Corruption Scandal New Documents Create New Problems for Ex-Siemens Chairman

Newly surfaced memos are creating additional pressure for former Siemens Chairman Heinrich von Pierer. According to information obtained by SPIEGEL, he may have already been aware of systematic corruption at the German multinational firm as far back as 2004. One witness is claiming that Pierer may have participated in bribes himself during the 1980s.

What did Heinrich von Pierer know? Just prior to the Siemens supervisory board meeting planned for April 29, the former chairmen is on the defensive again. Previously unknown documents are stirring up the suspicion that Pierer may have been informed early on about possibly systematic corrupt practices at the company.

Heinrich von Pierer: Was evidence not taken seriously or just ignored?

Heinrich von Pierer: Was evidence not taken seriously or just ignored?

Foto: REUTERS

Previously unreleased memos from the former head of the company's compliance department, Albrecht Schäfer, were allegedly distributed in 2004 and could become a smoking gun in the case. The report, written by Schäfer was meant to inform Pierer and other members of the executive board about a ruling made by an investigative judge in Milan, who suspected Siemens had secured the sale of turbines to the energy utility company Enel through bribes.

Compliance chief Schäfer cites a ruling from the investigative judge noting: "Especially the … existence of slush funds at Siemens show that oversight practiced by Siemens was totally inefficient and that the company, at the very least, viewed the payment of bribes as a possible corporate strategy." In his memo, Schäfer asked executives to "take note" of the information, and Pierer was included on the distribution list. He also sent the report to Chief Financial Officer Heinz-Joachim Neubürger and personnel chairman Jürgen Radomski as well as the then-supervisory board chief Karl-Hermann Baumann.

In an even earlier memo, dated April 29, 2004 and sent to Pierer and other members of the board, the anti-corruption expert warned of the danger that the US markets regulator SEC could possibly intervene over the Enel case. Today, the SEC is indeed investigating the company.

SPIEGEL was unable to reach Pierer for comment. Neubürger said he could not comment because he was on a trip aboard. Baumann also made no statement. Former personnel chief Radomski said the board commissioned a law firm in 2004 to conduct an internal investigation, but the company was never able to confirm the bribe allegations in its probe. However, the investigation was closed without interrogations of any of the Siemens employees in Italy suspected of having been involved in the Enel case.

The new memos first emerged at Siemens in recent days. According to the former compliance chief's attorney, her client already offered to share what he knew with internal Siemens investigators at the start of 2007. However, she claims the company had "no interest in his testimony" during the first half of the year. She says they "either weren't taken seriously or people just didn't want to hear" what he had to say. She claims a Siemens attorney rebuffed his effort to provide information.

Other new documents that have surfaced concern possible links to Pierer on the payment of commissions in what has become the biggest bribing business in Siemens' history. During the construction of two nuclear power plants in the Iranian city of Bushehr -- a project valued at 8 billion deutsche marks at the time -- the company was expected to pay 400 million marks during the 1970s to a business partner connected to the former Shaw who agreed to grease the wheels to push the project through.

Ultimately, the man alleged that only 266 million of the agreed 400 million deutsche marks was paid him, in a series of payments that would finally cease in 1987. Initially, Pierer was a company lawyer, but later he was a salesmen for the Siemens subsidiary KWU, which had direct responsibility for the project. The businessman, who now lives in Geneva, wrote a letter to Pierer accusing him of having "orchestrated" corruption even during the Bushehr project and of having known about kickbacks paid to other Siemens employees. The man, a Persian, claims that Pierer came to personally deliver commission checks to him in Geneva in 1982.

In the course of their investigation, state prosecutors in Munich have already uncovered documents suggesting that money from a slush fund in the company's Com communications division was paid in one instance to a Berlin detective. He had been hired to investigate two members of the IG Metall union works council who were creating trouble for the company. The claim is being made by a man called Reinhard S., who is believed to have organized secret accounts for the company.

When asked, Siemens said it would not comment on the incident.

Since 2006, Siemens has been plagued by the biggest corruption scandal in German corporate history. The company discovered that its employees had used slush funds to bribe clients to the tune of more than a billion euros in order to win new business. The scandal forced the resignations of former Siemens CEO Klaus Kleinfeld and former Chairman Pierer.

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