[Reader-list] BANGLADESH: Siemens Pleads Guilty in $5.3mm bribery case

Fri Dec 19 09:28:38 IST 2008

Siemens Bangladesh made bribery payments of about $5.3 million to
officials in that country between May 2001 and August 2006, the
agencies said. The payments were connected to a mobile telephone
project.

This story appeared on Network World at
http://www.networkworld.com/news/2008/121508-siemens-pleads-guilty-to-bribery-related.html

Siemens pleads guilty to bribery-related charges
By Grant Gross , IDG News Service , 12/15/2008
Sponsored by:

German electronics firm Siemens AG and three of its subsidiaries have
pleaded guilty to charges related to the U.S. Foreign Corrupt
Practices Act (FCPA), for a range of activity, including attempted
bribery of government officials worldwide, according to two U.S.
agencies.

Due to the charges resulting from the US$805.5 million bribery scheme,
Siemens and the subsidiaries have agree to pay criminal fines totaling
$450 million, with the parent company paying $448.5 million, according
to the U.S. Department of Justice and U.S. Securities and Exchange
Commission.

At a hearing in U.S. District Court for the District of Columbia,
Siemens AG pleaded guilty to two counts of criminal violations of the
FCPA's internal controls and books and records provisions. Siemens
Argentina pleaded guilty to one count of conspiracy to violate the
books and records provisions of the FCPA. Siemens Bangladesh and
Siemens Venezuela each pleaded guilty to one count of conspiracy to
violate the antibribery and books and records provisions of the FCPA.

Siemens' bribery effort was "unprecedented in scale and geographic
reach," Linda Chatman Thomsen, director of the SEC's Division of
Enforcement, said in a statement.

Siemens representatives were not immediately available for comment.

Beginning in the mid-1990s, Siemens AG engaged in systematic efforts
to falsify its corporate books and records and knowingly failed to
implement internal controls, the DOJ and SEC said.

Siemens took advantage of lax internal controls to make bribery and
other unaccounted payments totaling nearly $1.4 billion from March
2001 through 2007, the DOJ and SEC said. Of that money, nearly $805.5
million went to bribery payments to foreign government officials, the
DOJ and SEC press release said.

>From 2000 to 2002, four Siemens subsidiaries were awarded 42 contracts
with a combined value of more than $80 million with the Ministries of
Electricity and Oil in Iraq under the United Nations Oil for Food
Program. Those four subsidiaries paid more than $1.7 million in
kickbacks to the Iraqi government, the DOJ and SEC said.

In addition, from September 1998 to 2007, Siemens Argentina made and
caused to be made significant payments to various Argentine officials,
both directly and indirectly, in exchange for favorable business
treatment in connection with a $1 billion national identity card
project, the press release said.

Siemens Argentina made about $3.3 million in corrupt payments to
Argentine officials between March 2001, when Siemens AG was listed on
the New York Stock Exchange, and 2007, the agencies said.

Siemens Venezuela made about $18.8 million in bribery payments to
Venezuelan officials between November 2001 and May 2007, the agencies
said. The payments were for favorable business treatment in major mass
transit projects, the DOJ and SEC said.

Siemens Bangladesh made bribery payments of about $5.3 million to
officials in that country between May 2001 and August 2006, the
agencies said. The payments were connected to a mobile telephone
project.

"Today's filings make clear that for much of its operations across the
globe, bribery was nothing less than standard operating procedure for
Siemens," Acting Assistant Attorney General Matthew Friedrich, said in
a statement. "It should be equally clear that Siemens has undertaken
significant remedial measures, instituted real reforms and cooperated
from the inception of this investigation."

Siemens AG and its audit committee disclosed potential violations to
law enforcement officials, the agencies said.

Under the terms of the plea agreement, Siemens AG has agreed to retain
an independent compliance monitor for four years. The compliance
officer will make reports to the DOJ.

Also on Monday, Siemens AG agreed to a disposition resolving an
ongoing investigation by the Munich Public Prosecutor's Office of
Siemens AG's operating groups other than its telecommunications group.
The charges were based on corporate failure to supervise its officers
and employees, and in connection with those charges Siemens AG agreed
to pay €395 million, or approximately $569 million, including a
€250,000 corporate fine and €394.8 million in disgorgement of profits.

In October 2007, the Munich Public Prosecutor's Office announced a
settlement with Siemens AG under which Siemens AG agreed to pay €201
million, or approximately $287 million, including a €1 million fine
and €200 million in disgorgement of profits. The October plea was
related to bribery charges in Siemens' telecommunications group.

In connection with the cases brought by the DOJ the SEC and the Munich
Public Prosecutor's Office, Siemens AG will pay a combined total of
more than $1.6 billion in fines.

The IDG News Service is a Network World affiliate.