Monday, November 20, 2006

Siemens Under Fire in Corruption Scandal

A dozen former and current Siemens employees are being investigated for using bribes and embezzling millions in order to win company contracts.

A massive corruption scandal at the fixed line telecoms unit of the Munich-based engineering and electronics giant Siemens could involve more than 100 million euros ($128 million), according to reports in German weekly Focus magazine over the weekend.

The magazine said in its online edition that investigators had found 40 million euros in the bank account of a Siemens executive in Greece and another 40 million euros in Austria. Even the offices of Siemens chief executive Klaus Kleinfeld have been searched, according to newspaper reports.

Slush fund to bribe contractors

Prosecutors are investigating whether the money was part of a slush fund used to bribe overseas contractors to place orders, including a contract for security systems at the 2004 Olympic Games in Athens.

A former Siemens board member and four other employees were taken into custody following police raids of company headquarters, more than 30 other offices, and in private homes on Wednesday.

The five are among a dozen people suspected of embezzling 20 million euros, according to senior prosecutor Christian Schmidt-Sommerfeld. According to reports in Spiegel Online, two top executives, Michael Kutschenreuter and Andy Mattes, who were board members at Siemens COM, the fixed-line communications division, are among those being investigated.

Raid involved hundreds of inspectors

The raids involved about 270 tax inspectors, police officers and investigating magistrates who searched sites and seized documents at company headquarters as well as in the German city of Erlangen and offices in Switzerland.

The dozen suspects are being investigated for using company money to pay bribes in order to win contracts, channeling cash mainly through Swiss bank accounts, and transferring the embezzled funds to offshore firms via dummy companies.

The German daily Süddeutsche Zeitung reported on Monday that a Siemens spokesperson confirmed the company had known about the accusations for almost a year and had launched its own probe into the corruption scandal.

Siemens appointing ombudsman

On Thursday, Siemens said that it was revising its internal auditing procedures as a result of the affair and was also creating the position of a full-time ombudsman to whom its employees could report any suspected irregularities in the future.

The investigation adds to a difficult period for Siemen, which has been under fire for its perceived role in the collapse of German mobile phone maker BenQ, and is the latest in a series of corruption scandals that have plagued major German businesses recently.

Former Volkswagen board member Peter Hartz, who advised former chancellor Gerhard Schröder over the labor reform package that bears his name, was indicted just last week for sanctioning illegal bonuses paid out to his mistress and former heads of VW's workers' council.

DW staff/dpa/AFP (df)

Deutsche Welle 11/2006


At 11:54 pm, Anonymous Anonymous said...

It seems to me that Siemens is also involved in possible bribes in Poland. I someone would closer look at the tender contracts for inteligent traffic solutions in the cities of Warsaw, Krakow and Lodz corruption may surface.

At 1:03 pm, Anonymous Anonymous said...

In trust and goodwill. My name is Kevin ....... and I am a native of Canada. In August of 1990 I travelled to Poland for the first time as a guest of others. I saw that there were huge opportunities to do business. I was told that there were at least some 2,000 villages without phones. I also had seen across Europe the all too often poor,lousy monopolitistic phone service that was given by the state phone companies of Europe. Frankly I always wondered why some federal officials allowed the companies in Europe to charge as much as they did for their phone service? After all when people cannot afford a phone or do not have access to a good phone system they do not have the same kind of access to medical services do they? I will always remember as an exchange student to Europe seeing families lock up their phones in the 1970's? So in 1990 I started working on the idea that Poles should have digital wireless as a first communications piece of equipment. Some others in the major telco companies said that kind of idea for Poland was not possible, that digital wireless as I sought to advance in trust did not work, that it was a crazy North American idea? Some credited me with some work in writing. Others told me that bribes were being paid, others got work? So maybe some more of what maybe went will finally come out? I say this without malice, without prejudice as someone who gave evidence of bribery to the officials in Europe and to the police in Canada? Yes, my Canada where reportedly the world's largest mining fraud in a gold case some say was orgnaized, and the police of Canada did nothing it seems to some? So we should thank the prosecution authorities in Munich for trying to see what kinds of things may have gone, are going on in those who seek to do good works can do so...


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