MUNICH (CN) – A former Siemens manager organized bribes to win foreign contracts, a German court ruled in the first trial stemming from an investigation of corruption at Europe’s largest engineering company.
The Munich court gave Reinhard Siekaczek, 57, a two-year suspended prison sentence and a 108,000 euro ($170,000) fine. Siekaczek had worked in Siemens’ telecommunications equipment division until 2004, and there set up a system of paying funds into off-books accounts to use as bribes for winning foreign business. The money-skimming operations forced the company’s business partners to pay as much as 30 percent more than normal.
Siekaczek was found guilty on 49 counts of misuse of funds.
During the eight-week trial, he admitted to concealing funds, but claimed it was under orders from his superiors. Judge Peter Noll said that the company likely condoned the bribery network and that its internal controls failed to stop the corruption.
An estimated 1.3 billion euros ($2 billion) were paid into slush funds between 2000 and 2006, according to investigators. The suspect payments were recorded as fees.
The scandal prompted former CEO Klaus Kleinfeld and Chairman Heinrich von Pierer to resign in April 2007. They have been charged with ineffective supervision, punishable by fine, and Siemens is expected to file suit against them this week for failing to detect and put a stop to bribery operations. Siemens’ and other investigations revealed slush funds in other units throughout several countries, including transportation and power units.
Three hundred other former and current Siemens employees are also being investigated.
Bribery charges against Siekaczek were dropped last year.
Last October, Siemens was ordered to pay 201 million euros due to the bribery payments, of which Siekaczek’s operations were a part.