Ex-Siemens chief fingered in corruption probe: reports

( AFP ) - The former head of German engineering giant Siemens, Heinrich von Pierer, has been fingered for the first time by a witness in relation to the group's vast corruption scandal, press reports said Saturday.

A Siemens executive told prosecutors in Munich that von Pierer had ordered him and a colleague in 2002 and 2003 to make suspicious payments of some 10 million dollars in connection with a large order from the Argentine government.

Both the daily Sueddeutsche Zeitung and the online edition of the weekly Der Spiegel reported the allegations.

When the executive demurred, von Pierer told the two men to "act like soldiers for Siemens," the reports said.

Von Pierer denied the allegations through his lawyer in a statement to Sueddeutsche Zeitung.

The daily quoted prosecutor Christian Schmidt-Sommerfeld as saying that von Pierer had been interviewed at his own request on Friday and would be seen again on Monday.

The reports said evidence pointed to bribes being paid to officials of the Argentine government of Carlos Menem linked to a two billion dollar contract for a system to produce electronic passports.

The order was cancelled after a change of government, and an extra ten million dollars was allegedly paid through a Swiss intermediary to rescue it.

Siemens has struggled with revelations that it created a slush fund to pay bribes to obtain foreign contracts and that it built up a small trade union to try to offset the power of Germany's large IG Metall union.

The group has acknowledged the existence of funds worth 1.3 billion euros (2.0 billion dollars) and agreed in October to pay a fine of 201 million euros to put an end to some German legal proceedings.

Former company directors could still face charges however, and Siemens has not ruled out filing compensation claims itself if their responsibility is proven.

Siemens is also the subject of a potentially damaging probe by the US Securities and Exchange Commission (SEC) by virtue of the fact that shares in the company are listed in the United States.

Von Pierer was forced to step down last year and his successor Peter Loescher has pledged to pursue trails throughout the group, which makes items from light bulbs and telecommunications systems to power plants and trains.

Sueddeutsche Zeitung newspaper has quoted documents it said showed that von Pierer, who has not been the subject of an investigation so far, was informed of corrupt practices but did not act upon the information.

German Chancellor Angela Merkel on Thursday said she planned to disband the country's Innovation Council, which advises her on questions regarding technology and is headed by von Pierer.

Merkel told ZDF television in an interview that the council would be replaced by "two different institutions."

The German press earlier reported that the conservative chancellor was looking to relieve von Pierer of his duties at the council.

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