Bribe scandal highlights KPMG auditing role

The role of KPMG, the auditor at Siemens is coming under scrutiny, after illicit payments of ¿1.5bn (£1bn) made by the German group were allegedly uncovered by investigators.

Debevoise, the firm of independent US lawyers appointed by the Siemens supervisory board to investigate bribes paid by the company, reported back last week. According to the German publication Sueddeutsche Zeitung, they have uncovered ¿1.2bn of bribes paid by the Siemens telecommunications business between 1995 and 2006 and a further ¿300m of illicit payments made by its power generation arm.

Now Debevoise is set to look into the role of KPMG, according to sources close to Siemens. The supervisory board wants to know why the apparent bribes were not noticed by KPMG given their scale over many years.

The issue is of great importance not least because Siemens is listed on the New York Stock Exchange. Since more than ¿400 million in bribes appear to have been paid by its telecommunications arm since listing in 2001, Siemens could incur significant civil litigation while past executive board members might face criminal charges in the US.

Much will depend upon who was involved in or informed of the ¿1.5bn in alleged bribes.

Siemens supervisory board was not told of any wrongdoing until last November, a spokesman admitted: "The Siemens executive board, the auditors and the individual businesses did not report any information which demonstrated the full extent of the events being discussed now."

KPMG spokesman Thomas Blees, commenting upon the illicit payments at Siemens, insisted: "KPMG Germany has been in full compliance with all applicable auditing standards."