Former Siemens managers admit involvement in kickback payments at German trial

Two former Siemens AG managers on Tuesday admitted involvement in the payment of multimillion-euro (-dollar) bribes to officials at an Italian utility, and asserted that they had only been responding to those officials' demands for money.

Photo: Former Siemens managers admit involvement in kickback payments at German trial

Horst Vigener and Andreas Kley both former managers at Siemens' power generation unit are accused of paying kickbacks worth Ђ6 million (US$7.9 million) to a pair of officials at Italian utility Enel SpA in a bid to win a series of contracts for Siemens-made gas turbines between 1999 and 2002.

Kley, 63, the unit's former finance chief, acknowledged at the Darmstadt state court that he had authorized the payment. He said he had taken the decision alone and had not consulted with top Siemens managers.

In a statement read by his lawyer, Vigener, 73, acknowledged that he was involved in the payments and said he regretted that. However, he said he had never been in a position to make decisions on the situation.

Both also asserted that it had not been Siemens' idea to offer bribes to win contracts. Vigener's lawyer said the Enel officials had approached him with demands for payments, and Kley also said they had suddenly demanded money shortly before the contract was agreed.

Prosecutors put at Ђ450.3 million (US$592 million) the total value of contracts that were sought by a consortium of Siemens and Italy's Ansaldo, with at least Ђ338.1 million (US$444.5 million) of that going to Siemens.

In the statement read by his lawyer, Wolf Schiller, Vigener indicated that his unit had a web of accounts and front companies in Liechtenstein to facilitate anonymous payments to "helpers."

"There were many people who helped Siemens, but didn't want to be identified by name," Schiller said. He said payments of more 500,000 German marks (EUR 250,000; US$329,000) required approval from a higher level of management.

That system, he said, was used to make the first payment to the Enel officials, Luigi Giuffrida and Antonio Craparotta, but was stopped at the end of the 1990s. Later payments, according to Vigener's statement, were made from money that had been parked in Switzerland.

Kley said he had not approved the payment of the money via the Liechtenstein system, which he maintained was intended for legal commission payments.

He conceded that the power generation unit had maintained a fund in Switzerland, and said he later had tasked Vigener with putting the money under a Liechtenstein foundation.

Earlier Tuesday, Schiller said he doubted whether the breach of trust charge could be applied to his client and also raised doubts over the bribery charge.

Schiller contended that the Enel managers did not fulfill any public role; a German bribery law that took effect in 1998 foresees punishments for payments to foreign officials rather than businesspeople.

The case is separate from one in which six current or former Siemens employees are suspected of committing breach of trust against the company in cases stretching back to 2002 by setting up secret funds outside Germany.

In that case, Siemens has identified suspicious payments totaling EUR 420 million (US$552.5 million). Last month, Siemens said that it is also being investigated by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, reports AP.

Siemens Chief Executive Klaus Kleinfeld has hired an outside anti-corruption expert and a law firm to examine and revise Siemens' anti-corruption safeguards.