Siemens cuts earnings forecast as corruption probe continues

Siemens lowered its net income for fiscal year 2006 because of more tax charges related to an ongoing corruption scandal, and CEO Klaus Kleinfeld said that the probe wouldn't hurt its joint venture with Nokia, according to an Associated Press report.

The Associated Press report said the Munich-based company has been rocked by allegations that some of its employees may have set up slush funds to arrange for bribes in the pursuit of contracts.

The state justice ministry in Bavaria said that a former Siemens board member, Thomas Ganswindt, had been arrested in connection with the scandal. Ganswindt left the board at the end of September, the report said.

Investigators in Germany, Italy and Switzerland are probing the alleged embezzlement of 200 million euros ($263.54 million) by some Siemens workers, but have not targeted the company itself. Six other people already have been detained, although one was released by German police.

Kleinfeld said the company is cooperating fully.

He also told reporters that the company is expanding its business and winning more contracts, a process that the ongoing investigation into alleged claims of embezzlement and bribery at its equipment unit would fail to hinder, the Associated Press report further said.

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