court fines former siemens manager over ‘sham contracts’ 
29 July 2008

Munich — Reinhard Siekaczek was sentenced by the Munich Regional Court after a two-month trial . The corruption scandal at Siemens has led to investigations in at least a dozen countries.  “The allegations have been fully proved,” presiding Judge Peter Noll said. “For years, Siekaczek used an impenetrable system of sham contracts, which didn’t allow any control once Siemens money was paid out.”

Siemens, which co-operated with prosecutors, found € 1,3b n of “unclear payments” which were made between 2000 and 2006.   Munich prosecutors are investigating about 300 suspects, including former executives. Siemens’s supervisory board will decide this week whether to seek damages from former managers for not stopping corruption.

Former Siemens CEO Heinrich von Pierer and f ormer c hief financial o fficer Heinz-Joachim Neubuerger declined to testify at the trial, invoking their right not to incriminate themselves.  “Siemens wasn’t on trial here, but it would have been good if those who were company leaders at the time had resumed their leadership also in front of this court,” Noll said.  Siekaczek worked at Munich-based Siemens’s former ICN unit until 2004 and was charged with improper use of funds. He co-operated with prosecutors and admitted that he organised a system to conceal bribes.

The scheme was used to extract about € 50m from the company’s regular accounts between 2002 and 2004, the court said.  “I’m glad this is all over now,” Siekaczek said when he left the court. His lawyers and the prosecutors waived their right to appeal immediately after the verdict was delivered.   Prosecutors had sought a two-year suspended sentence and a fine of € 180000 last week during closing arguments.  

The court found Siekaczek guilty of 49 counts of improper use of funds. During the trial, prosecutors had dropped nine counts regarding € 3,3m of payments. Siekaczek was tried for improper use of funds only, after bribery allegations were dropped last year.

Karin Matussek,  www.businessday.co.za