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Business

Former Siemens CEO Won't Testify in Corruption Trial

Siemens allegedly paid tens of millions or euros in bribes during Heinrich von Pierer’s tenure as CEO. As the first corruption and bribery trial gets underway, Von Pierer’s attorney said his client won't testify.

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The affair has cast a cloud on engineering giant Siemens

Reinhard Siekaczek, a former head of Siemens' fixed telephone unit ICN, is on trial for allegedly paying kickbacks amounting to some 53 million euros ($82 million) over three years. Siemens is Europe's largest engineering firm with headquarters in Berlin and Munich.

Siekaczek, who has already admitted to setting up slush funds, has been charged with 58 counts of breach of trust, each of which could bring a jail sentence of up to five years. Siekaczek is not accused of personally pocketing any of the money.

During that time, von Pierer was his boss. While the former Siemens head said he would take responsibility for things that happened during his time at the helm, he would not testify in the Siekaczek case, which opened in the southern city of Munich in May.

"I assume that the court will forego his testimony," Pierer's lawyer Winfried Seibert was quoted by the Financial Times Deutschland as saying in its Thursday, June 12 edition.

Kickbacks were commonplace

Former siemens CEO heinrich von pierer

Von Pierer refuses to take the stand

The Siekaczek trial marks the beginning of criminal proceedings against Siemens managers suspected of having taken part in the kickback system. In all, Siemens has acknowledged that 1.3 billion euros disappeared into various funds following an internal probe that began in late 2006.

Investigators have since determined that paying kickbacks to win foreign contracts was a widespread practice among Siemens' various divisions.

A retired employee testified earlier this week that paying bribes at Siemens AG was a part of normal business for years. The witness, whose identity was withheld by the court, testified that he managed secret Austrian bank accounts and made bribery payments ordered by superiors, including Siekaczek.

Von Pierer could face fine

Siemens AG building in Munich

Investigations into corruption were launched in 2006

Some 300 suspects are being investigated by Munich prosecutors in an affair that led to the resignation of both von Pierer and former CEO Klaus Kleinfeld.

Von Pierer, a high profile German industrial figure who was an advisor to Chancellor Angela Merkel, headed Siemens for 13 years. Prosecutors are not expected to charge him with a criminal offense, although he could be fined up to 1 million euros for dereliction of duty for failing to supervise the company's affairs.

German law required executives to put "practicable organizational measures" in place to prevent crime, according to prosecutors.

There have been allegations that Pierer was warned about irregularities long before they became public.

Siemens employs around 400,000 people around the world and makes a broad range of products including household appliances, medical equipment, trains, turbines and power stations.

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