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German conglomerate, embroiled in scandal, adds an executive board position and increases role of CFO Joe Kaeser.
Stephen Taub, CFO.com | US
September 19, 2007
Siemens AG, trying to move beyond a bribery and corruption scandal, created a new executive-board position overseeing legal and compliance matters, and increased the compliance role of chief financial officer Joe Kaeser.
The naming of Peter Y. Solmssen to become general counsel of the executive board on Oct. 1, overseeing responsibility for legal and compliance issues, was one of two key appointments announced by the Munich-based conglomerate. Siemens' managing board, the equivalent of the board of directors, also appointed Andreas Pohlmann to the position of chief compliance officer, part of the company's new corporate legal and compliance office.
Most recently, Solmssen was executive vice president and general counsel at GE Healthcare, based in Chalfont St. Giles, UK. Pohlmann previously was executive vice president and chief administrative officer at Dallas-based Celanese Corp.
Also starting Oct. 1, the company said, all company audit functions will be merged into the Corporate Finance Audit unit. Corporate Finance Audit will be headed by chief audit officer Hans Winters, who formerly was a partner at PricewaterhouseCoopers, where his specialty was in projects for international compliance and internal control systems, and where he supported international companies in compliance-related matters before U.S. regulatory authorities.
Corporate Finance Audit will report to the corporate finance department, which is headed by CFO Kaeser.
"Bundling our legal and compliance as well as our audit processes, standardizing them worldwide, and implementing these personnel changes will make our company more transparent and less complex in key corporate functions," said Siemens president and CEO Peter Löscher. "At the same time, these decisions underscore our commitment to put Siemens in a leading position worldwide in the area of corporate governance."
Investigators in Italy, Germany, and the U.S. are looking into allegations that Siemens employees paid hundreds of millions of euros in bribes to secure telecom deals, according to the Associated Press.
CFO magazine reported in June that, so far, some $571 million in possible bribes have been disclosed, although Siemens's own internal review warns of "a significant increase" in that amount.
The Securities and Exchange Commission and the Department of Justice have launched formal investigations into affairs at Siemens. In May, Andreas Kley, a former finance chief at the power generation unit of Siemens, was found guilty of breach of trust and of bribing managers at Italian utility Enel, AP reported at the time. Former employee and consultant Horst Vigener was convicted of abetting bribery, according to the report.
In addition, the court reportedly ordered Siemens to forfeit $51.4 million (38 million euros) in profits from deals with Enel. The verdicts were the first related to a series of scandals at Siemens.
During the trial, AP reported, Kley and Vigener admitted that between 1999 and 2002 they were involved in paying nearly $8 million in kickbacks to two officials at Enel in an attempt to secure contracts to sell gas turbines. The value of the contracts reportedly exceeded $444 million. The two also reportedly testified that it was not Siemens' idea to offer bribes. According to AP, Kley admitted that he alone authorized the payment and had not consulted with top Siemens managers.
Prosecutors also reportedly asked for Siemens to pay $132.2 million, rather than the $51.4 million ultimately assessed by the court. Siemens has said that it would appeal. "The company maintains that the court's order to forfeit the profits from two orders placed by Enel with Siemens Power Generation Group for the supply of power plant equipment in 2000 and 2001 is illegal," Siemens said at the time.
Kaeser, who has been with Siemens for less than two years, said in a June interview with CFO that the company will "get to the bottom of everything" connected with the bribery and corruption allegations, and clean it up. "We're not going to be distracted by anything," he added. "This is a big company. It's also a very broad, broadly based management team, which is able to execute on matters and also take the challenges as they come."