Siemens was on Thursday night fined €201m by the German authorities over a bribery scandal in its telecommunications unit in the first of several rulings that could end up costing Europe’s largest engineering group billions.
The fine by the Munich district court represents the first step by the German conglomerate to address what senior directors have called a “systematic” approach to bribery that has spawned investigations by several regulators including the US Securities and Exchange Commission.
Siemens also agreed to pay tax authorities €179m ““ largely covered by a €168m charge it has already taken ““ to compensate for the €450m in non-deductible payments it falsely booked.
The payments mark the end of the German investigation into Siemens over bribery at the telecommunications unit, as the group waived its right to appeal.
Siemens hailed the fine as an important first step to resolving its problems and said it hoped to update markets on its internal investigations in November.
“Siemens accepts full responsibility in this matter. We have no tolerance for illegal conduct, and we respond to violations with clear consequences,” said Peter L¶scher, Siemens’ chief executive since July.
Mr L¶scher is hoping to use the scandal as an impetus to change radically Siemens’ culture and management structure.
Internal investigators at Siemens have examined about €1.5bn in suspicious payments since the beginning of the 1990s, directors said. However, only a minority of those could have been illegal, the directors added, because more than half of them occurred before the laws changed.
Analysts said that although the German decision was important, the stance of the SEC and US justice department would be crucial to the overall financial effect on Siemens. Several analysts said Siemens could be looking at a fine of more than €1bn.
German regional prosecutors are still investigating alleged bribery in Siemens’ power generation unit and whether the group illegally helped finance a rival to its main trade union.
Authorities in the US, Italy, Switzerland and Liechtenstein are also investigating, and Siemens faces antitrust probes in other countries