Wednesday, December 17, 2008

Siemens guilty of massive global corruption scandal

Tuesday 16th December, 2008

Washington/German corporate giant Siemens AG has pleaded guilty in a US court to a massive global corruption scandal that won it contracts around the globe from Argentina and Venezuela to Bangladesh, Iraq and Turkey.

The company Monday agreed to pay fines of $1.3 billion in two countries.

The multinational, which makes turbines, trams, telephone exchanges and other electrical products, admitted in the District Court in Washington that its executives paid kickbacks to win contracts using secret funds.

'Today's filings make clear that for much of its operations across the globe, bribery was nothing less than standard operating procedure for Siemens,' US acting assistant attorney general Matthew Friedrich said.

The court-approved US penalty of $800 million is nearly 20 times more than any other foreign company has faced in the United States for corruption and comprises $450 million in criminal damages under the Foreign Corrupt Practices Act (FCPA) and $350 million in civil damages for violating stock exchange rules.

Siemens has also accepted a fine in Germany of $530 million (395 million euros) so that parallel cases do not go to trial.

US officials said Siemens employees had transported masses of money in suitcases across international lines, set up slush funds and used post-it notes on documents for executive signatures so they could be removed afterwards to erase the trail.

Three Siemens subsidiaries in Argentina, Bangladesh and Venezuela each also agreed to pay $500,000 fines.

Siemens was charged with bribing Argentine officials to get a contract for a $1-billion identity card project, Venezuelan officials in connection with two major mass transit projects and Bangladesh officials for a mobile telephone contract.

During Iraq's oil-for-food programme managed by the United Nations before Saddam Hussein was deposed, Siemens AG or one of its subsidiaries also paid $1.7 million in kickbacks to the Iraqi government for contracts which netted them $38 million in profits, US officials charged.

All told, from the time Siemens was listed on the New York Stock Exchange in March 2001 through 2007, Siemens made payments of $1.36 billion to business consultants for unknown purposes, and underhand payments to foreign officials, US officials charged.

That conduct violated rules under the US Securities and Exchange Commission that forbid falsification of corporate books and insist on internal controls, said Linda Chatman Thomsen, director of enforcement at the SEC.

Friedrich did not rule out prosecution of Siemens executives who were connected to the scandal, but refused to give details.

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