Siemens adjusts profit forecast amid corruption probe

13 Dec 2006

(Associated Press via NewsEdge) Siemens lowered its net income for fiscal year 2006 because of more tax charges related to an ongoing corruption scandal, and CEO Klaus Kleinfeld said that the probe wouldn't hurt its joint venture with Nokia.

The Munich-based company has been rocked by allegations that some of its employees may have set up slush funds to arrange for bribes in the pursuit of contracts.

The state justice ministry in Bavaria said that a former Siemens board member, Thomas Ganswindt, had been arrested in connection with the scandal. Ganswindt left the board at the end of September.

Investigators in Germany, Italy and Switzerland are probing the alleged embezzlement of 200 million euros ($263.54 million) by some Siemens workers, but have not targeted the company itself. Six other people already have been detained, although one was released by German police.

Kleinfeld said the company is cooperating fully.

He also told reporters that the company is expanding its business and winning more contracts, a process that the ongoing investigation into alleged claims of embezzlement and bribery at its equipment unit would fail to hinder.

'We have clearly gained again in many regions in the world,' he said.

On Monday, the company hired New York-based law firm Debevoice & Plimpton to do its own independent investigation of its compliance and control systems in order to ensure that no further corruption could take place.

© 2006 The Associated Press

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