Siemens black money payments exceeded $1.4B, report claims

By Colleen Taylor, Contributing Editor -- 8/14/2007

The fallout from the "black money" scandal at Germany-based technology giant Siemens AG just keeps growing larger.

A law firm hired last month by Siemens to investigate the company’s recent history has reportedly discovered that illicit payments made at Siemens’ highest ranks exceeded $1.4 billion (1 billion euros), according to a report made this week by German newspaper the Sueddeutsche Zeitung.

The reported amount of money uncovered in the probe more than triples previous estimations of the scandal's scope. In November 2006, reports emerged that Siemens had used a network of "black accounts" for bribery around the world; at that time, however, the amount of money estimated was around $265 million. The Munich prosecutor's investigation, as well as related investigations in Liechtenstein and Switzerland, are ongoing, while Siemens had hired U.S.-based law firm Debevoise & Plimpton to conduct its internal probe.

The issue is not just in Germany and its surrounding countries, however: the investigation has widened in the months since to several outposts for the international technology company. 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, while the Japanese Fair Trade Commission (FTC) and the United States' Securities and Exchange Commission (SEC) have both launched investigations into the allegations of multi-million dollar bribes.

An anonymous source cited by the Sueddeutsche Zeitung said that "shocking" amounts of apparently bribery-related payments has thus far been discovered by Debevoise & Plimpton, with almost 900 million Euros of the more than 1 billion Euros of payments being uncovered at Siemens' telecommunications unit.  "It concerns enormous sums," the source inside the company reportedly said.

As news of the black money scandal has spread in the past year and Siemens has been scrambling to refresh its sullied image. In May, Siemens appointed  Peter Löscher, the former president of global human health at pharmaceutical giant Merck and Co. Inc., as its new president and CEO. Löscher replaced Klaus Kleinfeld, who abruptly announced in April his intent to step down from the president and CEO posts as more U.S. authorities joined in the corruption's probe.

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