Mumbai: German engineering giant, Siemens, rocked by criminal and internal investigations into suspected organised bribery disguised as payments to business consultants, announced last month it was extending its own investigation into the matter.
Now, internal investigators at the company have uncovered over €1 billion ($1.4 billion) of dubious payments at Siemens' telecoms and turbines divisions, some dating as far back as the early 1990s. Almost €900 million euros worth of such payments have been uncovered at the telecoms unit alone. This could potentially snowball into Europe's largest corruption scandal.
The company is now apparently reviewing more business consultant agreement payments than before, and is looking at similar payments at its turbines, power distribution, transport, medical and industrial services units. Previously, Siemens had announced its investigations into some €420 million euros spent on bribes to win telecoms equipment contracts.
The scandal around these investigations had forced the resignation of Siemens' chairman and chief executive earlier this year.
According to the latest information about the corruption scandal, which has been plaguing the German company, its power plant division too was paying bribes. The Hotel Michelangelo on Via Scarlatti in Milan, one valued mostly for its inconspicuousness and unimaginative functionality, was the ostensible setting for a meeting on Jan. 15, 2000 between two managers from Enel, the Italian energy provider, and two business partners from the Siemens.
It was during this meeting that the issue of greasing palms was discussed, if Siemens' power plant division was to get the contract for five gas turbines worth €132 million ($180 million). By the time the meeting concluded, Siemens was to transfer €2.65 million ($3.6 million) into bank accounts of the two Italians, in Monaco and Lugano - via a firm in Abu Dhabi called Middle East Energy & Industrial Services. In return, Siemens would receive the lucrative contract.
The dubious transaction has since been atoned for; The district court of Darmstadt sentenced Siemens advisor Horst V. to nine months probation for abetting bribery, and the former director of Siemens' power plant division Andreas K.,the man who approved the payments, to two years probation.
Seimens' telecommunications division was not the only one to maintain a slush fund for years. The power plant division too kept undocumented cash at hand. Reports indicate that bribe money paid by Siemens could possibly total well over a billion euros.
Siemens has been in the midst of a corruption scandal since last year's discovery of €420 million being fraudulently entered on to the company's books as payments for consulting services, attributed linked to the group's telecoms equipment division, which were in fact paid towards bribes to secure orders. The biggest casualties of the scandal have been Klaus Kleinfeld, the former chief executive, and Heinrich von Pierer, the chairman, who tendered their resignations in the wake of the discovery.