Jan. 20 (Bloomberg) -- Former Siemens AG management board member Thomas Ganswindt appeared in a Munich court on charges that he failed to halt bribes paid in Nigeria and Russia, the first senior executive to go on trial in the scandal.
The Munich Regional Court opened the case against the 50-year-old Ganswindt today. He faces three counts of inadequately supervising a company by failing to halt the corrupt payments and tax evasion. The court adjourned after only a few minutes to deliberate a defense motion seeking an additional judge on the case. The trial will continue on Jan. 25.
The Siemens corruption scandal that broke in 2006 led to investigations in at least a dozen countries. Siemens agreed to pay $1.6 billion to settle probes in the U.S. and Germany in 2008. Probes against other managers, including former management board members Uriel Sharef and Heinz-Joachim Neubuerger, are continuing.
“The case shows that investigators don’t stop when evidence hints at possible wrongdoing of top management, and that’s good,” Christian Schroeder, a professor of criminal law at Germany’s Halle University said. “It shows that the anti-corruption laws are being brought to life and we see that attitudes of both prosecutors and companies in handling these issues have changed compared to a decade ago.”
Ganswindt didn’t commit a crime, his attorney Kurt Broeckers told reporters today before the trial started. Under German law, inadequately supervising a company is only an administrative offense, only tax evasion is a crime.
Michael Rosenthal, Ganswindt’s other defense lawyer told the court today that the bench was improperly composed. There should be three processional judges hearing the case along with two lay judges because the matter was complicated. The Munich court had opened the trial with two professional judges and two lay judges.
Siemens spokesman Joern Roggenbuck declined to comment.
Ganswindt headed Siemens’s former communications unit from 2001 to 2004, when he became a member of the company’s central management board. By mid-2003, he had learned on several occasions about corruption allegations at the company, according to the indictment. Had he investigated, he could have uncovered a system of slush funds at Siemens, prosecutors claim.
Since July 2003, about 30.6 million euros ($41.2 million) were diverted from Siemens into the slush funds that were used to bribe officials in Nigeria and managers of Russian customers, prosecutors said. Ganswindt could have prevented that, prosecutors claim.
Siemens has sued Ganswindt for 5 million euros and Neubuerger for 15 million euros for failing to halt the corruption. Other former executives settled with the company, including former chief executive officer Heinrich von Pierer, who paid 5 million euros, and Sharef, who agreed to pay 4 million euros.
Ganswindt was also charged with another seven counts of aiding to bribe foreign officials. The court hasn’t yet ruled on whether that part of the charges may go to trial and will handle it separately, court spokeswoman Margarete Noetzel said last month.
Former management board member Johannes Feldmayer was convicted in 2008 for authorizing payments intended to help cultivate an “employer friendly” labor group at the company.
To contact the reporter on this story: Karin Matussek in Munich via firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.