Siemens Pays EUR210 Million Fine for Communications Unit
FRANKFURT -(Dow Jones)- German engineering giant Siemens, Thursday said it accepted an EUR201 million fine by the Munich District Court and reached a settlement with German tax authorities on questionable payments, ending investigations into illegal conduct and tax violations at Siemens' Communications unit.
Siemens said some EUR450 million in payments at the former Communications unit were determined as being nondeductible, resulting in a tax charge of EUR179 million.
Of this, EUR168 million have already been booked in the 2006 financial statement, Siemens said.
Siemens said the decision by the Munich District Court and the settlement with the tax authorities ends German investigations into illegal conduct and tax violations at its former Communications unit.
The engineering giant said it accepts the fine and takes responsibility for past misconduct at the Communications group, waiving its right to appeal.
Siemens said the comprehensive independent investigation conducted by law firms Debevoise and Plimpton will continue. Siemens said it continues to support the work of authorities and is also further strengthening its compliance measures and internal control systems.
Traders said the relatively low fine shouldn't raise any concerns for Siemens' share price. "However, it remains to be seen whether Siemens has already made provisions for such a charge or which quarter could be impacted," one trader said.
On Thursday, Siemens shares closed down EUR0.47, or 0.5% lower, at EUR98.27, slightly underperforming the broader DAX index, which closed 0.1% lower.
Siemens has been rocked by a bribery scandal and is being investigated by German and U.S. authorities in several separate cases of suspected bribery involving hundreds of millions of euros.
The investigation by prosecutors and tax authorities into allegations that employees made illegal payments in a bid to secure more contracts is one of several cases that have dogged the Munich-based company.
The engineering conglomerate, whose 475,000 employees make everything from lightbulbs to power trains, said in July it was widening its internal investigation from the telecoms unit to include its turbines, transport and medical units, among others.
The company, whose former chief executive and chairman both stepped down after the corruption allegations became public, on Sept. 19 established a new managing board position for legal and compliance matters, effective Oct. 1. In addition to the Munich prosecutor, the European law enforcement agency, the U.S. Department of Justice and the Securities and Exchange Commission for corruption are all investigating Siemens for alleged misconduct.
The NYSE-listed company could incur significant penalties from the U.S. or be excluded from bidding for certain contracts as a result of the SEC investigation. The SEC started an official investigation against Siemens in the spring.
Last week, the Wall Street Journal reported that an internal probe at Siemens revealed the amount of suspicious transactions has risen to about EUR1.6 billion, citing people familiar with the matter.
The amount is about four times that which the German conglomerate disclosed in December, when it said it found EUR420 million in questionable transactions spanning the previous seven years at its telecommunications-equipment unit.
Siemens has asked U.S. law firm Debevoise & Plimpton LLP to conduct its own internal investigations.
-By Klaus Brune, Dow Jones Newswires; +49 69 29 725 500; klaus.brune@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 4th October 2007
