By Jens Hack
MUNICH (Reuters) - A German court gave a former SIEMENS (SIE.XE)xecutive a fine of nearly $170,000 (85,600 pounds) and atwo-year suspended prison sentence for his role in setting upslush funds used to win contracts for the German engineeringgroup.
Reinhard Siekaczek, 57, was found guilty on 49 counts ofbreach of trust on Monday in the first trial arising from asweeping investigation into suspected corruption and briberythat has deeply bruised Siemens's reputation.
Siemens has been grappling for more than a year withallegations that it bribed its way into contracts around theworld to the tune of at least 1.3 billion euros (1.03 billionpounds), according to its own tally of suspect payments bookedas fees.
Siekaczek, a former sales manager at Siemens' telecomsdivision, had admitted to building a system of hidden funds. Hetold the court he later tried to stop the systematic briberybut top managers failed to act.
"The defendant channelled money into a network of boguscompanies...," presiding judge Peter Noll said in court, addingemployees tapped an uncontrolled system of slush funds whenthey needed to grease palms for business.
The judge said Siemens' efforts to fight corruption wereincomplete and that Siekaczek was only a cog in a wheel.
"One can assume that Mr Siekazcek was part of a system oforganised irresponsibility that was implicitly condoned" andthat he had acted at the behest of his superiors, Noll said.
The judge also said it was still not clear whether formertop executives were involved but it was evident that thecompany's organisation encouraged slush funds and corruption.
"Basically all control systems and the entire organisationwas geared to make such behaviour possible," Noll said.
NO WAY TO PUT OUT A FIRE
The judge said the responsibilities of Siemens' former headof compliance, Albrecht Schaefer, were too narrowly defined.
"It's as if you were to equip the fire department with atoothbrush cup to extinguish fires," he said.
Schaefer had testified earlier this month that former topmanagement turned a deaf ear to repeated warnings aboutsuspicious payments.
The trial of Siekaczek is the result of a years-longinvestigation by Munich prosecutors, one of several bodiesworldwide that are probing activities at Siemens.
The affair has already cost the jobs of Siemens' ex-ChiefExecutive Klaus Kleinfeld and ex-CEO and Chairman Heinrich vonPierer, though they are not accused of criminal wrongdoing, andhas led to an upheaval in corporate culture and structures.
Von Pierer refused to testify in June, invoking his rightnot to take the stand on the grounds that he could incriminatehimself.
According to media reports Siemens will decide on Tuesdaywhether it will sue 10 former board members, including itsformer chairman and chief executive, for damages.
Siemens shares slipped 1.3 percent to 72.56 euros by 11:24a.m. British time, lagging the German blue-chip DAX index,which was down 0.9 percent.
Siemens' own and other investigations into a suspectedorganised bribery system at its former telecoms unit havewidened from the telecoms unit to include the transportationand power units, among others.
They may result in Europe's biggest engineering group'sbeing banned from bidding for certain U.S. contracts.
(Additional reporting by Nicola Leske in Frankfurt)
