Last updated: January 20, 2011 12:34 pm

Former Siemens executive in court over scandal

Corporate Germany’s largest ever bribery scandal came back to the fore when the first trial against a former Siemens executive board member began at a Munich court.

German prosecutors are accusing Thomas Ganswindt, once a contender to become Siemens chief executive, of tax evasion and neglecting his supervisory duty in relation to the wide-ranging corruption scandal at Europe’s largest engineering group by sales.

Michael Rosenthal, Mr Ganswindt’s lawyer, said the former Siemens manager had not committed any crime.

The trial against the 50-year-old manager was adjourned until next week only minutes after it opened on Thursday, in order to consider a motion by the defence to bring in an additional judge.

In the scandal that surfaced in 2006, prosecutors and Siemens’ internal investigation found some €1.3bn of suspected payments by managers to officials around the world to win contracts.

The allegation of wide-scale bribery led to the departure of almost the entire top management team, and cost Siemens in excess of €2bn in fines, legal and advisory payments.

During his time on the management board, Mr Ganswindt has been responsible for Siemens’ telecommunications unit, one of the areas most affected by the widespread practices to pay bribes.

Mr Ganswindt, who was briefly held in detention after the scandal erupted in late 2006, has denied that he knew of bribery at Siemens.

The group has sued him for €5m ($6.7m) and Heinz-Joachim Neubürger, Siemens’ former chief financial officer for €15m in damages for failing to stop the corruption. Mr Neubürger has denied any wrongdoing.

Several other former members of the executive board, among them Heinrich von Pierer, the former chief executive and chairman, settled with Siemens last year.

Mr von Pierer, who this week at the presentation of his autobiography repeated that he had no knowledge of the bribery system, paid €5m to avoid a legal battle with Siemens.

The Munich prosecutors said they were accusing Mr Ganswindt of failing to prevent bribes paid to officials in Nigeria and managers in Russia. The maximum possible sentence for tax evasion in this case would be five years in prison.

The trial is already the fourth connected to a bribery scandal that shook Siemens to its core and that triggered a wide-ranging overhaul of the group’s compliance system.

Prosecutors are still investigating Mr Neubürger and a number of other former managers of Siemens, one of Germany’s largest employers.

The corruption scandal has brought compliance to the top of German chief executives’ list of priorities in recent years, when a number of companies stepped up their efforts to fight corruption.

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