Bribery Scandal

The former management board of German engineering giant Siemens knew about bribery allegations earlier than previously thought -- as early as November 2003, a former Siemens official told the Sueddeutsche Zeitung newspaper.

The Munich-based company's former compliance officer, Albrecht Schaefer, said he had told former management board Chairman Heinrich von Pierer and other top managers about bribes.

News of earlier information

Schaefer told a Munich court that he had informed management board members about alleged slush funds and bribery payments that were linked to a court case over a turbine contract in Italy, the newspaper reported.

"The existence of slush funds at Siemens shows that Siemens' means of practicing compliance was fully inefficient and that the company at least was willing to consider bribery as a possible business strategy," he wrote in an internal document in 2004.

Such accusations against von Pierer are not entirely new. But until now he had claimed to know about certain instances of corruption, while remaining ignorant of widespread practices.

The issue is no small one for Siemens, which is listed on the US Stock Exchange, because the US Securities and Exchange Commission could force it to pay high fines.

Widespread scandal

The current advisory board is currently deciding whether or not to sue the prior board members for millions of euros in compensation.

Siemens has recently been battered by allegations that employees used slush funds to bribe clients for orders. By the latest accounts, Siemens is accused of having made some 1.3 billion euros in dubious payments, most thought to be foreign bribes.

The US SEC and Justice Department are among the agencies looking into the claims. The investigation has spread to at least a dozen countries.

To appease the SEC, most of the old Siemens leadership has left the company. The legal process surrounding the scandal will start at the end of May. Ex-chief von Pierer is expected to take the witness stand.

Cooperation with BND

Meanwhile, German weekly newsmagazine Der Spiegel reported that Siemens had cooperated closely with Germany's top spy agency for over a decade.

Germany's Federal Intelligence Service, or BND, had a representative on the management board, Spiegel cited unidentified former managers as saying. The BND used Siemens's communication technology for espionage purposes, while Siemens became the spy agency's top supplier.

The BND's role in Siemens could mean it has knowledge of access codes the company uses to conduct maintenance work on communications systems, Spiegel said. Siemens engineers also gain exposure to construction sites that aren't visible by US satellite photography, according to the magazine.