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Corruption Scandal

Siemens To Sue Former Top Executives

German multinational Siemens is expected to launch multimillion euro lawsuits against some of its top ex-managers, according to a newspaper report. The company reportedly accuses the managers of having failed to take action to prevent corrupt practices at the company.

Engineering and electronics giant Siemens is reportedly planning to sue former directors it believes were responsible for failing to prevent what became the largest corruption scandal in German corporate history, according to a major national daily. The company's supervisory board, the Munich-based Süddeutsche Zeitung reported on Tuesday, is expected to make the decision next week to launch legal proceedings against 10 former top executives who sat on the group's board between 2003 and 2006.

According to the newspaper, the top managers -- who include former Siemens bosses Klaus Kleinfeld and Heinrich von Pierer and former financial director Heinz-Joachim Neubürger -- are being accused by the company of grave failures when they ran Siemens, allowing one of the biggest corruption scandals in German corporate history to unfold. Siemens is said to be seeking several million euros in damages from each of the 10 executives.

In May, prosecutors in Munich launched proceedings against former Siemens bosses Pierer and Kleinfeld and several other top executives, who ran the company from 2003 to 2006. The company has admitted it poured €1.3 billion ($2.1 billion) into slush funds, which were used to bribe governments and business partners to win contracts. The actions of around 300 staff and former employees are being investigated, but the company has already acknowledged that corrupt practices were widespread across its many divisions.

But now some of the suspects could also face civil proceedings. According to the newspaper report, the company's new bosses have come to the conclusion -- after a long investigation -- that the former executives bear a lot of blame for the corruption scandal. Over the years they allegedly had received plenty of hints about the slush funds, but failed to take appropriate action. They also allegedly had been warned about grave shortcomings in the company's control systems, without plugging the holes.

The scandal could have particularly severe implications for Siemens because it has triggered an investigation by the US stock market watchdog, the Securities and Exchange Commission (SEC). Siemens, which has been listed on the New York Stock Exchange since 2001, could be slapped with fines as high as $2 billion (€1.3 billion).

maw/afp