Siemens, one of Germany's best-known companies, was pulled deeper into a swamp of alleged corruption on Wednesday with a report that prosecutors had extended a bribery probe to the group's former finance chief. Allegations of widespread corruption and embezzlement at the giant engineering group have been snowballing for months.
The latest development centres on suspicions that executives tried to build up a small trade union as a counterweight to the mighty IG Metall union. After management board member Johannes Feldmayer was arrested Tuesday for his alleged involvement in the matter, a report in the daily Sueddeutsche Zeitung on Wednesday said investigators had now turned their attention to Siemens' former finance chief and a former member of its supervisory board, Karl-Hermann Baumann.
Baumann, Feldmayer and a number of other top managers were suspected of being involved in alleged payments to the head of the AUB labour organisation, Wilhelm Schelsky, Sueddeutsche Zeitung said.
Schelsky, who was arrested last month, allegedly received 15-20 million euros (20-26 million dollars) in bogus consultancy fees, the newspaper continued. Siemens allegedly paid the money to the tiny labour organisation in an attempt to turn AUB into a counterweight to the powerful IG Metall union, the report said. Feldmayer had asked to be relieved of his duties while the investigation was ongoing, and the supervisory had complied with that request, Siemens said.
The Sueddeutsche Zeitung quoted supervisory board sources as saying that Feldmayer's arrest and its consequences would be discussed at an extraordinary supervisory board meeting on Wednesday, called officially to dicuss the timetable for a possible flotation of the car parts unit VDO.
Industry sources subsequently said that the meeting had been called off. But Siemens shares were the biggest losers on the Frankfurt stock exchange on Wednesday, where they were showing a loss of 1.46 euros or 1.80 percent at 79.76 euros as the snowballing scandals increasingly take the shine off Siemens' previously squeaky-clean image.
In fact, the IG Metall union said it was now considering suing Siemens. "It seems that our suspicion that Siemens systematically tried to influence works councils and employee representation is hardening," a union official Michael Leppek told the German news agency DPA. That was punishable with jail sentences, he said. Siemens is also under fire from another high-profile slush-fund scandal, where prosecutors allege that company managers siphoned off hundreds of millions of euros in company money to obtain foreign contracts.
The flurry of different corruption allegations in recent months has prompted chief executive Klaus Kleinfeld to hire an outside anti-corruption expert and a law firm to examine and revise the company's safeguards.
In November, German prosecutors launched a massive probe, raiding the offices and homes of a number of Siemens employees amid suspicions of embezzlement, bribery and tax evasion.
A number of current and former employees at the fixed networks division, including top-ranking managers, have been held for questioning on the matter. Prosecutors allege that the employees concerned are suspected of collaborating to open slush fund accounts abroad and of operating a system to embezzle company money.
Prosecutors put the sum held in the accounts at 200 million euros (266 million dollars) and some of that money may have been used as bribes to obtain contracts abroad. Siemens itself said it had uncovered as much as 420 million euros in suspicious payments as part of the probe.
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