Siemens Chairman to Step Down Amid Corruption Scandal

Associated Press
Thursday, 19 Apr 2007 | 7:14 PM ET

The board chairman of German industrial giant Siemens said Thursday he was stepping down and hoped that a successor could steer the scandal-plagued company into "calmer waters."

Heinrich von Pierer, the company's former CEO, will give up his post at the next supervisory board meeting on April 25. His term would otherwise have run until next year, he said in a company statement.

Von Pierer said he was not stepping down to take responsibility for the corruption investigations that have heaped negative publicity on Siemens , a pillar of the German industrial establishment. Prosecutors are looking into alleged illegal payments to win business overseas, and current and former executives have been questioned.

But he conceded, "I assume that electing a new chairman of the supervisory board will also make a contribution toward taking our company out of the headlines and bringing it back into calmer waters."

The company's press release -- which went out late Thursday, just before 11 p.m. local time -- said that board member Gerhard Cromme would be nominated to take over the rest of von Pierer's term. Cromme is the board chairman of steelmaker ThyssenKrupp and heads the government-appointed commission that produced Germany's corporate governance code.

Siemens -- which makes everything from cell phone network components to trains and is Europe's biggest engineering company by sales -- has been rocked by investigations in Germany, Italy and Switzerland over money taken from corporate accounts and allegedly used to pay bribes to help land telecommunications deals.

Six current or former Siemens employees, including the ex-head of its telecommunications equipment unit, Thomas Ganswindt, are suspected of committing breach of trust against Siemens in cases stretching back to 2002 by setting up secret funds outside Germany.

CEO Klaus Kleinfeld has launched an internal investigation, hiring an outside law firm, New York-based Debevoise & Plimpton, to assist its auditors, KPMG, in examining the estimated US$550 million in payments made to various consultants since 1999.

Von Pierer's decision reverses his earlier position that he should not quit because he had done nothing wrong, as he said in a newspaper interview in December.

But the fact that alleged wrongdoing took place during von Pierer's 1993-2005 term as chief executive officer did not help his position.

"I have always believed that one's duty to the company and its well over 400,000 employees world wide must take priority over one's own interests," von Pierer said in the statement. "A personal responsibility regarding the current investigations was not the basis for my decision."

"Despite its outstanding business performance, Siemens has run into a difficult situation due to the in part apparent and in part alleged misconduct of a number of managers and employees," von Pierer said. "The sole reason for my decision today is to serve the best interests of Siemens."

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