Union Bribery Trial Begins for Siemens | Business| Economy and finance news from a German perspective | DW | 24.09.2008
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Union Bribery Trial Begins for Siemens

A bribery scandal at German conglomerate Siemens began Wednesday as a former board member went on trial for breach of trust by misusing millions of euros. It's the first of several trials at the Munich-based company.

Siemens banners flying outside the company's Munich headquarters

Siemens is accused of misusing millions in bribery and slush fund scandals

Wilhelm Schelsky, former leader of the conservative AUB union, went on trial for fraud and tax evasion on Wednesday, Sept. 24. The court was told he filed 44 invoices for 30.3 million euros ($47 million) plus tax for work he never carried out.

Also on trial at the state court in Nuremberg was Johannes Feldmayer, a former member of the main Siemens board. He was accused of misappropriating corporate funds. He was arrested last year while still a member of the Munich-based giant's executive board and spent nine days in police custody.

The double case is the newest of a series in which prosecutors have revealed how bribery was rife at Siemens, with executives hiding the expenditure under innocuous descriptions in the corporate accounts.

Other departments spent large sums paying kickbacks to secure contracts in Greece, Italy and elsewhere, according to prosecutors.

Misused millions

Money being moving from one hand to another

Schelsky is accused of embezzling funds given illegally to him by Siemens

Executive board member Feldmayer signed a contract with Schelsky in 2001 to pay 2 million euros annually. On paper, this was mainly for union-operated training courses, but the indictment said Feldmayer's actual purpose was to weaken the IG Metall union by promoting AUB.

IG Metall is Germany's principal industrial union and holds seats on the Siemens supervisory board. The tiny AUB, which represented non-militant Siemens staff, adopted a pro-business stance.

"When they signed the contract, the two defendants were of one mind that Schelsky did not have to perform what was officially agreed to, but that the fees were to be for the expansion, preservation and cultivation of the AUB," prosecutor Antje Gabriels-Gorsolke told the court.

She said that by 2006, Schelsky had begun diverting some of the funds to his own private needs, to his own business interests and to sports sponsorship.

Juergen Lubojanski, representing Schelsky, told reporters outside the court that he would show that "much" of the prosecution case was not proven.

Widespread corruption

In a separate investigation, the 161-year-old firm is also engulfed in a slush-fund scandal, in which the company has acknowledged that up to 1.3 billion euros may have been spent on bribes to win foreign contracts.

The conglomerate found the practice was widespread across its numerous divisions. Prosecutors are investigating around 300 people in connection with the affair. It led to the resignation of a string of top Siemens executives, including chief executive Klaus Kleinfeld and his long-term predecessor and chairman of the board Heinrich von Pierer.

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