19 July 2005

MUNICH - Evidence that a senior executive with German chipmaker Infineon Technologies AG may have taken kick-backs as part of a sports sponsorship deal has hardened up, the Munich state prosecutor said Monday.

Infineon's chief operating officer Andreas von Zitzewitz was forced to stand down on the weekend amid corruption allegations, with the company saying Monday it had launched an investigation into whether to make a claim for compensation.

Munich-based Infineon, Europe's biggest semiconductor maker, announced on the weekend that Andreas von Zitzewitz had resigned in the wake of allegations concerning payments of EUR 259,000 being made for motorsport sponsorship.

In a statement released Monday, Munich's chief prosecutor Christian Schmidt-Sommerfeld said evidence so far "confirms the suspicion of payments" in his investigation into fraud, corruption and tax evasion in the case.

Von Zitzewitz decision to stand down followed police raids on Infineon's headquarters late Friday and several apartments as the probe by the state prosecutor into the allegations of kickbacks gained momenturm.

A former company executive, Harald Eggers is also under investigation for payments totalling EUR 50,000.

A successor for von Zitzewitz has not named with the group's chief Wolfgang Ziebart taking over responsiblity for the memory chip business. Infineon was spun off as a separate unit about six years ago by German electronics group Siemens.

While Infineon is itself not under investigation, the company said Monday it was considering whether to make a claim for compensation as a result of possible damage to the group's standing.

The scandal follows allegations that 45-year-old von Zitzewitz received kick-backs for handling sponsorship contracts with Infineon suppliers for a Swiss marketing company, BF Consulting GmbH.

However, the managing director of the Swiss-based company, Udo Schneider, on Monday insisted in a DPA  interview that his group had paid kick-backs to von Zitzewitz and Eggers.

Infineon has in the past sought to carve out a role for itself in motorsport sponsorship, including France's Le Mans car race and Formula One team Jordan-Honda. Infineon said it has now suspended all motorsports sponsorships.

DPA

Subject: German news