Cover-Up: Kloeckner-Humboldt-Deutz said it faces losses of as much as $419 million that were concealed by a unit's managers and now threaten to put the company out of business. The German machine- and plant-making firm discovered the losses at its Humboldt Wedag subsidiary last week after a unit manager confessed to helping cover up losses on three cement factories being built for customers in Saudi Arabia. KHD filed charges this week against 15 unit employees, including the chief executive. The company also charges that major cement customers were involved in the cover-up. The size of the losses surprised many analysts, who said the company can't avoid bankruptcy without fresh cash from its banks--which have already rescued the company from near bankruptcy. Last year, KHD was in talks with its largest shareholder, Deutsche Bank, about the situation. Last year, the bank rescued the company with a $300-million infusion.

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