SWITZERLAND - Siemens' Swiss arm has filed criminal charges against what it said were "external managers" who had links with Roland Rümmeli, the disgraced former head of investments at its pension fund (Pensionkasse).

"Criminal charges have been filed against external parties who conducted asset management for the Pensionskasse as there is strong suspicion of damage to the fund," Siemens Switzerland said.

Saying that it needed to respect an ongoing investigation by Zurich's public prosecutor, Siemens neither named the external parties nor elaborated on the nature of the charges.

Rümmeli was fired from Siemens last October after it emerged that he had received CHF500,000 (€306,000) in kickbacks from a hedge fund called Auriga. The allegation is that this payment was made in exchange for Siemens' Pensionskasse investing in Auriga.

While Rümmeli repaid Siemens CHF400,000, this did not stop the firm from filing criminal charges against him last November.

Asked by IPE about the status of its earlier charges, Siemens spokesman Charles Breitenfellner said: "Those are still with the public prosecutor, who is investigating. Yes, Mr Rümmeli paid almost all of the kickbacks back, but there are still claims against him."

Siemens' latest charges follow an investigation of its Pensionskasse's activities since 2000. The investigation was conducted by two outside experts.

Among the experts' findings was the fact that "in asset management, the fund worked with far too many external partners". Partly because of this, Rümmeli was able to hide his wrongdoing for an extend period of time, according to the experts.

Breitenfellner said that since the investigation, the Pensionskasse's supervisory board has introduced a new mandate structure that includes fewer external managers.

On the other hand, the experts said that since 2000, when new management was brought in at the CHF1.7bn Pensionskasse, there had been "significant improvement" in the areas of documentation, portfolio, risk management and controlling.

Asked whether Rümmeli's case contradicted this finding, Breitenfellner replied: "I see no contradiction. Corruption is very difficult to prevent."

"Say you have a business relationship with someone and then you meet them for lunch. Suddenly, they pass you CHF10,000 under the table and you take it. What are the chances of this being found out?," he added.

Separately, the latest Lusenti Partners survey of Swiss Pensionskassen and other institutions revealed that in 2006, the schemes improved their funding ratio to an average of 111.6%.
 
Lusenti Partners, a Swiss consultant, said the improvement was mainly due to a strong performance of the investors' equity holdings amid last year's bull run.

Topics