Reports are in that police and prosecutors have raided Siemens AG, the world's largest electronics company, in Munich and Erlangen, Germany, as part of an investigation into acts of fraud suspected at the company’s fixed networks business.

"Certain Siemens employees have engaged in fraud," Siemens spokesman Andreas Schwab confirmed. "We are cooperating fully with the investigation." 

Approximately 200 police, prosecutors and tax inspectors were involved in the raids at around 30 locations, some of them private homes.  Police have already arrested five Siemens employees as part of an investigation into embezzlement and possible bribery at the company.

A total of ten Siemens employees, which included top executives Michael Kutschenreuter and Andy Mattes, and two other non-Siemens workers are still undergoing investigation for involvement in €20 million (US$25.5 million) to front companies and bank accounts in Switzerland and Liechtenstein, according to German publication Spiegel.

“Whether and to which degree these funds were used for paying bribes must still to be investigated,” said Munich senior prosecutor Christian Schmidt-Sommerfeld. “Three of the suspects have already made comprehensive statements.”

Reports say that company executives created a secret slush fund with the purpose of paying bribes to secure contracts, customers and design-wins.  The tactic, though illegal, is not uncommon in tech companies and may lead the way for several other investigations of the same manner.

“Based on our investigation so far, we have reason to suspect that Siemens ran ‘black accounts’ that allowed it to open new markets through secret payments to potential and existing business partners,” said a Swiss federal prosecutor spokeswoman.  Siemens has issued a press release, but is so far extremely tight lipped about the investigation.