The corruption scandal at German engineering giant Siemens just keeps getting murkier, as the company reveals that corruption at the conglomerate was bigger in scale and more widespread than previously disclosed.
Presenting its results for the 2006/2007 business year on Thursday, the Munich-based company revealed that auditors had uncovered additional dubious payments of over €857 million ($1.26 billion). The payments were found in divisions other than the former communications division Com, until now the only part of the company where such payments had been found. The dubious payments are suspected of having been used for slush funds and bribery in countries outside Germany.
The new revelations raise the total of known dodgy payments to €1.3 billion. Siemens had already discovered and disclosed questionable payments in the Com divisiontotaling €449 million. The investigation had since been extended to other company divisions. Siemens said Thursday that, in the fourth quarter of the business year, it had completed "as far as possible" its investigations into bribery and corruption in other parts of the company for the business years 2000 to 2006.
Siemens' new CEO, Peter Löscher, who assumed the company's helm in July after his predecessor Klaus Kleinfeld resigned over the scandal, has said he wants to take further measures to clear up the affair. Siemens employees were recently offered an amnesty that runs until the end of January 2008 under which staff who come clean about corruption do not need to fear being fired or being sued by the company for damages. Kleinfeld himself has denied any misconduct and has not been investigated. The company said Thursday that it had taken disciplinary action against around 500 employees in the last year.
The company could face severe punishment from the Securities and Exchange Commission (SEC), the US stock market watchdog. It is also facing hefty back taxes. Siemens originally wrote the slush and bribe funds off on its taxes, but it will now be retroactively counted as revenues. Siemens has already been forced to pay €178 million in back taxes relating to the Com corruption investigation, and it now faces further charges of €339 million over the latest revelations.
Siemens also said Thursday that investigations are now being conducted against former and current Siemens executives in Switzerland, Italy, Greece, Hungary, China, Indonesia, Norway, Israel and Russia, as well as in Germany. A Munich court recently fined the company €201 million in a case related to the suspicious payments in its Com division.
The new revelations threatened to overshadow otherwise respectable results. The company reported that sales had risen to €20.2 billion in the fourth quarter, an increase of 9 percent compared to the prior-year period, when sales were €18.5 billion. However, tax expenses of around €1 billion related to the sale of its VDO auto electronics unit to Continental AG in July resulted in the company posting an overall loss of €74 million in the fourth quarter, compared to a profit of €148 million in the same period of last year.