A spokesman for prosecutors in Bremen told Deutsche Welle Friday the offices of Rheinmetall Defense Electronics and Atlas Elektronik were searched by police seeking evidence in connection with bribery and tax evasion allegations.
"In several places there were raids in which more than 100 officers were deployed," the spokesman said, confirming a report in the Suddeutsche Zeitung newspaper that each of the two companies are suspected of paying bribes totaling $24 million to Greek government officials to acquire U-boat contracts.
Files, computers and hard drives were seized during the searches, he said, but didn't indicate how long it would take to evaluate the information.
A Rheinmetall Defense official rejected the accusations, telling the newspaper they were "baseless."
Meanwhile, the parent companies of Atlas Elektronik -- aviation and aerospace giant EADS and the industrial group ThyssenKrupp -- confirmed a search of its Bremen offices had been carried out.
EADS and ThyssenKrupp purchased Atlas -- one of the world's leading suppliers of electronics for naval forces -- in 2006 from the British defense contractor BAE.
But in addition to the specialized knowledge Atlas held, EADS and ThyssenKrupp may have also acquired some baggage: Prosecutors say the alleged bribes reach back for years.
The Bremen officials said Atlas Elektronik's new owners first discovered the suspect operations during internal investigations carried out in 2010, when payments to a British post office box owned by a Greek company, POI information, were halted.
Atlas informed authorities about the situation at the time, but investigators initially weren't interested, thinking it was out of their jurisdiction. Their interest in the case was rekindled, however, after a 2012 tax audit of Rheinmetall yielded additional information.
Corruption in Germany's submarine business with Greece isn't new -- the Munich public prosecutor's office for years has probed alleged kickbacks on the sale of German U-boats to Athens, Suddeutsche Zeitung reported.
The District Court of Munich in 2011 handed out suspended prison sentences to two former managers of the Essen, Germany, company Ferrostaal after both confessed that former subsidiary MAN Ferrostaal had bribed Greek officials. After the illegal activities were uncovered, Ferrostaal was forced to pay a $200 million fine.
With the millions paid to politicians and civil servants in Athens, Ferrostaal was able to sell two submarines to the Greek navy for more than $1 billion. The U-boats were built mainly in the shipyards of ThyssenKrupp AG.
The Bremen prosecutor told the newspaper he wasn't ruling out the possibility that the alleged bribes from Atlas and Rheinmetall may have been paid within the same context.
There are "some similarities" to the Ferrostaal case, the Bremen prosecutor said.
The 2010 purchase of the subs was controversial in Greece at the time, coming amid deep slashes to non-military domestic spending in the wake of the country's economic crisis and German-led demands for painful austerity measures.
Stelios Fenekos, a vice admiral in the Greek navy, resigned his position in protest, claiming the Greek defense minister's decision to purchase the subs and other decisions were "politically motivated," The Wall Street Journal reported.