Former Siemens Chief Linked to Illicit Payments | Business| Economy and finance news from a German perspective | DW | 19.04.2008
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Former Siemens Chief Linked to Illicit Payments

A senior manager at German electrical engineering giant Siemens has linked former chief Heinrich von Pierer to suspicious payments in connection with a large government project in Argentina, German media reported.

Symbol photo of euro bills

Siemens corruption saga continues as new allegations surface

Allegations of corruption continue to follow ex-Siemens boss Heinrich von Pierer. After statements from prosecutors in Munich earlier this month had cleared the former head of the concern's supervisory board from corruption charges, new reports are surfacing indicating that Pierer may actually have had a hand or at least knowledge of illicit payments.

Reports published in the Munich-based daily Sueddeutsche Zeitung and the online edition of Der Spiegel news magazine on Saturday, April 19 said von Pierer had been fingered for the first time by a witness in relation to the concern's vast corruption scandal.

According to the news outlets, a Siemens executive told prosecutors in Munich that von Pierer had ordered him and a colleague in 2002 and 2003 to make suspicious payments of some $10 million (6.3 million euros) in connection with a large order from the Argentine government.

Argentine officials involved

Deutschland Wirtschaft Heinrich von Pierer Rücktritt Siemens

Heinrich von Pierer stepped down as head of Siemens supervisory board in 2007

The reports said evidence pointed to bribes paid to officials in the Argentine Interior Ministry under former president Carlos Menem for securing a two-billion dollar contract for a system to produce electronic passports.

The order was cancelled after a change of government, and an extra ten million dollars was allegedly paid through a Swiss consultancy to revive the deal.

Prosecutors in Munich, where the German electrical engineering concern has its headquarters, confirmed to Deutsche Presse-Agentur dpa that they were in contact with von Pierer.

"There was a lengthy conversation at the prosecutors' office at the wish of Herr von Pierer and in the presence of his lawyer yesterday [Friday]," senior prosecutor Christian Schmidt-Sommerfeld said.

Von Pierer, who has always brushed aside any wrongdoing in the long-running Siemens corruption saga, issued a statement through his lawyer denying the latest allegations.

The ex-Siemens boss stepped down from his post in April last year amid an extensive investigation into corruption at the company. Before that, Von Pierer was chief executive of the engineering giant from 1992 to 2005.

Corruption scandal expands

The Siemens company's logo outside an administration building of the German electronic trust Siemens in Munich

Siemens is one of Germany's most prominent brands

Over the past year Germany's largest electrical and engineering concern has struggled with revelations that it created a slush fund to pay bribes in exchange for foreign contracts. Just this past week, seven former executives in Siemens' Greek unit were summoned to testify in a corruption probe focusing on transactions related to the 2004 Olympic Games in Athens.

The Munich-based company is also the subject of a potentially damaging probe by the US Securities and Exchange Commission (SEC) by virtue of the fact that shares in the company are listed in the United States.

Billions of euros in illicit payments

Siemens has acknowledged the existence of illicit payments worth 1.3 billion euros around the world. In Oct. 2007, the company agreed to pay a fine of 201 million euros to put an end to some German legal proceedings.

Officials for the company which makes items from light bulbs and telecommunications systems to power plants and trains said they were cooperating in all investigations and have introduced changes designed to make its corporate structure leaner and more transparent.

Meanwhile German Chancellor Angela Merkel said she planned to disband the country's Innovation Council, headed by von Pierer. The ex-boss had served as technology advisor to the chancellor. Merkel said the council would be replaced by two different institutions, a technical academy in Munich and the German Academy of Science in Halle, eastern Germany.

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