BERLIN, August 16, 2008 (AFP) - German engineering giant Siemens ignored its own anti-corruption procedures in a slush fund scandal that has brought down a number of former group executives, Spiegel magazine said.

'Netzwerk-compliance,' a network comprising more than 400 businesses created to secure good company governance, identified 'considerable structural shortcomings' in Siemens' anti-corruption rules, according to a 'strictly confidential' document by Hengeler Mueller lawyers' office for Siemens.

Hengeler Mueller pinpointed a conflict of interest in the company's auditing office tasked with preventing corruption and protecting the group if corruption cases were revealed, the magazine said in its edition to be published Monday.

Steps to improve the way the auditing office works also met with 'considerable opposition by management,' it added.

With its 80 members, the audit department was understaffed compared to its US competitor General Electric (GE) which employs 300 people in its compliance department, according to an internal 2005 study, quoted by the magazine.

Siemens said late last month it would pursue former directors for damages in an unprecedented action based on a claim they ignored widespread corruption revealed nearly two years ago.

Among the 11 executives targeted are former Siemens bosses Heinrich von Pierer and Klaus Kleinfeld, the company said in a statement.

The company 'bases its claims on breaches of their organisational and supervisory duties in view of the accusations of illegal business practices and extensive bribery' that marked operations from 2003 to 2006.

The sprawling conglomerate has acknowledged that 1.3 billion euros (two billion dollars) was funneled into various funds used to obtain foreign contracts, and that the practice was widespread across its numerous divisions.

The 160-year-old group manufactures products from light bulbs and medical equipment to railway trains and power stations, and employs around 400,000 people worldwide.

It agreed in October to pay a fine of 201 million euros to put an end to some German legal proceedings but is also the subject of a potentially damaging probe by the US Securities and Exchange Commission.

Siemens shares are listed in the United States where it could be barred from bidding on public contracts -- one reason why it might have taken such historic action.

Siemens was also accused of having built up the leader of a small independent trade union in exchange for support against actions by the giant IG Metall union.