Electronics and electrical engineering company
Siemens and some of its subsidiaries admit they spent more than $1.4 billion to bribe foreign officials, scammed the United Nations Oil for Food program, and cooked their books for years until they were caught by prosecutors in Germany and the United States.
As a penalty, the companies will pay $898.5 million in U.S. criminal fines, according to the Securities and Exchange Commission. In settlement of a separate U.S. civil proceeding involving some of the same incidents, the company agreed to give up $350 million in profits related to those violations.
View a slide show on 2008’s biggest tech crime stories.
“Today’s filings make clear that for much of its operations across the globe, bribery was nothing less than standard operating procedure for Siemens,” says U.S. Acting Assistant Attorney General Matthew Friedrich.
The parent company
Siemens A.G. and the relevant subsidiaries pleaded guilty in U.S. District Court in Washington, D.C., to charges brought under the U.S. Foreign Corrupt Practices Act (FCPA). “This pattern of bribery by Siemens was unprecedented in scale and geographic reach,” says Linda Chatham Thomsen, the director of the SEC’s enforcement division.
Siemens’ bribes-for-business activities came under U.S. scrutiny because the FCPA applies to companies traded on U.S. stock exchanges. Siemens itself investigated and disclosed potential FCPA violations after the public prosecutor’s office in Munich raided Siemens offices and homes of employees as part of its own investigation.
Penalties in various cases brought against Siemens in Munich total $856 million. These cases stemmed from the same investigation that sparked the U.S. investigation, the SEC says.
The total in fines, penalties and return of profits that Siemens must pay for its illegal activities that were the subject of the charges in the United States and Germany is $1.6 billion, the SEC says. All the offenses occurred during the timeframe 1998 to 2007.
During that time, Siemens Argentina paid more than $31 million to buy off officials deciding national-identity-card contracts, logging the payments as consulting or legal fees, the SEC says.
The main Siemens company and four of its subsidiaries—Siemens France and Turkey, Osram Middle East and GTT—paid $1.7 million in kickbacks to Iraqi officials between 2000 and 2002. In return they landed $80 million in contracts with the Iraq Ministries of Electricity and Oil, profiting $38 million in the deals. The Siemens organizations inflated their bids 10%, then disguised kickbacks as commissions for consultants.
Between 2001 and 2007, Siemens Venezuela laundered $18.7 million to government officials through business consultants in exchange for a share of two mass transit projects in that country.
Siemens Bangladesh paid at least $5.3 million to government officials through intermediaries listed as consultants in exchange for favorable treatment during bidding on a
mobile phone project.