German industrial group Siemens yesterday denied an allegation that the bulk of its business in China is tainted by bribery, and vowed to take a zero-tolerance approach to anyone who violates its internal policy.

Over half of Siemens' businesses in China are tainted by bribery, German media WirtschaftsWoche has quoted unnamed sources as saying.

Investigation into the bribery claim is still under way, said Richard Hausmann, president and chief executive officer (CEO) of Siemens China.

"We are fully collaborating with the investigations and I have full confidence that we are doing this in the right way, working with authorities involved," Hausmann said.

"The allegation (that over half of China operations are tainted by bribery) does not hold water," the China CEO said, referring to the German press reports.

The German industrial and engineering giant has been embroiled in a bribery scandal since November, when German authorities raided Siemens headquarters and arrested six former and current employees suspected of bribery.

"In relation to bribery, I have clearly stated this is my most important agenda, and there is a zero-tolerance policy for anybody violating the internal policy," said Peter Loescher, president and CEO of Siemens AG.

"We have a full audit and a full compliance program in place and communicate the zero-tolerance policy to our staff," Hausmann said. "We found some cases and are working on them ... there are clear consequences in those cases," the China CEO said.

Siemens China, according to Hausmann, dismissed 20 employees last year for "deeds that the company did not accept".

Loescher is on his first visit to China after taking over as Siemens AG's president and CEO in July.

"China is critical to our strategy of exploring fully the potential growth in emerging markets," he said.

The German firm chalked up 50.2 billion yuan sales in China last year, a figure the company is aiming to double by 2010.

Siemens has poured 10 billion yuan into China in the past three years and last year pledged to invest another 10 billion yuan in the next few years.

Rising population, rapid urbanization and massive environmental challenges that China face, Loescher said, would translate into huge business demand for Siemens. "All group units have reached their business goals (in China) in the first three quarters."