German engineering powerhouse Siemens said Sunday it had hired a new chief executive to steer the company out of a major corruption scandal.

Peter Löscher, who currently runs US pharmaceutical giant Merck's Global Human Health division, takes over at Siemens on July 1.

"His upright character, his global background, his outstanding international reputation and his wide-ranging experience in business development and strategy, the financial markets and technology-related issues were the key factors in our decision," Siemens supervisory board's chairman, Gerhard Cromme, said in a statement.

"I am convinced that Mr Löscher has what it takes to steer Siemens through its current difficulties and into a better future," he said.

Kleinfeld became untenable

Löscher, 49, was appointed at a special meeting of the Siemens supervisory board to succeed Klaus Kleinfeld, who said last month he would leave his post by September to allow Siemens to focus on weathering a far-reaching corruption scandal, even though he has not personally been implicated.

The announcement came a few days after the previous favorite, Wolfgang Reitzle, chief executive of German industrial gas giant Linde, said he preferred to stay where he was.

Siemens is suspected of trying to bribe key union officials to secure industrial peace, and of setting up a massive slush-fund to obtain foreign contracts. Some 400 million euros ($540 million) are said to have been used for bribes in telecommunications contracts.

Break to tradition

Siemens is Germany's biggest employer and has more than 450,000 workers worldwide. It builds trains, power plants and manufactures medical and telecommunications equipment.

Austrian-born Löscher spent most of his career as an executive at Hoechst AG, which merged with France's Rhone-Poulenc to form Aventis.

The appointment of an outsider to the Siemens top job is a break with the company's tradition and shows its determination to put its house in order following the corruption scandal, observers said.