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CEO of Siemens leaves amid flap

The industrial powerhouse is being rocked by probes into bribery and slush funds in the U.S. and abroad.

FRANKFURT, Germany - Klaus Kleinfeld, 49, was the wunderkind who lifted Siemens AG's stock price 50 percent in his more than two years as chief executive officer of the conglomerate that has businesses ranging from cell phones to auto parts.

Now, Kleinfeld is leaving the company he has been with for 20 years after corruption investigations in Europe and the United States alleging that employees set up secret funds to pay off union leaders and bribe officials to win contracts.

His departure follows that of board chairman Heinrich von Pierer, also a former CEO.

Yesterday, Siemens said in a filing with the U.S. Securities and Exchange Commission that the company was being investigated by Norway, France and Poland over possible antitrust violations.

The investigations are in addition to probes of bribery and corruption involving about $570 million, being handled by investigators in Germany, Italy, Switzerland and the United States, along with antitrust probes by the European Commission and Japan's Fair Trade Commission.

The probes have put one of the world's industrial powerhouses in the strange position of seeing its reputation as a corporate citizen tarnished even as profits and investor approval climb.

Kleinfeld took over as CEO from von Pierer in 2005 at Siemens, a conglomerate with a market capitalization of nearly $110 billion and 428,000 workers in more than 190 countries.

Siemens Medical Solutions USA Inc. is based in Malvern, Pa., where it has 4,000 employees.

The first rumblings of trouble came in November when six current and former employees were detained after Munich prosecutors ordered raids on Siemens offices across Germany. They were later released, but the investigation continues.

Investigators said the six committed breach of trust against the Munich-based company, in cases stretching back to 2002, by setting up secret funds outside Germany used for payoffs to win lucrative telecommunications contracts.

Kleinfeld - who is not under investigation or linked to the alleged wrongdoing - announced an internal probe of the claims, and hired a law firm to conduct an independent investigation. Von Pierer also has not been named in any of the probes.

Last week, Siemens posted a second-quarter profit of $1.71 billion, up 36 percent from a year earlier and its best quarterly result in five years. Sales were up 10 percent to $27.99 billion.

The departure of top figures such as von Pierer and Kleinfeld could be a turning point for attitudes toward corrupt practices, said Jermyn Brooks, director of private-sector programs at Berlin-based Transparency International, a nongovernmental organization that focuses on combating corruption.

"What hopefully will come out of the Siemens affair . . . is that senior business leaders, when they see what happens to Siemens in terms of fines and the lost reputation of individuals like von Pierer or Kleinfeld . . . will say, 'OK, we need to start taking this seriously,' " he told the Associated Press.