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Siemens ordered by German court to pay €38 million in bribery case

Circuit-breaker with stored-energy spring-operated mechanism for 550-kV during the overvoltage testing at the high-voltage test bay in Berlin, in March 2007.

Siemens AG is Europe's biggest public company and a global powerhouse in electrical engineering and electronics. The company has around 475,000 employees working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of services for individual requirements. Siemens says that it provides innovative technologies and comprehensive know-how to benefit customers in over 190 countries.

Founded more than 155 years ago, the company focuses on the areas of Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In fiscal 2006 (ended September 30), Siemens had sales of €87.3 billion and net income of €3.033 billion, according to US GAAP accounting standard. Siemens was ordered today by a German court to pay €38 million in respect of the profit that Europe's biggest public company made from contracts that involved bribe payments.

The court in Darmstadt made the ruling, as part of a corruption trial focused on a €6 million payment made to managers at companies of Italian utility Enel, by executives of Siemens. Siemens said today that it will appeal the decision of the Darmstadt regional court. The company maintains that the court’s order to forfeit the profits from two orders placed by Enel with Siemens’ Power Generation Group for the supply of power plant equipment in 2000 and 2001 is illegal.

Siemens said that the court’s decision has no basis in law or in fact. Andreas Kley, the former finance director at Siemens’ power generation operation, was found guilty of bribery and breach of fiduciary duty and given a two-year suspended prison sentence for his role in paying out the €6 million sum between 1999 and 2002. Horst Vigener, a former consultant to Siemens, was given a nine-month suspended sentence after being found guilty of aiding the bribery.

Siemens has disclosed that it is being investigated both by the US Securities and Exchange Commission (SEC) and the Department of Justice into allegations the group had operated slush funds and had violated a 1974 US law. In 2006, an investigation by German prosecutors revealed up to €240 million in suspect payments made from its telecommunications operation, prompting the resignation of Klaus Kleinfeld, Siemens Chief Executive. Kleinfeld had headed the telco unit earlier in the decade before he took over the group in January 2005. He disposed of much of the problem by transferring the operation to a new joint venture to be headed by Nokia. (finfacts.com)