Personal Data Fears After German Phone Giant Says It Spied on Staff

Europe's largest telecommunications operator was yesterday forced to issue words of assurance to its millions of customers that their personal data remained secure, after reports that the company hired a surveillance firm to spy on its employees' telephone conversations.

Deutsche Telekom acknowledged reports that its in-house security division had contracted a company in Berlin to monitor calls between its senior executives and journalists to identify the source of a series of leaks to the media.

René Obermann, Telekom's chief executive, said he was "deeply shattered" by the affair, insisting that senior executives had known nothing about it, and said he had launched an internal inquiry. Those found to have been involved faced "severe consequences", he said.

The spying operations, which are believed to have taken place between 2005 and 2006 under the code names Clipper and Rheingold, involved the tracking of several hundred thousand fixed-line and mobile telephone connections. The aim was to monitor phone calls made between journalists who reported on Deutsche Telekom and their contacts within the company.

State prosecutors have been brought in to investigate the case, which experts said could have a devastating effect on consumer confidence in the company. "Up until now Telekom customers believed 'My data is safe', but now the trustworthiness in the company has suffered sustained damage," said Ulf Pose, the president of the Ethics Board of German Industry. He called the case unprecedented within Europe.

"That a company has a legitimate interest to find out where leaks are coming from is quite understandable, but what's scandalous in this case are the methods that were employed to do so," said Pose.

Germany's journalist association accused Telekom, whose biggest shareholder is the German government, of sponsoring an "attack on press freedom" and demanded a full explanation.

Critics said the affair came at a critical time for the company. Telekom is being restructured and, since January, is now legally obliged to save the telecommunications records of all its customers for six months, under new anti-terrorism legislation.

"The citizens now have every right to ask whether Telekom is looking after their data properly," stated an editorial in the German newspaper Die Welt.

The scandal comes weeks after the discount supermarket chain Lidl acknowledged it had employed outside agents to spy on its employees, monitoring details such as how many times they took toilet breaks and who they socialized with outside the workplace.