Legal News

Compliance at Siemens: Putting Out Fires With a Toothbrush Cup?

By Dan Slater

Siemens, Europe’s largest engineering company, is embroiled in what could be the largest corporate bribes-for-business case ever, with €1.3 billion in suspicious transactions flagged by Siemens since German police raided its offices in 2006. In May, Reinhard Siekaczek, a former Siemens manager accused of helping steer $39.1 million in bribes to potential customers in several different countries, became the first Siemens exec to go on trial after agreeing to cooperate with Munich prosecutors.

Today, that cooperation appears to have paid off as a German court fined Siekaczek, 57, about $170,000 and gave him a two-year suspended prison sentence after he was found guilty on 49 counts of “breach of trust.” Here’s the Reuters report; click here for the report from the AP.

“The defendant channeled money into a network of bogus companies…,” presiding judge Peter Noll said in court, adding that employees tapped an uncontrolled system of slush funds when they needed to grease palms for business.

The judge said Siemens’ efforts to fight corruption were incomplete, but that Siekaczek was only a cog in a wheel. “One can assume that Mr. Siekazcek was part of a system of organized irresponsibility that was implicitly condoned” said Knoll, adding that the responsibilities of Siemens’ former head of compliance, Albrecht Schaefer, were too narrowly defined.

“It’s as if you were to equip the fire department with a toothbrush cup to extinguish fires,” he said.

Siemens, which makes everything from wind turbines to trams, agreed in October to pay a €201 million fine to end some legal proceedings in Germany related to the investigation.

Full post as published by Law Blog - WSJ.com on July 28, 2008 (boomark / email).