U.S., Japan authorities join in Siemens' ‘black money’ probe

By Colleen Taylor -- Electronic News, 2/2/2007

The effects of Siemens AG's "black money" scandal have now spread far beyond its native Germany.

The Munich-based company disclosed this week in an interim Q1 report that the Japanese Fair Trade Commission (FTC) and the United States' Securities and Exchange Commission (SEC) have both launched investigations into allegations of multi-million dollar bribes at the company's highest ranks.

Munich public prosecutors are currently conducting an investigation of current and former employees of Siemens on suspicion of embezzlement, bribery and tax evasion. In November, reports emerged that the company used a $265 million network of "black accounts" for bribery around the world after more than 200 police raided a network of offices and private homes, carting off 36,000 pages of documents. In this week's interim report, Siemens admitted that the Munich prosecutor's investigation, as well as related investigations in Liechtenstein and Switzerland, are ongoing. Meanwhile, in Greece, public prosecutors are also conducting an investigation with regard to a former officer of Siemens Greece and have questioned the CEO and another employee of Siemens Greece as witnesses, the company disclosed.

In December, the Japanese FTC searched the offices of more than 10 producers and dealers of healthcare equipment in connection with an investigation into possible anti-trust violations, Siemens said. In addition, Siemens admitted, the U.S. Department of Justice is conducting an investigation of possible criminal violations of U.S. law by Siemens in connection with these matters. Siemens also said that the SEC's enforcement division is conducting an informal inquiry into the matters at this time.

For its part, Siemens has launched into full-on spin control. The company said that its operating activities may well be negatively affected due to the investigations. In December, Siemens put in a motion several initiatives with an "anti-corruption" focus in an attempt to clean up its sullied image.