FORMER Siemens AG executive Reinhard Siekaczek yesterday told a court in Munich, Germany, that he built a system of slush funds at a unit of the engineering firm through which officials in several countries, including Nigeria, were bribed with company cash.
The court last October fined Siemens �1 million, the maximum fine for bribes paid by the communications unit in 77 cases between 2001 and 2004 to government officials in Nigeria, Libya and Russia.
The Nigerian government, last December, cancelled a N128.4 million (about $1.1 million) contract with Siemens for the supply of circuit breakers and other power generation accessories, and suspended dealings with the German telecoms firm pending an investigation into the bribery allegations.
Four former ministers of communications, a senator, some officials in the Nigerian Telecommunications Limited (NITEL) and the Nigeria Immigrations Service (NIS) were indicted by the Munich court last year for �10 million bribe in the on-going probe of Siemens.
The former ministers are Tajudeen Olanrewaju (a retired General who served in Sani Abacha’s regime), Chief Cornelius Adebayo, Dr. Mohammed Bello and Alhaji Haruna Elewi – all part of erstwhile President Olusegun Obasanjo’s Administration between 1999 and 2007. Prof. Jibril Aminu is the senator named in the bribery scandal.
Siekaczek, 57, who worked at the Siemens’s ICN fixed-line communications unit until 2004, said superiors had asked him in 2002 to organize a new way of raising money for bribes. He confessed to creating fake contracts that were used to extract �53.3 million ($84 million) from the company’s regular accounts, according to prosecutors.
“Everyone in the unit leadership knew that I was taking care of this task,” Siekaczek told the court.
It is the first criminal trial in the Munich investigation that has dogged Siemens since November 2006. It led to probes in at least a dozen countries and spurred the departures of Chief Executive Officer Klaus Kleinfeld and Chairman Heinrich von Pierer last year.
Prosecutors are investigating at least 270 suspects in several company divisions. The probe initially focused only on the communications unit.
Prosecutors claim Siekaczek diverted corporate funds via a system of sham contracts into slush funds. The money was then used to bribe clients, they said.
Siemens’ products include light bulbs, medical scanners and wind turbines, and it competes with companies such as ABB Ltd. and General Electric Co. Second-quarter profit dropped 68 per cent after a review of orders led to charges at power and transport units.
Prosecutors stressed that between 2002 and 2004, Siekaczek orchestrated a system of sham contracts at ICN with fake or real firms to generate funds.
While the system was set up with the encouragement of some of his superiors and the help of several employees, Siekaczek and his accessories deliberately ensured the company’s central management board did not learn about it, prosecutors said.
Prosecutors claim the ICN unit organized payments via two Austrian bank accounts and from 120 to 220 million Deutschmarks were transferred through the accounts.
Siemens’ compliance unit asked the ICN leadership to close the accounts after Swiss prosecutors investigated.
Michael Kutschenreuter, a member of ICN’s board, asked Siekaczek to find another way to organize money transfers, and later to “decrease and finally terminate the payments,” Siekaczek said.