The first hearing on corruption at Siemens began today with a defendant acknowledging the existence of a slush funds at the giant German industrial group.
Reinhard Siekaczek, a former head of Siemens' fixed telephone unit ICN, said he had set up, with the approval of his superior, a fund used to pay kickbacks. Some €53m was paid into this fund over three years, he said.
In all, Siemens has acknowledged that €1.3 billion disappeared into various funds following an internal probe that began in late 2006.
Investigators have since determined that paying to obtain foreign contracts was a widespread practice among Siemens' various divisions. To date however, only one judicial ruling has been issued in connection with the affair.
In late 2007, a fine of €201m was levied against the group's communications systems division, which was the first identified as having made illicit payments.
The trial of Siekaczek marks the start of proceedings against individual managers suspected of having taken part in the kickback system.
Several senior Siemens directors have also been identified as suspects but former boss Heinrich von Pierer, a high profile German industrial figure, is not expected to face serious charges and could at most be fined €1m for dereliction of duty.
Von Pierer was forced to step down as head of the supervisory board of Siemens, a company he had run for 13 years, while current Siemens boss Peter Loescher was hired from outside the group to clear up the affair.
