Anti-corruption watchdog sees off Siemens

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Siemens faces further damage to its corporate image after Transparency International, the anti-corruption watchdog, said it would end the German industrial conglomerate’s membership, following investigations of suspected fraud at the Munich-based group.

The decision to expel Siemens from the organisation raises the pressure on Klaus Kleinfeld, chief executive, to deal with the investigation and could even put a key agreed tie-up with Nokia’s telecoms equipment business in doubt, according to German press reports.

Siemens has been rocked in recent weeks by an escalating investigation into transfers of Siemens funds by several employees.

The company, which is not part of the investigation, has responded by stepping up its drive to reduce potential reputational risk from the case. The exit from Transparency Inter-national would be a blow to its recent efforts.

Mr Kleinfeld said last month the company’s business conduct guidelines would be “substantially tightened” as it launched a special taskforce to look into its practices.

The Munich prosecutor is investigating a dozen people, including current and former Siemens employees, over the possible illegal transfer of funds to foreign accounts from Com, Siemens’ telecoms equipment business, which it is officially merging with Nokia of Finland on January 1.

The prosecutor has said about €200m is missing, and suspects the money was used to bribe business partners in order to secure large contracts.

The German press reported that six suspects had admitted to investigators that they installed or facilitated bank accounts in Liechtenstein, Switzerland and Austria.

Many of the managers being investigated work in the Com business, and weekend press reports suggested Siemens feared Nokia might pull out of the joint venture as a result of the investigation.

One unidentified Siemens manager was quoted as saying that such an outcome was the “worst case scenario”, but one that could put in doubt the future of Mr Kleinfeld, the Frankfurter Allgemeine Zeitung reported in its Sunday edition.

Siemens’ supervisory board is expected to meet on Monday to discuss the allegations.

The company could not be reached for comment on Sunday.

Transparency International’s membership is drawn from governments, business and the media.

It works to promote transparency in elections, government and business around the world. Founded in 1993, the organisation is active in 90 countries and is based in London and Berlin.

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