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Siemens CEO to crack down on irregularities amid widening corruption probe

Siemens CEO to crack down on irregularities amid widening corruption probe

Siemens AG Chief Executive Klaus Kleinfeld, under pressure over a ballooning corruption scandal, said Thursday that the company will be "pitiless" in cracking down on irregularities.
Prosecutors are investigating whether Siemens managers spirited some euro200 million (US$258 million) into secret accounts to pay bribes to secure major contracts.
Kleinfeld said Siemens' management would tolerate no illegal business practices in Germany or abroad. As a result, internal rules for employees would be "clearly sharpened" and more carefully enforced.
"We must be pitiless in clearing up and punishing irregularities," Kleinfeld said. Employees will be immediately suspended if there is evidence they have committed a crime, he said.
German state prosecutors searched Siemens offices in the country last week in an investigation of suspected embezzlement. They have arrested a total of six current or former Siemens employees, including a former manager of its fixed-line communications unit.
The six allegedly banded together to help commit breach of trust against Siemens in cases stretching back to 2002 by setting up secret funds outside Germany. The damages so far uncovered amount to some euro200 million (US$258 million).
Kleinfeld's office was among those searched, though prosecutors have said he is a witness, not a suspect.
The raids were linked to a money-laundering investigation in neighboring Switzerland opened in 2005. Swiss prosecutors suspect that the money was channeled into secret accounts and used to pay bribes to secure lucrative contracts.
Prosecutors have declined to comment on reports in Germany's Sueddeutsche Zeitung newspaper that suspicious payments flowed via an Austrian bank account in connection with contracts in Greece, Italy and Nigeria.
Politicians and shareholder groups have criticized Siemens managers for not doing enough to prevent irregularities and complained that the scandal is sullying the image of German business.