Siemens Slush Fund Scandal Broader Than Expected | Business| Economy and finance news from a German perspective | DW | 08.11.2007
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Siemens Slush Fund Scandal Broader Than Expected

Siemens revealed on Thursday, Nov. 8, that an internal probe had uncovered questionable transactions totaling 1.3 billion euros ($1.9 billion) -- nearly three times the amount previously estimated.

A Siemens employee works on a turbine in the Görlitz factory

Orders are up at Siemens, but taxes and fines are weighing the company down

Earlier reports put the estimated amount linked to the scandal at 449 million euros and said the corruption was limited to the electronics giant's former communications branch. The new sum, however, is said to include other Siemens division as well.

Siemens has already dismissed 140 employees and an additional 330 have received penalties of other kinds, CEO Peter Löscher said Thursday.

"We are glad that we have taken another important step in clearing up the past," he said. "We have to do business as well and as cleanly as we can."

External auditors had found questionable sums totaling more than 1 billion euros in August, but Siemens refused to comment at that time, saying their internal probe was still underway.

Most of the money is reported to have disappeared into secret bank accounts for use as bribes in securing contracts outside Germany, the Munich-based conglomerate said.

Revenues rise despite scandal stress

Siemens CEO Peter Löscher

CEO Peter Löscher presented his company's progress report in Munich

The company's confession coincided with the release of a relatively bright quarterly report on Thursday.

Revenue grew by 9 percent to 20.2 billion euros while operating profits rose 166 percent in the last quarter of the 2006-2007 fiscal year, which ended on Sept. 30, Siemens said in a statement. Growth was particularly strong in the Asia-Pacific regions.

At the same time, however, the group posted a net loss of 74 million euros, compared to the same period last year. The loss can be attributed to 1 billion euros in taxes on the sale of its VDS subsidiary to the Continental automotive group as well 201 million euros in fines in connection with the bribery scandal.

Löscher is also scheduled to meets with officials from the US Securities and Exchange Commission. The Wall Street watchdog may also impose hefty finds on the company, which is listed on the New York Stock Exchange as well as in Frankfurt.

Investors, however, seemed pleased with the company's transparency. Siemens shares jumped 5 percent on Thursday in Frankfurt trading.

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