Siemens Books EU1 Billion Provision for Bribery Cases ( INCLUDING LIBYA )

Bloomberg

Siemens Books EU1 Billion Provision for Bribery Cases ( INCLUDING LIBYA )

By Sheenagh Matthews and Karin Matussek

Nov. 5 (Bloomberg) -- Siemens AG, the world's largest engineering company, set aside 1 billion euros ($1.3 billion) to settle U.S. and German charges that it bribed officials in at least a dozen countries to win contracts.

The provision, affecting earnings for the year ended Sept. 30, is based on the ``status of ongoing discussions'' with authorities, Munich-based Siemens said. The company fell 2.9 percent in Frankfurt trading.

The German maker of power plants and trains is seeking an accord with the U.S. Securities and Exchange Commission and the Justice Department to end a two-year bribery investigation. The scandal erupted in November 2006 and led to probes in at least a dozen countries. The company found at least 1.3 billion euros in ``unclear payments'' made from 2000 to 2006, which may have been used to bribe customers for orders.

``The number is probably pretty much exactly what they will have to pay,'' said Theo Kitz, a Munich-based analyst at Merck Finck & Co, who has a ``buy'' rating on Siemens. ``The SEC part would be less than 1 billion when you subtract the German part. That really is less than expected.''

Siemens fell 1.46 euros to 48.92 euros in Frankfurt trading.

No further comments will be made on the proceedings, the company said in a statement today.

Chief Executive Officer Peter Loescher, hired in July 2007 to clean up the company's affairs, replaced half of the top 100 executives and appointed division heads to eliminate decision making by consensus on a board.

Outside Hire

Loescher, the first CEO hired from outside of Siemens, took over from Klaus Kleinfeld, who left along with Chairman Heinrich von Pierer in the wake of the bribery scandal.

Siemens in July said it will demand that Kleinfeld, Von Pierer, who was chief executive from 1992 to 2005, and nine other former officials pay damages for failing to halt bribery.

The Munich Regional Court last year fined Siemens 1 million euros, the maximum fine, for bribes paid between 2001 and 2004 to government officials in Libya, Nigeria and Russia. It also seized 200 million euros, the ``economic benefits'' Siemens gained through the kickbacks. The Munich ruling only covered bribes paid in the former communications unit. Munich prosecutors have extended their probe to all other units and may seek similar penalties for wrongdoings.

Public prosecutors opened administrative probes in May against Von Pierer and Kleinfeld over the issue. Both men deny wrongdoing.

``It's good that Siemens isn't barred from taking on public contracts in the U.S.,'' Kitz said. ``That would be a burden for Siemens and would lead to job cuts there. Theoretically it's still possible, but I don't think it's likely.''

To contact the reporters on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net.