Siemens troubles hold up JV with Nokia

Nokia Corp. and Siemens AG said their network equipment joint venture will be delayed due to an ongoing investigation into irregularities at Siemens’ telecom unit involved in the JV. The companies also said the deal will be subject to “the results and consequences” of the investigation.
Previously, the two companies had anticipated closing the JV by the end of the year and beginning business together at the start of 2007. Under the new schedule, jointly announced by both companies, the JV deal is to close in the first quarter of 2007 with operations to follow-pending the results of a compliance review at Siemens in which Nokia is participating.
The two firms earlier this year announced a deal to form Nokia Siemens Networks, valued at $20 billion. The JV would be the third-largest network equipment company in the world. Recently merged Alcatel-Lucent is the largest, followed by L.M. Ericsson.
Although Siemens has said that allegedly fraudulent behavior at its telecom business was the result of “individual acts,” current and former managers have been arrested in the past month, including an oversight manager as well as executives in finance, accounting and auditing. The company has reported finding $550 million in questionable transactions over seven years.