Siemens defendant's evidence "started avalanche"

Reinhard Siekaczek, former Siemens manager awaits the start of his trial in a Munich courtroom May 26, 2008. In a case that may reveal the scale of a suspected bribery network already put at more than 1 billion euros ($1.6 billion), by German engineering giant Siemens, Siekaczek is accused of building a system of slush funds and front firms to hide illegal money transfers. The company's conduct is also being investigated by the U.S. Department of Justice and Securities and Exchange Commission, among other foreign authorities, and could lead to Siemens being banned from bidding for certain U.S. contracts.

MUNICH, Germany (Reuters) - The defendant in the first criminal trial over suspected bribery at German engineering group Siemens AG (SIEGn.DE) sparked investigations that now encompass about 100 suspects, a Munich court heard.

Reinhard Siekaczek, who has admitted building a system of slush funds and mailbox companies for Siemens, had rushed on his arrest to provide names of those who had allegedly known about the corrupt practices, a witness said.

Hildegard Haeumler-Hoesl, a Munich prosecutor called as a witness on Wednesday, said Siekaczek had implicated dozens of colleagues when he was arrested on an anonymous tip-off in 2005.

Later, the 57-year-old former sales manager at Siemens' telecoms equipment division brought prosecutors two suitcases full of documents and composed a "list of those in the know," including well-known managers at the time.

"Mr Siekaczek started an avalanche," Haeumler-Hoesl said.

Munich prosecutors are meantime investigating almost 300 suspects, including about 100 relating to Siekaczek's case.

The case involving at least 1.3 billion euros ($2 billion) in suspect payments, according to Siemens' own estimate, has also sparked investigations by the U.S. Department of Justice and the Securities and Exchange Commission, among other authorities.

Such probes could lead to Siemens being banned from bidding for certain contracts in the United States and elsewhere.

Siemens' telecoms equipment division, most of which has since been divested, made annual sales of 13 billion euros and had 50,000 employees in its heyday.

BRIBERY NETWORK

The bribes it allegedly paid could have helped it to win contracts where it was bidding against rivals such as Cisco Systems Inc (CSCO.O), Nokia Oyj (NOK1V.HE) and Ericsson (ERICb.ST) in countries including Nigeria, Libya and Russia.

Siekzczek, who is defending himself against 58 charges of breach of trust, told the court on Monday he had in 2004 asked Thomas Ganswindt, at the time in charge of Siemens' telecoms equipment unit, to put a stop to the bribery network.

But nothing had changed after their meeting, he said.

Siekaczek says he built the network for paying bribes to officials in charge of handing out telecoms contracts abroad on the request of his superiors after such bribes were outlawed in Germany in 1998.

He faces up to five years in jail for each breach-of-trust charge as well as financial penalties if found guilty.

Klaus Kleinfeld and Heinrich von Pierer, at the time respectively chief executive and chairman of Siemens, resigned over the scandal last year, although neither was personally accused of wrongdoing.

Von Pierer will be called as a witness later in the trial in Munich's Higher Regional Court, as will be current Chief Financial Officer Joe Kaeser.

(Editing by David Holmes)