* ThyssenKrupp shareholders’ meeting due on Friday
* AGM comes after CEO axed top execs and vowed fresh start
* Some shareholders want Chairman Cromme to step down
By Maria Sheahan
FRANKFURT, Jan 16 (Reuters) - Some ThyssenKrupp AG investors have seized on big losses and scandals to call for the German steelmaker’s chairman to step down but he has the backing of the biggest shareholder.
Friday’s annual general meeting is expected to be lively after news headlines involving a botched multi-billion euro project in the Americas, lavish junkets for journalists and a cartel fixing the price of rail tracks.
“The supervisory board, especially Chairman (Gerhard) Cromme, has blatantly breached its duty to supervise,” Ingo Weiss, a minor shareholder, said in a motion to block the board’s approval at the shareholder meeting.
It is seen as unlikely, however, that the silver-haired manager will be forced out of office after 11 years at the helm of Thyssen’s supervisory board because he is backed by Berthold Beitz, the 99-year-old patriarch at the biggest shareholder.
The Alfried Krupp von Bohlen und Halbach Foundation headed by Beitz has 25.3 percent of voting rights and has the right to name three members to the 20-member supervisory board. One of them is Cromme, aged 69, who is seen as Beitz’s crown prince.
“I don’t think Cromme will be ousted, but the AGM will certainly be stormy,” Westend Brokers analyst Eerik Budarz said.
The discontent comes despite Chief Executive Heinrich Hiesinger axing half his management board last month and vowing to put an end to “old boys’ networks and blind loyalty”.
Essen, Germany-based Thyssen’s biggest headache has been its Steel Americas business comprising two steel mills - in Brazil and Alabama - that have cost much more than expected to set up and have generated losses since.
The project, in which Thyssen has invested 12 billion euros ($16 billion) over the years, was meant to carve out new markets but was blighted by cost overruns, poor project management and weakening demand for steel.
Thyssen recently wrote down the value of the mills to less than 4 billion euros, causing a 5-billion-euro loss for 2012.
Thyssen has been trying to offload the mills, a lengthy and difficult process, with bids being much lower than it foresaw.
Cromme, who is also the chairman of engineering group Siemens, has been criticised for allowing the Americas project to continue for years, though an independent report found that the board was not at fault.
“Cromme is supposed to be a role model, and he is not living up to that responsibility,” Peter Dehnen, vice president at the Association of Supervisory Boards in Germany, told Reuters.
Aside from having to answer to shareholders on Steel Americas troubles, Thyssen will have other scandals to explain.
The company - which also makes submarines, elevators, automotive components and industrial plants - was fined last year for being part of a cartel fixing the price of rail tracks and is being sued for damages by rail operator Deutsche Bahn.
One of its ousted board members is under investigation by prosecutors following reports that he took journalists on luxury trips costing as much as 15,000 euros per person.
And now Cromme’s deputy Bertin Eichler, who represents the labour side on Thyssen’s supervisory board, has said he will not seek re-election after being criticised for having the company pay for his first class tickets for business trips to China, Thailand, the United States and Cuba.
Allegations of preferential treatment for employee representatives are a hot-button issue in Germany, after a scandal last decade at carmaker Volkswagen involving a slush fund for managers and union representatives to enjoy lavish meals and trips to overseas brothels.
Meanwhile, Thyssen’s European steel business has also suffered as the euro zone debt crisis hurt demand from major customers such as automakers.
CEO Hiesinger has said that a “great deal” had gone wrong at Thyssen, born from the world’s biggest industrial company in the late 19th century, and has promised a fresh start following the management reshuffle.
“But considering the grave deficits it is clear that a credible fresh start cannot end at the management board level,” Hans-Christoph Hirt, director of Britain’s Hermes Fund Managers, a minor shareholder, told German daily Boersen-Zeitung.
$1 = 0.7493 euros Additional reporting by Tom Kaeckenhoff; editing by Anna Willard