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Siemens China Linked to Bribery Scandal
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Affected by the Siemens headquarters' multi-million bribery scandal, Siemens China is now under investigation by Debevoise & Plimpton, a US law firm.


WirtschaftsWoche, a German business magazine, quoted an insider from Siemens in this week's issue, saying that about half of Siemens China's business was connected to the bribery scandal. The magazine also revealed that the Chinese branch carried out approximately 90 percent of the business through a third party currently under investigation by Siemens's internal network.


In an email interview with the China Business News, a senior manager of the Chinese branch dismissed the report of WirtschaftsWoche as groundless but he admitted that Siemens China is currently under the Debevoise & Plimpton-led probe. He argued that it was too early to accuse the branch of bribery given that the investigation is still under way and no concrete evidence has been uncovered. But he refused to disclose more details.   


In its mid-August appraisal, Debevoise & Plimpton said that Siemens' internal "suspicious payment" is very likely to exceed 1 billion euros, not just 426 million euros as estimated by Siemens itself.


Reportedly, German police and prosecutors raided Siemens headquarters and arrested six former and current company employees in November of last year. They suspected that managers from some of the company's branches had coaxed funds out of their headquarters through fraud practices. They then bribed others with the funds to get orders for their products.    


In light of the bribery scandal, Klaus Kleinfeld resigned from his CEO post before his term ended. His successor, Peter Loescher, who took over the CEO role in July, emphasized that his highest priority during the fourth quarter would be to make Siemens's operations lawful when releasing the third quarter financial report.


After the bribery scandal surfaced, every department of Siemens China assigned some employees to participate in the company's internal investigation.


Siemens has so far established over 70 sub-branches and 60 regional agencies in China, with staff totaling 43,000.


The company's third quarter financial report showed profits up 22 percent to 1.504 billion euros. Net revenues climbed 54 percent to 2.065 billion euros. The Asia Pacific region has contributed significantly to the upward trend. 


( by Pang Li August 22, 2007)

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