As many as ten Siemens executives have been arrested in raids at Siemens offices across Germany last week. Prosecutors are investigating charges of embezzlement and bribery at the company.
Weekend German newspapers report a ‘massive slush fund fraud robbed German engineering and electronics giant Siemens of some USD 128 million, five times the original estimate.’
Newspapers also quote the Munich prosecutors as saying ‘at least this amount was paid out from the company's telephones division in a bid to secure contracts.’
German paper Der Spiegel reported that intercultural specialists are constantly reminding executives that they need to adapt to foreign business practices when doing deals abroad. But certain managers at German engineering giant Siemens appear to have taken the advice of their multicultural consultants too literally - at least when it comes to efforts to secure foreign contracts. According to media reports, several Siemens executives are suspected of bribe paying.
The Munich prosecutor's office said in a statement that a total of ten Siemens employees, plus two acquaintances who were not Siemens workers, are being investigated. The suspects are claimed to have diverted company funds of around €20 million to front companies and bank accounts in Switzerland and Liechtenstein.
"Whether and to which degree these funds were used for paying bribes must still to be investigated," said Munich senior prosecutor Christian Schmidt-Sommerfeld. The investigation had been prompted by an anonymous tip-off and information from Swiss and Italian investigators, he said.
A total of 12 people are being investigated on suspicion of using company money to pay bribes to win contracts. This included a contract for security systems at the Athens Olympic Games in 2004.
The raids on Wednesday involved about 270 tax inspectors, police officers and investigating magistrates who searched sites in the company's headquarters in Munich as well as the German city of Erlangen and sites in Switzerland.
The investigation adds to a difficult period for Siemens which is under fire for its perceived role in the collapse of German mobile phone maker Benq mobile.