Corruption Probe Targets Siemens Staff

Five people, including one former Siemens Communications Group senior executive, have been arrested following police raids that are part of an investigation into corruption at the German giant. The vendor itself is not being investigated, and is acting as a witness in the probe.

Police raided 30 locations, including Siemens offices in the German cities of Munich and Erlangen, as part of the state prosecutor's probe into allegations of fraud by former and current staff working at the vendor's fixed-line equipment business.

Prosecutors in Switzerland are also believed to be involved in the investigation.

Siemens says the amount of money involved is "in the low double-digit million euro range." German media reports suggest the five people, including an unidentified former Siemens board member, are suspected of embezzling €20 million ($25.6 million) by transferring money to offshore companies they had set up.

German media agency Deutsche Presse-Agentur (DPA) reported state prosecutor Christian Schmidt-Sommerfeld as saying the investigation is looking into whether the embezzled funds were being used to pay bribes to win business contracts.

DPA also reported that, in total, 12 people are being questioned in connection with the investigation, including 10 current and former Siemens staff. About 270 staff and tax officials were involved in the raids, which resulted in a large quantity of documents being seized, a police spokesman told DPA.

Siemens says it is "very interested in having the matter completely cleared up. The company is therefore fully supporting the police investigation." In a prepared statement the company added it has "Business Conduct Guidelines that provide company-wide principles for conducting business that are mandatory for all employees. These guidelines include clear instructions for employees to obey the law and are a component of every employee contract."

No further information, including the identities of any of the people being questioned, is being released at this stage.

Siemens Communications is set to be folded into a new joint venture with the networks business of Nokia Corp. (NYSE: NOK) before the end of this year. (See Nokia, Siemens Get OK From EC.)

— Ray Le Maistre, International News Editor, Light Reading