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German engineering giant Siemens has said an internal audit had uncovered as much as 420 million euros ($554 million) in suspicious payments as part of the ongoing probe into an alleged bribery and embezzlement scandal.
Siemens is Europe's largest electronic company
On Tuesday, finance chief Joe Kaeser said not all of the newly uncovered payments had necessary flown into alleged slush funds. They were non-taxable consultancy payments that were being regarded as suspicious at the moment and would be investigated further, Kaeser said.
Investigators in Germany, Switzerland and Italy are examining the alleged embezzlement of around 200 million euros of Siemens' money, which may have been siphoned off into overseas funds as possible bribes for contracts.
The office of Siemens' CEO Klaus Kleinfeld was also searched by prosecutors
Late Tuesday, the Munich prosecutor's office said that Thomas Ganswindt, former chief executive of Siemens' information and communications unit, had been placed in temporary detention, bringing the scandal to the highest levels of the company.
Ganswindt had left the company at the end of September this year. He had been appointed to the managing board of Siemens in December 2002 and to the corporate executive committee in October 2004, when he was charged with supervising telecommunications activities.
He left Siemens in late September to become head of the Elster Group, which manufactures meters for the gas, water and electricity industries.
According to the Web site of German newsmagazine Der Spiegel, Ganswindt was implicated by former colleagues, who during questioning by officials said that he had known about and participated in the alleged slush-fund system.
Late Monday, Siemens announced that it was restating its full-year earnings to take into account additional tax charges connected with the slush-fund probe.
The changes to accounts involved additional deferred and current income tax charges totaling 168 million euros over a period of approximately seven years, the Munich-based company said.
The changes meant Siemens net profit for the 2006 fiscal year, which ended on Sept. 30, would be corrected down to 3.033 billion euros from 3.106 billion euros reported when it released its annual results in November.
Siemens seeks external help
Siemen's has hired external help to find compliancy gaps
On Monday, Siemens announced it had hired an external firm to advise on its internal compliancy.
Helped by independent auditor KPMG, the international law firm Debevoise & Plimpton LLP is to conduct an independent and comprehensive investigation of the company's compliance and control system.
"Siemens tolerates absolutely no illegal or irregular conduct by employees -- and I really mean zero tolerance," Chief Executive Klaus Kleinfeld said in a statement.
Siemens also named Michael Hershman, co-founder of the anti-corruption organization Transparency International, as its compliance adviser. The Berlin-based organization had threatened to terminate Siemens membership in light of the fraud allegations.