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Siemens gains on US probe settlement hopes

An industry source said on Friday that Siemens was expected to pay around $800 million to end a US bribery probe, comprising around $450 million to the US Department of Justice and $350 million to the Securities and Exchange Commission.

Siemens in November set aside 1 billion euros ($1.35 billion) to prepare for a settlement and end a scandal that cost the jobs of former Chief Executive Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer.

Von Pierer and Kleinfeld, who resigned last year, have not been accused of crimes and both have denied any wrongdoing.

German daily Handelsblatt reported that the company is also close to reaching an agreement with German regulators to end an investigation into a related corruption affair, citing people familiar with the matter.

‘It looks like Siemens may have to pay around 600 million euros for settlement of the US case and maybe around 200 million for the final German settlement. This is a good amount less than the 1 billion euros it set aside,’ said a Frankfurt-based trader.

‘Both fines are covered by provisions. Therefore, we do not expect a further major burden from outstanding lawsuits in Europe,’ said Roland Pitz, analyst at UniCredit.

Analysts expect both the US and German cases to wrap up quickly, with initial decisions coming as early as Monday.

A Siemens spokesman said on Friday the US probe should be concluded soon, but declined to give a precise date.

Siemens shares rose as high as 49.50 euros and were up 2.1 percent at 48.36 euros by 1040 GMT, outperforming a 1.6 percent rise in the German blue-chip DAX index.

END OF THE AFFAIR

‘Siemens’ supervisory board will meet today and we expect it to endorse the payments (in the US case). The settlement includes the provision (???) that a compliance monitor will be installed at the company for four years. We think the settlement with the US authorities is moderate and lower than expected,’ said analyst Theo Kitz from Merck Finck.

Kitz said he expected German authorities to announce a fine before next week’s Christmas holidays next week, and the amount should already be covered by existing provisions.

Siemens has been grappling for more than a year with allegations it secured contracts around the world in exchange for bribes.

Siemens is in the process of claiming damages from 11 former top managers, including von Pierer and Kleinfeld.