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Siemens investigated by SEC, DoJ, as it loses CEO
By Suzanne Deffree, News Editor -- Electronic News, 4/27/2007
Just hours after announcing it is losing its CEO, Siemens AG reported Thursday that the Securities and Exchange Commission (SEC) is now officially probing it in allegations of bribery and that the United States Department of Justice (DoJ) is also conducting an investigation of possible criminal violations by the Germany-based company of U.S. law.
The company’s written statement on its CEO’s exit simply stated: “Dr. Klaus Kleinfeld, President and CEO of Siemens, has announced that he is not available for a renewal of his contract which expires on September 30, 2007.” The European engineering giant gave no further details on Kleinfeld’s exit, which came as a surprise as the company also reported positive quarterly results Thursday with revenue up 10 percent in its fiscal Q1 to $28 billion (20.6 billion Euro) quoting Kleinfeld in its statements and featuring his photo on investor relations pages.
Kleinfeld joined the company in 1987 and was named CEO in January 2005, becoming Siemens’ 11th CEO in its 160-year history. His exit follows the resignation of company chairman Heinrich von Pierer just last week.
Siemens’ trouble started in November 2006 as reports began to emerge that the company used a $265 million (200 million Euros) 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. Munich police reportedly uncovered suspicious payments made mostly through Swiss and Austrian accounts, and at least six employees have been arrested. Kleinfeld’s offices were also raided.
The company went into “spin control” in December, in an attempt to save its sullied reputation. Part of that was the engaging of Debevoise & Plimpton LLP (Debevoise), an independent external law firm, to conduct an independent investigation to determine whether anti-corruption regulations have been violated and to conduct an independent assessment of the compliance and control systems of Siemens.
Siemens reported Thursday that the Debevoise investigation is still underway. Siemens also said that because of the ongoing status of its own analyses and the SEC and DoJ investigations, it has not recorded any change in tax assets and liabilities. It reminded, however, that it may have to in the future, dependent on what the investigations find. Siemens further reminded that it cannot exclude the possibility that criminal or civil sanctions may be brought against it or against certain of its employees in connection with possible violations of law.
