A FORMER executive at Siemens has admitted to managing a €53 million slush fund to win contracts, opening the next stage of a €1.3 billion fraud inquiry at the engineering giant.

Reinhard Siekaczek, a former sales executive at the Siemens ICN fixed-line unit, told a Munich court yesterday that the slush funds were an "open secret" in the company and the industry.

"Of course the entire local board knew what I was doing," said Mr Siekaczek, a Siemens employee of 38 years with carefully groomed grey hair and gold-rimmed glasses. "Everyone knew that we paid fees for contracts."

Mr Siekaczek, who faces 58 charges of embezzlement, insisted yesterday he had not personally benefited from the slush fund. The €53 million he extracted from company accounts using fake contracts was forwarded to salesmen to help win contracts, he said.

He played down the complexity of off-shore accounts and consultant contracts that helped Siemens win large contracts in Egypt, Indonesia, Vietnam and even at the Olympic Games in Athens.

"You didn't have to be incredibly intelligent to master it," said Mr Siekaczek. "We all knew it was illegal but we weren't doing it for ourselves, but for the company."

At all times, he said, he kept his superiors informed of his activities, increasing the likelihood of higher-profile trials to come.

The Siemens affair, as it has become known in Germany, first came to light in November 2006 when investigators raided the company's Munich headquarters.

The scandal has tarnished the name of one of Germany's iconic companies and the investigation is already well on its way to becoming the largest of its kind in corporate history.

"We hope the trial will create a new awareness in corporate culture that bribery will not be tolerated, either in Germany or abroad," said senior prosecutor Anton Winkler yesterday.

Investigators have gathered five terrabytes of files - equivalent to five million sheets of A4 paper - and are investigating 270 people across the group. The scandal has already claimed the heads of group chief executive Klaus Kleinfeld as well as Heinrich von Pierer, a former chief executive and later supervisory board chairman.

The company employs 400,000 people worldwide. It was already fined €38 million earlier this month after two former executives were convicted of paying €6 million in bribes to help win an Italian gas turbine contract worth €450 million.