Slush fund scandal deepens at Siemens

Slush fund scandal deepens at Siemens

Siemens is in trouble following investigations into bribery, embezzlement and tax evasion.

It has lowered its expected net profit for 2006 by €80 million; another former executive has been arrested; and the total cash used in suspect payments has more than doubled from €200 million to €420 million.

Thomas Ganswindt, a main board executive of Siemens until September last year, has been arrested after police interrogation with fears he might flee Germany. He joins several others in custody.

The suspect payments were used to hire people as external "consultants" and pay them to help get contracts in the fixed line telecommunications area awarded to Siemens. Bribes were also said to be paid to purchasing officials in Italy and elsewhere via shell companies in Puerto Rico and other locations. Other money was simply embezzled, according to what is known of the current investigations. Ganswindt allegedly knew of some of these suspect transactions.

The history of the affair has become clearer through Siemens' own actions.The current investigation grew out of an anonymous complaint and requests for judicial assistance from Switzerland and Italy.

Bank accounts in Geneva, Switzerland, held by a former officer of Siemens Greece were seized in August 2005. The company became aware of the seizure at the end of 2005 having been notified by both the officer and the financial institution in which the accounts were held. As part of its internal investigation, the company filed a civil action in Greece against the officer on 14 November,, 2006.

Then, in June 2006, the company also became aware of the existence of an escrow account in Lugano, Switzerland. In July 2006, the trustee was requested to provide documentation of the account and to transfer the funds to the company: The account was seized prior to receiving the funds.

On March 30, 2006, the premises of Intercom Telecommunication Systems in Switzerland (Intercom), a subsidiary of Siemens, were searched by Swiss prosecutors. The company subsequently learned that, via Intercom, so-called Business Consultant Agreements were processed directly or indirectly through intermediary companies. Intercom currently finds itself in liquidation. It has been established that Intercom made payments to the above mentioned bank accounts.

Investigations are ongoing to determine the rightful owner of the accounts in Geneva and Lugano.

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Tags siemensbriberyganswindtintercomtax evasionslush fund



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