The firm is now saying it is probing possible bribery of more than £283m in consultancy payments, more than twice previous estimates.
Thomas Ganswindt is the most senior former manager to be detained in the investigation so far. Munich prosecutors said they had taken the former head of the company's telecoms equipment division into custody as part of an investigation into the siphoning off of millions of euros into overseas funds as possible bribes for contracts.
German reports cited former colleagues of Ganswindt claiming he had known about and participated in the alleged embezzlement scandal. Ganswindt, who was once seen as a potential chief executive of Siemens, left the firm in September, after 17 years, to become chief executive of Luxemburg-based metering service company Elster Group.
The Schutzgemeinschaft der Kapitalanleger, a stockholder representative group that protects the interests of minority shareholders, has now asked former Siemens chief executive Heinrich von Pierer to step down as the head of its supervisory board. But Von Pierer, chairman and chief executive from 1992 to early 2005 when most of the siphoning is alleged to have taken place, has so far resisted calls to resign and said he would play an active role in investigations.
"If we were to construe a political responsibility in every case, we'd have a new management every couple of months," he said, adding that it was not the chief executive's job to check each single payment that was made. He repeated the claim by Siemens that a "group of employees" had teamed up to cash in at the company's expense.
Chief financial officer Joe Kaeser said not all the payments under investigation were necessarily dubious.
The group's supervisory board said this week it had hired legal firm Debevoise & Plimpton as well as Michael Herschman, one of the founders of Transparency International, to examine its compliance rules and systems.
The German group was earlier this week forced to rewrite its full-year profits figures for the year to 30 September from 3.11 billion to 3.03bn, just a month after reporting the numbers.
Munich prosecutors have reported that they believe a criminal gang within the company may be behind the shortfall.
It had been feared that the company could be forced to revisit figures dating back as far back to 2002. However, the company said this week there could be further adjustments and investigations by US authorities.
German police last month raided more than 30 of the company's offices as part of the investigation. The searches, conducted by some 200 tax inspectors, also extended to the homes of some of the company's top managers.