Legal News

The Lesser of Two CEO Jobs? Claims of Corruption at Siemens, Alcoa

By Dan Slater

We’re only two days into the workweek, and already we’re two-for-two on current or former Siemens employees in the news, a result of the bribery investigation into the manufacturer that’s been underway for some time. Today, let’s open the book on Klaus Kleinfeld, the former CEO of Siemens and the current CEO of Alcoa.

First, the backdrop: Yesterday, a German court fined Reinhard Siekaczek, a former Siemens manager accused of helping steer $39.1 million in bribes to potential customers in several different countries, and gave him a two-year suspended prison sentence after he was found guilty on 49 counts of “breach of trust.” In 2006, Siemens flagged €1.3 billion in suspicious transactions after German police raided its offices. Siekaczek was the first Siemens exec to go on trial.

With Siekaczek’s conviction in the can, German prosecutors are now pursuing criminal and civil charges against higher-ranking execs. Their next target? Klaus Kleinfeld. According to the WSJ, Munich prosecutors have begun civil proceedings against Kleinfeld (who could also face a civil suit from Siemens itself) and other former Siemens board members on suspicion of failed oversight. Kleinfeld has denied any wrongdoing.

An Alcoa spokesman said, “We think it is best to confirm details of this investigation with the German authorities who are conducting it.”

Yet, it’s not clear what’s worse: to be the former CEO of Siemens or the current CEO of Alcoa. In a rare development back in February, a state-owned aluminum company in Bahrain filed an FCPA suit in Pennsylvania federal court against Alcoa, alleging that, for 15 years, Alcoa overcharged it for alumina, a precursor ingredient for aluminum, apparently by paying kickbacks to a Bahraini “senior government official.”

Full post as published by Law Blog - WSJ.com on July 29, 2008 (boomark / email).