Former Siemens executive Reinhard Siekaczek told a Munich, Germany, court Monday he built a system of slush funds at a unit of Europe's...

Share story

Former Siemens executive Reinhard Siekaczek told a Munich, Germany, court Monday he built a system of slush funds at a unit of Europe’s biggest engineering company to conceal that company cash was used to bribe customers.

Siekaczek, 57, who worked at ICN fixed-line communications unit 2004, said superiors had asked him in 2002 to organize a new way to raise money for bribes.

He created fake contracts that were used to extract 53.3 million euros ($84 million) from the Munich company’s regular accounts, prosecutors say.

“Everyone in the unit leadership knew that I was taking care of this task,” Siekaczek told the court.

It’s the first criminal trial in the investigation that has dogged Siemens since November 2006, led to probes in at least a dozen countries and spurred the departures of Chief Executive Officer Klaus Kleinfeld and Chairman Heinrich von Pierer last year.

Siemens, which is cooperating with prosecutors, found 1.3 billion euros ($2 billion) of “unclear payments” from its 2000 fiscal year to 2006.

Prosecutors are investigating at least 270 suspects in several company divisions. The initial inquiry focused only on the communications unit.

Siekaczek is charged with 58 counts of breach of trust. Prosecutors claim he diverted corporate funds via a system of sham contracts into slush funds. The money was then used to bribe clients, they said.

The money Siekaczek and his accessories allegedly extracted was placed in funds administered by Siekaczek, and he distributed it to sales staff for bribes, prosecutors claim.

While the system was set up with the encouragement of some of his superiors and the help of several employees, Siekaczek and his accessories deliberately ensured the company’s central management board didn’t learn about it, prosecutors said.

Bribery charges against Siekaczek were dropped before the trial, Anton Winkler, a spokesman for the Munich prosecutors’ office, said in an interview last week.

Siekaczek’s trial in Munich Regional Court is scheduled for 15 days over nine weeks.