Siemens fraud probe widens: WSJ
SAN FRANCISCO (MarketWatch) -- A criminal probe into alleged fraud at Siemens AG is widening, according to a media report Wednesday.
German prosecutors said they had uncovered €200 million ($257 million) in suspicious transactions, 10 times the amount they said they had uncovered last week, The Wall Street Journal reported in its online edition. See Wall Street Journal story (subscription required).
German authorities also said they jailed two more employees of Siemens's telecommunications unit, bringing to six the number of people under arrest, according to The Journal, and said, a "band" of individuals had engaged in repeated fraud through secret bank accounts set up in other countries.
German prosecutors said last week that they were focusing on 12 suspects, 10 of whom were current or former Siemens employees, The Journal said. The prosecutors said the alleged fraud dated to 2002 and had continued until recently, according to the report.
More than 200 police in Germany raided about 30 offices and residences of employees on Nov. 15 as part of an international investigation into alleged embezzlement and possible bribery at Siemens, Europe's largest engineering company by sales, The Journal said. At the time, they said they had uncovered about €20 million in questionable transactions, according to the report.
Authorities are trying to determine where the money went, according to Christian Schmidt-Sommerfeld, head of the prosecutors' office in the southern German city of Munich, The Journal reported.
Police have completed their search of Siemens's offices after seizing 36,000 documents, and a team of detectives is in the early stages of reviewing the evidence, The Journal reported Schmidt-Sommerfeld said in a telephone interview.
German authorities are working in conjunction with investigators in Italy and Switzerland, and trying to determine how far up the corporate ladder the alleged fraud traveled, The Journal said.
German prosecutors said last week that they suspected the funds in question were used to pay bribes to secure business contracts, according to the report.
A spokesman for Munich-based Siemens reiterated Wednesday that the company is cooperating with German authorities and is eager to get to the bottom of the matter, The Journal said, adding that Siemens has attributed the alleged fraud to "individual acts" in its fixed-line telecommunications business.
German authorities searched the offices of Klaus Kleinfeld, the chief executive, and other members of Siemens's management board last week as part of the probe, The Journal reported, adding that Kleinfeld is being treated as a witness, not a suspect.
German and Italian prosecutors also have confirmed that Michael Kutschenreuter, the head of Siemens's real-estate division and former chief financial officer of the telecommunications unit, was arrested last week, The Journal said.
In a parallel investigation in Switzerland, a federal prosecutor there said three suspects are under investigation, but none has been arrested, The Journal said.
The Swiss investigation began in mid-2005 after a local bank reported suspicious transactions to Switzerland's money-laundering agency. Prosecutors say they have frozen more than €10 million in connection with the case, The Journal reported.
Italian prosecutors told The Journal this week that they suspect fraud dates back further and wasn't confined to the telecommunications division, according to the report.
They are focusing on Austrian bank accounts controlled by a Siemens official, Karl von Jagemann, whom they suspect directed bribery-funding activities from the mid-1990s until earlier this month, The Journal said.
Mr. Von Jagemann was arrested last week and is suspected of fraud, embezzlement and money laundering, The Journal said, citing Cuno Tarfusser, senior prosecutor in the northern Italian town of Bolzano. Italian investigators say their inquiry dates to 2004, and they are focusing on bank records involving the equivalent of more than €60 million, The Journal said.
Tarfusser said Siemens officials have repeatedly attempted to block his bribery investigation by filing court motions in Austria to stop investigators from accessing data from bank accounts in Innsbruck, The Journal said. A Siemens spokesman said Wednesday he had no knowledge of such attempts, according to the report.
Italian investigators say some of the transactions they are investigating follow a pattern, according to The Journal.
Consulting contracts were signed by senior Siemens officials for work that was never done, The Journal said it was told by investigators, and payments were then transferred through shell companies registered in offshore locations such as the Channel Islands and Puerto Rico.
In a separate case, prosecutors charged two former employees of Siemens's power-generation unit in March with offering €6 million in bribes between 1999 and 2002 to secure contracts from Italian gas companies, The Journal said, adding that case is pending in a German court.
