Siemens pays $1.3 billion to settle corruption probes
FRANKFURT/WASHINGTON (Reuters) - Siemens (SIEGn.DE) will pay just over $1.3 billion to settle corruption probes in the United States and Germany, it said on Monday, ending two years of uproar that rocked the German engineering conglomerate.
Wrapping up the biggest corporate corruption investigation in history, Siemens agreed to pay $800 million to settle a U.S. investigation by the Department of Justice and the Securities and Exchange Commission into bribes it paid to win contracts.
It will also pay 395 million euros ($531.9 million) to resolve a similar bribes-for-business investigation in Germany.
"Siemens will pay total fines and penalties of approximately 1 billion euros," the company said in a statement.
Siemens in November set aside 1 billion euros to prepare for a settlement and end a scandal that cost the jobs of former Chief Executive Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer.
Von Pierer and Kleinfeld, who resigned from their posts last year, have not been accused of crimes and both have denied any wrongdoing. Siemens brought in Austrian outsider Peter Loescher as CEO last year to help clean up the mess.
In Washington, the U.S. District Court for the District of Columbia accepted Siemens' settlements of charges that it violated the Foreign Corrupt Practices Act through a lack of internal controls and bookkeeping violations.
WAIGEL TO WATCH
As part of the settlement, Siemens agreed to appoint an independent monitor -- later named as former German Finance Minister Theo Waigel -- for up to four years and to cooperate with the U.S. government's continuing investigation in the case.
A U.S. Justice Department official told a court hearing that Siemens is paying a total of about $1.6 billion to settle U.S. and German cases. It had previously been fined in Germany.
Siemens Chairman Gerhard Cromme said "Today we are, in essence, closing one of the unhappiest chapters in our 160-year history."
Siemens shares, which had gained as much as 4.5 percent in Frankfurt on expectations it would settle U.S. corruption cases sooner and for less money than first expected, closed down 0.5 percent at 47.15 euros.
They have lagged the German blue-chip index .GDAXI by a quarter since the scandal first broke in November 2006.
"Both fines are covered by provisions. Therefore, we do not expect a further major burden from outstanding lawsuits in Europe," said Roland Pitz, analyst at Unicredit.
"Siemens' supervisory board will meet today and we expect it to endorse the payments (in the U.S. case). The settlement includes the provision that a compliance monitor will be installed at the company for four years. We think the settlement with the U.S. authorities is moderate and lower than expected," said analyst Theo Kitz from Merck Finck.
Siemens has been grappling with allegations it secured contracts around the world by systematically funneling bribes through slush funds.
It is in the process of claiming compensation damages from 11 former top managers, including von Pierer and Kleinfeld, for failing to stop the payments.
(Reporting by Michael Shields in Frankfurt, Peter Maushagen in Munich, and by Karey Wutkowski and James Vicini in Washington)
($1=.7426 Euro)
