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Conglomerate
Munich, Bavaria, Germany
Nationality of Foreign Officials:
Summary of Allegations:
BACKGROUND
Between 21 March 2001 and 30 December 2007, Siemens used a variety of methods to allegedly make approximately 4,283 illegal payments to government officials, totaling approximately USD 1.4 billion. These payments caused the Company to realize an alleged USD 1.1 billion in profits during the relevant time period.
Siemens allegedly made improper payments when competing for business outside of Germany. These types of payments were not illegal under German law at the time and indeed were tax deductible as legitimate business expenses. In 1999, Germany ratified the Organisation of Economic Cooperation and Development ("OECD") Convention prohibiting transnational bribery. In 2001, Siemens listed its stock on the New York Stock Exchange thereby subjecting itself to the FCPA.
Despite the change in the law, Siemens did not implement the necessary internal controls to ensure that improper payments were no longer made and allegedly encouraged and rewarded such payments.
The payments allegedly made in various divisions of the Company between 2001 and 2007 included: (i) cash payments to Nigerian officials in connection with four telecommunications projects; (ii) payments to Enel, a partially state-owned company in Italy, in connection with two power plant projects; (iii) "bonus payments" made to Greek officials by Siemens' Communications Group; (iv) payments to officials in Venezuela in connection with metro projects in Valencia and Maracaibo; (v) payments to government customers in China in connection with seven metro construction projects; (vi) payments to a former director of the Israel Electric Company for four contracts to build and service power plants; (vii) payments to government customers in China for the installation of high voltage transmission lines; (viii) payments to officials in Bangladesh for a contract to install mobile telephone services; (ix) payments to senior officials in Argentina in order to win a contract to produce national identity cards; (x) payments in Vietnam in connection with the sale of medical devices; (xi) cash payments and vacation travel for doctors in China related to the sale of medical equipment; (xii) payments to government officials in Russia related to a World Bank-funded project for the design and installation of traffic equipment; (xiii) payments to senior officials at PEMEX, the Mexican state-owned oil company, to settle cost overruns in connection with three refinery modernization projects; (xiv) payments to government customers in Russia for the sale of medical equipment; and (xv) payments to officials in Vietnam related to a contract to supply equipment and services for a GSM network.
In addition to the payments listed above, Siemens allegedly paid approximately USD 1.7 million in kickbacks under 42 contracts to the government of Iraq in connection with the United Nations Oil for Food Program. These contracts resulted in over USD 124 million in revenue and approximately USD 38,226,537 in profits. The payments were described as after-sales service fees, even though Siemens did not render any services under the contracts.
Siemens allegedly used a variety of methods to conceal these payments and improperly recorded all 4,283 payments on its books and records. Approximately USD 982.7 million in payments were funneled through third parties. Siemens would allegedly enter into business consultant agreements under which the consultants would not perform any services other than funneling bribes. Siemens routed more than USD 211 million in bribes through slush funds that were often maintained by former Siemens executives, third parties, or affiliated companies. Siemens also used cash to pay approximately USD 160.4 million in bribes.
Employees with the Communications Group would obtain cash from "cash desks" maintained by the Siemens Real Estate Group. Employees would allegedly pick up hundreds of thousands of dollars in cash and would then transport it, sometimes in suitcases, across borders to pay bribes. In addition to the other methods, Siemens used a number of internal accounts to make more than USD 16.2 million in payments. These accounts were intended to make payments on transactions between two Siemens entities; however, Siemens often used these accounts to make payments to third parties.
Approximate Alleged Payments to Foreign Officials:
Business Advantage Allegedly Obtained:
Nationality of Foreign Officials: Argentina
Summary of Allegations:
The Argentinean Anti-Corruption Authority began an investigation into alleged corruption in connection with a contract Siemens was awarded in 1998 for the development and operation of a system for the production of identity cards, border control, data collection, and registers of voters.
Siemens AG filed a request for arbitration against the Republic of Argentina (Argentina) with the International Center for Settlement of Investment Disputes (ICSID) of the World Bank. Siemens AG claimed that Argentina had unlawfully terminated its contract with Siemens for the development and operation of a system for the production of identity cards, border control, collection of data and voters' registers (DNI project) and thereby violated the Bilateral Investment Protection Treaty between Argentina and Germany (BIT). Siemens AG sought damages for expropriation and violation of the BIT of approximately USD 500 million.
On 13 December 2011, the U.S. Department of Justice ("DOJ") charged eight former executives and agents of Siemens AG and its subsidiaries for allegedly engaging in a decade-long scheme to bribe senior government officials in Argentina to secure, implement and enforce a USD 1 billion contract with the government of Argentina to produce national identity cards. The indictment charges the defendants and their co-conspirators with conspiracy to violate the FCPA and the wire fraud statute, money laundering conspiracy, and wire fraud.
Also on 13 December 2011, The U.S. Securities and Exchange Commission ("SEC") filed a civil action on related charges alleging that over USD 100 million in bribes were paid in connection with Siemens' efforts to secure the contract and obtain the profits from that contract. The indictments come three years after Siemens AG, as a company, resolved FCPA-related charges with the DOJ and SEC. The SEC alleged that in furtherance of the scheme, the defendants falsified documents, including invoices and sham consulting contracts, participated in meetings in the United States to negotiate the terms of bribe payments, and made use of U.S. bank accounts to pay bribes. According to the SEC's complaint, the bribery scheme lasted for more than a decade, from approximately 1996 until early 2007.
On 22 December 2017, the U.S. extradited Eberhard Reichert to New York. Eberhard Reichert as one among the eight former executives indicated by the DOJ in 2008, and pleaded not guilty to the charge of FCPA violation in Argentina.
Approximate Alleged Payments to Foreign Officials: Approximately $100 million to the Argentine government, opposition party, and candidates for office
Business Advantage Allegedly Obtained: A $1 billion contract of producing national identity cards
Nationality of Foreign Officials: Austria
Summary of Allegations:
The Vienna public prosecutor, Austria, is conducting an investigation into payments between 1999 and 2006 relating to Siemens AG Austria and its subsidiary Siemens VAI Metal Technologies GmbH & Co. for which valid consideration could not be identified. In September 2011, the Vienna public prosecutor extended the investigations to include a potential corporate liability of Siemens AG Austria for tax evasion.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Bangladesh
Summary of Allegations:
It is alleged that the employees of Siemens Bangladesh colluded with employees of a public hospital to overcharge for the delivery of medical equipment in the period before 2007.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Brazil
Summary of Allegations:
Siemens' former senior representative in Brazil, Adilson Primo, allegedly paid approximately USD 8.1 million in bribes. Brazilian daily newspaper O Estado de Sao Paulo reported on 1 December 2013 that a Sao Paulo court ordered Mr. Primo to disclose financial transactions on a business account he owns. Both the ruling leftist labor party, PT, and the country's largest opposition force, the Social Democratic PSDB, accused each other of having received kickbacks from Siemens in connection with the Sao Paulo metro tender. Police in Sao Paolo reportedly obtained two documents incriminating senior PSDB leaders. The documents allegedly implicate payments to PSDB leaders in Sao Paulo from a railway cartel involving Siemens, French conglomerate Alstom, and Spain's CAF group, as well as Mitsui of Japan and Bombardier from Canada.
On 4 December, Brazilian media reported that Siemens AG and Brazilian state prosecutors are negotiating a settlement of over USD 307 million of a civil case related to investigations into bribery in exchange for obtaining train contracts. Prosecutors are reportedly accusing Siemens of illegal acts to win a contract to provide trains for the Sao Paulo metropolitan transit system between 1998 and 2008, including forming a cartel and paying bribes.
Approximate Alleged Payments to Foreign Officials: USD 8.1 million
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: China
Summary of Allegations:
After the Siemens case was prosecuted in the United States, information was provided to Chinese authorities, apparently through diplomatic channels, regarding the involvement of Chinese officials in the Siemens bribery.
A number of companies are reported to have been involved in Siemens bribery in China, including Siemens Medical Solutions Group, Siemens PTD and Siemens Transportation System. Media sources allege that these three companies offered USD 61.4 million in bribes to Chinese officials for projects totaling CYN 2.1 billion.
The owner of a private company, Tian Qu, allegedly served as middleman or sales agent for Siemens to broker equipment sales between Siemens and China Mobile. Through Tian, Siemens allegedly secured lucrative sales contracts with China Mobile Anhui Province, and paid USD 5.1 million to Tian's bank account, to be transferred to Shi. The transactions allegedly took place between 2002 and 2009.
Approximate Alleged Payments to Foreign Officials: USD 61.4 million
Business Advantage Allegedly Obtained: projects totaling CYN 2.1 billion.
Nationality of Foreign Officials: Greece
Summary of Allegations:
In February 2010, a Greek Parliamentary Investigation Committee (GPIC) was established to investigate whether any politicians or other state officials in Greece were involved in Siemens' alleged wrong-doing in Greece. GPIC's investigation focused on possible criminal liability of politicians and other state officials. Greek public prosecutors separately investigated certain fraud and bribery allegations involving - among others - former board members and former executives of Siemens Greece and Siemens AG. In January 2011, the GPIC alleged that the damage suffered by the Greek state amounted to at least EUR 2 billion.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Hungary
Summary of Allegations:
Siemens Zrt. Hungary and certain of its employees are alleged to have made suspicious payments in connection with consulting agreements with a variety of shell corporations in Hungary. Siemens Zrt. Hungary is alleged to have made improper payments to secure the awarding of a contract for the delivery of communication equipment to the Hungarian Armed Forces.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: secure the awarding of a contract for the delivery of communication equipment to the Hungarian Armed Forces
Nationality of Foreign Officials: Iraq
Summary of Allegations:
In August 2007, the Nuremberg-Fuerth public prosecutor began investigating Siemens for possible violations of anti-corruption law in connection with the United Nations Oil-for-Food Programme.
In June 2008, the Republic of Iraq filed an action requesting unspecified damages against 93 named defendants with the United States District Court for the Southern District of New York on the basis of findings made in the 'Report of the Independent Inquiry Committee into the United Nations Oil-for-Food Programme.' Siemens S.A.S. France, Siemens A. S. Turkey and OSRAM Middle East FZE, Dubai, are among the 93 named defendants.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Israel
Summary of Allegations:
On 17 March 2013, Reuters reported that Dan Cohen, a former judge in Israel and former director of the state-owned IEC, has been extradited to Israel from Peru in order to face bribery and other charges. The indictment of Cohen alleged that he accepted approximately USD 1.3 million in exchange for ensuring that Siemens Israel won a bid over General Electric for a lucrative gas turbines contract with IEC in 1999. An investigator at the Israel Securities Authority alleged that Cohen received bribes amounting to approximately USD 4 million from multiple companies, although details on these other companies and transactions were not disclosed.
In total, Siemens allegedly paid USD 20 million in bribes to officials at Israel Electric Corp, a state-owned entity, in order to win contracts between 2000 and 2005. The payments allegedly were made through a former Siemens CEO in Israel and his brother-in-law to at least six former executives of Israel Electric Corp. via foreign bank accounts.
Approximate Alleged Payments to Foreign Officials: USD 20 million
Business Advantage Allegedly Obtained: win contracts between 2000 and 2005
Nationality of Foreign Officials: Italy
Summary of Allegations:
The public prosecutor in Milan alleged that two individuals at Siemens S.p.A. made illegal payments to employees of the state-owned gas and power group, ENI, as part of a larger probe that implicated other companies operating in Italy. Andreas Kley, the former finance chief at Siemens' power-generation unit, and Horst Vigener, a former consultant to Siemens' power-generation unit, were alleged to have paid about USD 7.8 million in bribes from 1999 to 2002 to help Siemens win gas-turbine supply contracts with Enel, an Italian energy company. The contracts were valued at approximately USD 585 million.
Approximate Alleged Payments to Foreign Officials: about USD 7.8 million
Business Advantage Allegedly Obtained: contracts valued at approximately USD 585 million
Nationality of Foreign Officials: Kuwait
Summary of Allegations:
In May 2011, Siemens voluntarily reported a case of attempted public corruption in connection with a 2010 project in Kuwait to the DOJ, SEC and the Munich Public Prosecutor.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Mexico
Summary of Allegations:
Petroleos Mexicanos ("PEMEX"), a Mexican state-owned petroleum company, alleged that a consortium between Siemens AG and SK Engineering & Construction Co., which operated under the name Conproca, bribed officials to win a lucrative contract for the Cadereyta project in Northern Mexico in 1997. Later, when cost overruns would have had consequences pursuant to the project contract, the consortium paid additional bribes in order to avoid the cost overrun status.
PEMEX brought a civil suit in a U.S. court alleging that Siemens and SK Engineering submitted a low bid in 1996 to win a public contract for modernizing a PEMEX refinery. Siemens then allegedly bribed PEMEX officials to recover cost overruns. PEMEX sought at least USD 500 million in damages from Siemens and SK Engineering. On 17 July 2014, the U.S. Court of Appeals for the Second Circuit dismissed the suit by PEMEX on the basis that PEMEX did not allege sufficient contacts or activities with the U.S. in order to bring the charges in U.S. courts.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Nigeria
Summary of Allegations:
The Nigerian Economic and Financial Crimes Commission (EFCC) conducted an investigation into alleged illegal payments by Siemens to Nigerian public officials between 2002 and 2005. In October 2010, the EFCC filed charges with the Federal High Court in Abuja and the High Court of the Federal Capital Territory against - among others - Siemens Ltd. Nigeria (Siemens Nigeria), Siemens AG and former board members of Siemens Nigeria.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Norway
Summary of Allegations:
The Norwegian anti-corruption unit, Oekokrim, alleged that Siemens AS Norway and two of its former employees paid for golf trips in 2003 and 2004 that were attended by members of the Norwegian Department of Defense.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Russian Federation
Summary of Allegations:
Authorities in Russia conducted an investigation into alleged misappropriation of public funds in connection with the award of contracts to Siemens for the delivery of medical equipment to public authorities in Yekaterinburg in the years 2003 to 2005.
In April 2009, Siemens AG received a notification of administrative proceedings from the World Bank in connection with allegations of sanctionable practices during the period 2004-2006 relating to a World Bank-financed project in Russia. This appears to be ongoing.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: award of contracts to Siemens for the delivery of medical equipment to public authorities in Yekaterinburg
Nationality of Foreign Officials: Serbia
Summary of Allegations:
The public prosecutor in Wuppertal, Germany, conducted an investigation against Siemens employees regarding allegations that they participated in bribery related to the awarding of a European Union contract for the refurbishment of a Serbian power plant in 2002.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: awarding of a European Union contract for the refurbishment of a Serbian power plant in 2002
Nationality of Foreign Officials: South Africa
Summary of Allegations:
In November 2009 and in February 2010, a Siemens AG subsidiary voluntarily self-reported possible violations of South African anti-corruption regulations in the period before 2007.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Switzerland
Summary of Allegations:
The Swiss investigation by the Public Prosecutor's Office focused on corrupt payments made to secure business for Siemens in the Greek telecommunications market. Swiss investigators cooperated with their counterparts in Germany, the United States and Liechtenstein during the course of the probe. In November 2013, the Swiss authorities issued fines and seized CHF 60 million (approximately USD 65 million) relating to the Siemens "slush fund" scandal.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: secure business for Siemens in the Greek telecommunications market
Nationality of Foreign Officials: Thailand
Summary of Allegations:
On June 23, 2010, the Frankfurt public prosecutor searched the premises of Siemens in Germany in response to allegations of questionable payments relating to an Industry project in Thailand.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Turkey
Summary of Allegations:
In October 2011, the Turkish Prime Ministry Inspection Board notified Siemens A.S. Turkey of an investigation in connection with alleged bribery in Turkey and Iraq from 1999 to 2007.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Unspecified
Summary of Allegations:
CENTRAL ASIA
In July 2011, the Munich public prosecutor notified Siemens AG of an investigation into payments to a supplier related to the oil and gas business in Central Asia between 2000 and 2009.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Unspecified
Summary of Allegations:
CARIBBEAN
In July 2011, the Nuremberg-Fuerth public prosecutor notified Siemens AG of an investigation of allegations that several employees made improper payments related to the health care business in the Caribbean.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Agencies: Argentina: Unspecified
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
On 14 December 2012, La Nueva reported that a federal judge in Argentina held a hearing regarding the possible extradition of former Siemens AG CFO Andres Truppel to the United States to face criminal charges. Main Justice reported on 18 March 2013 that Truppel is one of four defendants who also have failed to respond to the civil suit brought by the SEC, and that the SEC is seeking to have Truppel be considered in default of the civil charges.
On 14 June 2011, it was reported that a Siemens management board member had been charged in connection with breach of trust in connection with bribes paid (through slush funds, phony companies and middlemen) in Argentina between 2003 and 2007. Argentinian authorities searched the offices of Siemens Argentina and Siemens IT Services S.A. in Buenos Aires in August 2008 and February 2009. The Argentinean investigative judge requested judicial assistance from the Munich public prosecutor and the federal court in New York.
In a separate suit arising out of the earlier investigation, Carlos Moran, formerly a government investigator in Argentina, brought a claim in federal court in Miami against Siemens AG and Siemens' subsidiary in Argentina. Moran claims that Siemens paid people to physically attack him after he blew the whistle on Siemens' bid for the national identity card project.
On 27 December 2013, 17 current and former managers of Siemens were indicted on charges of bribery for allegedly paying more than USD 106 million in bribes to government officials to win contracts. On 4 May 2015, the Camara Federal de Casacion Penal denied a petition for dismissal by one of the defendants, who had argued that a previous plea agreement in Germany precluded prosecution in Argentina.
Agencies: Austria: Vienna Prosecution Office
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
The Vienna public prosecutor, Austria, is conducting an investigation into payments between 1999 and 2006 relating to Siemens AG Austria and its subsidiary Siemens VAI Metal Technologies GmbH & Co. for which valid consideration could not be identified.
In September 2011, the Vienna public prosecutor extended the investigations to include a potential corporate liability of Siemens AG Austria for tax evasion.
Agencies: Bangladesh: Anti Corruption Commission
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In 2009, the Anti-Corruption Commission of Bangladesh ("ACC") filed criminal charges against two current and one former employee of Siemens Bangladesh's Healthcare business.
Agencies: Brazil: Ministry of Justice
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In 2011, the Brasilia public prosecutor opened proceedings to assess allegations against Siemens in connection with a 2007 metro project.
In May 2013, Siemens self-reported its involvement in a price-fixing cartel to Brazilian law enforcement authority, and admitted to paying bribes in order to win contracts to build the Sao Paolo Metro.
Agencies: China: Court
Results: Conviction, Prosecution of Individuals
Year Resolved: 2011
Compliance Monitor:
Ongoing: No
Details:
Shi Wanzhong, former chairman and general manager of China Mobile Anhui Province, was sentenced to death in May 2011 in the Intermediate Court of Hebei City, Henan Province, for receiving USD 5.1 million in bribes from Siemens. Shi received a two-year reprieve (which usually means that the sentence will not be carried out). The trial was closed to the public.
Tian Qu, who served as sales agent for Siemens and was responsible for brokering the deals between Siemens and China Mobile Anhui and for transferring the kickbacks to Shi, was sentenced to 15 years in prison for facilitating Shi's corruption.
The Chinese investigation appears to have concluded in June 2011.
Agencies: Germany: Civil Lawsuit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
CIVIL SUIT BY HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A.:
In July 2008, the Hellenic Telecommunications Organization S.A. ("OTE") filed a lawsuit against Siemens AG in the District Court of Munich. The lawsuit sought disclosure by Siemens AG of information pertaining to "allegations of undue influence and/or acts of bribery in connection with contracts concluded between Siemens AG and OTE from 1992 to 2006." After being granted access to some of Siemens' files, OTE expanded its claim, requesting at least EUR 57.07 million in damages from Siemens for alleged bribes to its employees. Siemens and OTE are currently negotiating a settlement.
Agencies: Germany: Munich Public Prosecutor's Office
Results: Criminal Fine, Disgorgement
Year Resolved: 2007
Compliance Monitor: Theodor Waigel (German monitor); Joseph Warin (U.S. counsel to German monitor)
Ongoing: No
Details:
In its settlement with the Munich Prosecutor's Office, Siemens (apart from its telecommunications group) pleaded guilty to charges related to a corporate failure to supervise its officers and employees and paid a total of EUR 395 million (approximately USD 569 million), including a EUR 250,000 corporate fine and EUR 394.75 million in disgorgement of profits. In a related action, Siemens' telecommunications operating group settled charges with the Munich Prosecutor's Office in October 2007, and paid EUR 201 million in fines and penalties (approximately USD 287 million), including a EUR 1 million fine and EUR 200 million in disgorgement of profits.
In addition to monetary fines and penalties, the German public prosecutors required Siemens to retain an independent compliance monitor for a four-year period. Siemens and the enforcement agencies agreed to the appointment of Dr. Theodor Waigel, the former German finance minister, as its independent monitor. Joseph Warrin of Gibson, Dunn & Crutcher LLP was appointed to serve as counsel to the monitor with respect to the requirements of the FCPA.
On 20 April 2010, Michael Kutschenreuter, the former financial head of Siemens' telecommunications unit, was found guilty of breach of trust and abetting bribery in a Munich court. He was placed on probation for two years and fined EUR 160,000. On the same day, Hans-Werner Hartmann, head of accounting for the telecommunications unit, was placed on probation for 18 months and fined EUR 40,000.
On 19 May 2011, it was reported that Berlin prosecutors dropped its case against former Siemens board member, Thomas Ganswindt, who used to run the Company's telecommunications unit, in exchange for Ganswindt agreeing to make a payment of EUR 175,000 euros (USD 250,000) to five charities. Siemens' former finance chief Heinz-Joachim Neubuerger is still fighting charges.
In 2014, former Siemens board member Uriel Sharef was acquitted in Munich court for three counts of fraud. It was alleged that Sharef twice helped to order the payment of bribes totaling USD 14.2 million in Latin America and allegedly failed to close out a USD 35 million slush fund. The court held that it was not convinced Uriel was involved in the ordering of bribes and that he had not known the slush fund still existed.
On 6 September 2016, Germany's Federal Court of Justice, citing legal errors, upheld the acquittal on the payment of bribes but overturned Munich court's decision to acquit Uriel Sharef of fraud charges regarding the slush fund.
Agencies: Greece: Unspecified
Results:
Year Resolved: 2012
Compliance Monitor:
Ongoing: No
Details:
Siemens
According to press reports on 25 November 2011, Greek finance and justice ministers sought an out-of-court settlement with Siemens in the range of EUR 200 million to EUR 250 million.
In February 2012, Siemens entered into an agreement with the Greek government, pledging to forgo EUR 80 million in outstanding Greek debt in exchange for no claims for reparations resulting from the bribery scandal, which purportedly cost Greek taxpayers EUR 2 billion in overpayment of Siemens contracts. All told, Greece owes Siemens approximately EUR 150 million. The arrangement requires Greece to invest EUR 90 million with Siemens in new projects.
In a press release on 5 April 2012, Siemens confirmed the arrangement, announcing that the Greek Parliament had ratified the settlement agreement. The settlement approves Siemens' forgiving of EUR 80 million owed to it by the Greek government, for supplies delivered to Greek medical facilities over a period of years. Siemens has agreed to spend up to EUR 90 million on "transparency initiatives and anti-corruption programs," and on research. Siemens also agreed to spend over EUR 100 million on its own commercial activities in Greece, thereby encouraging economic growth and increasing employment within Greece.
Individuals
According to media reports, on 9 March 2015 Greek authorities indicted 64 people to stand trial for bribery or money laundering. Former Siemens, including former CEO Heinrich von Pierer and former Siemens Greece head Michalis Chirstoforakos, and OTE officials are included in those indicted.
According to media reports, Jean-Claude Oswald, a banker tied to the Siemens activity, was arrested in the United Arab Emirates on 4 April 2015 and placed in Greek custody.
On 30 April 2015, the House Speaker of the Greek Parliament issued an order for the Parliament to re-examine the Siemens bribery case.
Although, as of July 2016, the trial continues, the hearing has experienced frequent postponements. Some are reportedly worried that the statute of limitations could expire as a result.
On 10 February 2017, Greek Prime Minister Alexis Tsipras asked Kyriakos Mitsotakis to request the extradition of Michalist Christoforakos, former exeutive of Siemens Hellas, from Germany.
On 28 July 2017, Tasos Mandelis, a former transport minister, was found guilty of money laundering and was handed an eight-year suspended sentence. Judges ruled that Mandelis had received 450,000 German marks as a bribe for a contract signed with the Hellenic Telecommunications Organisation (OTE) in 1997 when Mandelis was a government minister. Siemens Hellas former executive Ilias Georgiou was also found guilty of money laundering and bribery as well as Mandelis’ associate Aristidis Mantas for assistance in money laundering.
On 17 October 2018, Prodromos Mavridis, former telecommunications manager for Siemens Hellas testified before an Athenian court over the accusation of bribing politicians to secure government contracts of digitizing the network of OTE telecom.
Agencies: Hungary: Unspecified
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
Investigations are ongoing into Siemens Zrt. Hungary and certain of its employees in connection with consulting agreements with a variety of shell corporations and alleged bribery relating to the awarding of a contract for the delivery of communication equipment to the Hungarian Armed Forces.
Agencies: Israel: Israel Securities Authority
Results: Acquittal/Dismissal, Civil Penalty
Year Resolved: 2018
Compliance Monitor:
Ongoing: No
Details:
On 17 March 2013, Reuters reported that Dan Cohen, former director of the state-owned Israel Electric Corporation ("IEC"), was extradited to Israel from Peru and arrested on bribery and other charges based on allegations that he accepted EUR 1 million in exchange for ensuring that Siemens won a lucrative contract with IEC in 1999. Cohen had left Israel in 2005, and Peru had previously denied requests for extradition.
On 11 July 2013, The Times of Israel reported that Cohen has entered into a plea bargain with prosecutors, agreeing to spend five years and six months in prison and pay a fine of ILS 6 million (USD 1.65 million). The story also reported that prosecutors will also take ILS 4 million (USD 1.1 million) in assets from Cohen as part of the agreement.
On 5 January 2015, six current and former executives from state-owned Israel Electric Corporation were detained in connection with allegedly accepting bribes paid by Siemens. Investigators from the Israel Securities Authority arrested Yacov (Yasha) Hain, a senior vice president for engineering projects. Mr. Hain said he was resigning from the Israel Electric Corporation for health reasons. He is accused of taking hundreds of thousands of dollars in bribes. According to local news media, there is court-ordered gag order on the release of details about Mr. Hain's case.
On 14 July 2015, the Israel Securities Authority completed its six-year investigation into the company and stated that it had found evidence of improper payments made by Siemens to the Israel Electric Corp. The findings were provided to the Tel Aviv District Attorney's office, which will determine whether charges will be brought against former executives of Siemens and the Israel Electric Corp.
On 2 May 2016, six former senior Israel Electric Corporation officials were indicted for fraud in Israeli court. The six former officials are reportedly former IEC senior deputy director general David Kohn, former senior deputy CEO Yakov Hain, former engineering and planning department deputy director Haim Bar-Ner, planning and development department deputy director David Elmakis, former engineering and planning department director Yona Schweitzer, and former planning department departmental head Zvi Eyal.
On 9 March 2017, David Kohn, Yona Schweitzer, Yacov Hain, Haim Brenner and Tzvi Eyal were convicted of taking bribes and other charges after agreeing to plead guilty to a revised indictment. David Kohn, who admitted to taking USD 500,000, will serve 45 months, receive a suspended sentence and forfeit at least 1 million shekels in assets. Yona Schweitzer, who admitted to accepting USD 200,000, will serve 29 months in prison, receive a suspended sentence and forfeit 200,000 shekels in assets. Yacov Hain, who admitted to accepting USD 290,000, will serve 24 months in prison, receive a suspended sentence, forfeit 850,000 shekels in assets and pay 300,000 in penalties. Haim Brenner, who admitted to accepting USD 430,000, will serve 33 months in prison, receive a suspended sentence, and forfeit 1.7 million shekels in assets. Tzvi Eyal, who admitted to accepting USD 470,000, will serve 28 months in prison, receive a suspended sentence, forfeit 470,000 shekels in assets and pay 570,000 in penalties.
David Elmakais is set to go to trial.
27 March 2018 - The Israel Securities Authority(“ISA”) ended its four-year long criminal case against Shlomo Nass' for his alleged involvement in the Siemens / IEC bribery scandal due to a lack of evidence. The case against his sister, Rachel Don Yehiya, an IEC director at the time of the Siemens bribery scandal,was also closed due to a lack of evidence. This marks the end of the IEC probe.
Shlomo Nass is an attorney in Israel and a former Israel Electric Corporation board member. He became a subject of ISA investigation in 2014 due to the discovery of a Swiss account under his name that contained USD 500,000 that had been transferred from a Siemens account that had been used to pay other bribes in the scandal.
Since Nass left his IEC board position decades before the Siemens bribery occurred, prosecutors were unable to assemble sufficient evidence to show that Nass was a public-sector employee and that he did something in return for the suspected payment.
Agencies: Israel: Israel Securities Authority
Results: Civil Penalty
Year Resolved: 2016
Compliance Monitor:
Ongoing: No
Details:
On 2 May 2016, the Israeli Justice Ministry announced that Siemens will pay a penalty of NIS 160 million (USD 42.7 million) and would appoint an external inspector to supervise its business in Israel in exchange for state prosecutors dropping charges of securities fraud against Siemens.
Agencies: Italy: Milan Public Prosecutor's Office
Results: Criminal Fine, Disgorgement, Prosecution of Individuals
Year Resolved: 2007
Compliance Monitor:
Ongoing: No
Details:
The public prosecutor in Milan filed charges against a current and a former employee of Siemens S.p.A., against the company itself, and against one of its subsidiaries. Siemens S.p.A. and its subsidiary entered into a 'patteggiamento' (plea bargaining agreement without the recognition of any guilt or responsibility) with the Milan public prosecutor which was confirmed by the Milan court on April 27, 2009. Under the terms of the patteggiamento, Siemens S.p.A. and the subsidiary were each fined EUR 40,000 and ordered to disgorge profits in the amount of EUR 315,562 and EUR 502,370, respectively.
On 14 May 2007, the two individuals, Andreas Kley, the former finance chief at Siemens' power-generation unit, and Horst Vigener, a former consultant to Siemens' power-generation unit, were convicted in a Darmstadt court for paying about EUR 6 million in bribes from 1999 to 2002. Kley received a two-year suspended sentence and Vigener a nine-month suspended sentence. According to press reports, both sentences were less than prosecutors had requested.
Agencies: Mexico: Unspecified
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
Mexican officials are investigating whether officials in the state-owned PEMEX received bribes from the Conproca consortium, composed of Siemens AG and SK Engineering and Construction Co.
The new foreign bribery investigations remain ongoing at this time.
Agencies: Nigeria: Economic and Financial Crimes Commission
Results: Disgorgement, Restitution
Year Resolved: 2010
Compliance Monitor:
Ongoing: No
Details:
On 22 November 2010, it was reported that Siemens agreed to pay NGN 7 billion (approximately USD 46.5 million) to the Nigerian government in exchange for the Economic and Financial Crimes Commission's withdrawal of criminal charges against Siemens, its Nigerian subsidiary, Siemens Ltd. Nigeria and four of its officials. The payment was described variously as "restitution" and "disgorgement" in press reports.
Agencies: Norway: Oekokrim
Results: Acquittal/Dismissal, No Action
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
On July 3, 2009, the trial court in Oslo, Norway, found the two former Siemens AS Norway employees not guilty on charges related to payments made for golf trips attended by officials from the Norwegian Department of Defense. Norway's anti-corruption force, Oekokrim, stated on July 16, 2009, that the proceedings against Siemens AS Norway have also been discontinued.
Agencies: Russia: Unspecified
Results: No Action
Year Resolved: 2011
Compliance Monitor:
Ongoing: No
Details:
On July 5, 2011, the Russian investigation was closed with respect to all material charges.
Agencies: Switzerland: Federal Public Prosecutor's Office
Results: Criminal Fine
Year Resolved: 2013
Compliance Monitor:
Ongoing: No
Details:
In November 2013, the Swiss authorities issued fines and seized CHF 60 million (approximately USD $65 million) relating to the Siemens "slush fund" scandal. In doing so, the Federal Prosecutor's Office signaled the conclusion of an eight year investigation into executives and shell companies that used the Swiss financial system to channel massive bribes used to win lucrative contracts for the German industrial giant. In addition to the CHF 60 million of bribe money seized by the Attorney General, a further sum of 630,000 (CHF 776,000) was paid to Transparency International Switzerland, the Geneva foundation La Maison de Tara and to the SOS Children?s Village in Munich.
Agencies: Turkey: Prime Ministry Inspection Board
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In October 2011, the Turkish Prime Ministry Inspection Board notified Siemens A.S. Turkey of an investigation in connection with alleged bribery in Turkey and Iraq from 1999 to 2007.
Agencies: United Nations: Procurement Division
Results: Suspension/Debarment
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
Siemens provided the following update regarding its United Nations debarment in its SEC Form 6-K filed on 10 November 2011:
"As previously reported, on March 9, 2009, Siemens AG received a decision by the Vendor Review Committee of the United Nations Secretariat Procurement Division (UNPD) suspending Siemens AG from the UNPD vendor database for a minimum period of six months. The suspension applied to contracts with the UN Secretariat and stemmed from Siemens AG's guilty plea in December 2008 to violations of the U.S. Foreign Corrupt Practices Act. On December 22, 2009, Siemens AG filed a request to lift the existing suspension. Effective January 1, 2011, the UNPD lifted the suspension against Siemens AG."
Agencies: United States: Civil Lawsuit
Results: Acquittal/Dismissal
Year Resolved: 2014
Compliance Monitor:
Ongoing: No
Details:
PEMEX CIVIL SUIT:
PEMEX filed a Racketeer Influenced and Corrupt Organizations Act ("RICO") lawsuit against Siemens AG and SK Engineering & Construction Co., claiming USD 500 million in damages for bribery conducted by the two companies in 1997 and thereafter, in connection with the Cedereyta project. U.S. District Judge Louis Stanton of Manhattan dismissed the lawsuit brought by PEMEX against Siemens. The dismissal was upheld by the U.S. Court of Appeals for the Second Circuit on 17 July 2014.
Agencies: United States: Civil Lawsuit
Results: Acquittal/Dismissal
Year Resolved: 2011
Compliance Monitor:
Ongoing: No
Details:
CLASS ACTION SUIT:
A securities class action was filed in December 2009 against Siemens AG with the United States District Court for the Eastern District of New York seeking damages for alleged violations of U.S. securities laws. In March 2011, the Court granted the Company's motion to dismiss the action. The plaintiffs' motion to reconsider was denied by the court. Plaintiffs did not appeal the court's decision.
Agencies: United States: Civil Lawsuit
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
IRAQ OIL-FOR-FOOD CIVIL LAWSUIT:
In June 2008, the Republic of Iraq filed an action requesting unspecified damages against 93 named defendants with the United States District Court for the Southern District of New York on the basis of findings made in the 'Report of the Independent Inquiry Committee into the United Nations Oil-for-Food Programme.' Siemens S.A.S. France, Siemens A. S. Turkey and OSRAM Middle East FZE, Dubai, are among the 93 named defendants.
Agencies: United States: Civil Lawsuit
Results:
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
COMPANY SUIT AGAINST DIRECTORS:
Siemens AG asserted claims against former members of the Managing and Supervisory Board for breaches of organizational and supervisory duties in view of the accusations of illegal business practices that occurred in the course of international business transactions in the years 2003 to 2006 and the resulting financial burdens for the Company. On December 2, 2009 Siemens reached a settlement with nine out of eleven former members of the Managing and Supervisory Board. The Company reached a settlement agreement with its directors and officers (D&O) insurers regarding claims in connection with the D&O insurance of up to EUR 100 million, of which ?84 million resulted from the settlement agreement with the D&O insurers and EUR 12 million resulted from settlement agreements with former board members. The former board members used claims they had against the Company to offset a portion of their obligations under the aforementioned settlement agreements. The remaining amount was or will be settled by the former board members in cash. On January 25, 2010, Siemens AG filed a lawsuit with the Munich District Court I against the two former board members who were not willing to settle, Thomas Ganswindt and Heinz-Joachim Neuburger.
Agencies: United States: Civil Lawsuit
Results: No Action
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
DERIVATIVE SHAREHOLDER SUIT:
An alleged holder of Siemens American Depository Shares filed a derivative lawsuit in February 2007 with the Supreme Court of the State of New York against certain current and former members of Siemens' Managing and Supervisory Boards as well as against Siemens as a nominal defendant, seeking various forms of relief relating to the allegations of corruption and related violations at Siemens. The shareholder voluntarily withdrew the derivative action in September 2009.
Agencies: United States: Civil Lawsuit
Results: Acquittal/Dismissal
Year Resolved: 2014
Compliance Monitor:
Ongoing: No
Details:
On 15 January 2013, a former compliance officer for Siemens' Chinese subsidiary filed a lawsuit against Siemens in federal court in New York. The former employee, a Taiwanese man named Meng-Lin Liu, claimed that in May 2011, one week after presenting evidence of Siemens' continued internal controls violations and the Company's circumvention of its plea agreement with U.S. authorities, he was notified that his contract would not be renewed, and that he should not report to work. In the complaint, Liu alleges that the evidence he submitted to the SEC and Siemens' executives revealed the Company's practice of submitting inflated bids for the sale of medical imaging equipment in China, and then selling the equipment at lower prices to intermediaries, for resale to public hospitals.
On 14 August 2014, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a lawsuit filed by a former Siemens compliance officer in China who said the company retaliated against him after he internally reported alleged corrupt sales practices. The court granted Siemens' motion to dismiss with prejudice, holding that the anti-retaliation provision of the Dodd-Frank Act (15 U.S.C. 78u-6(h)(1)) does not apply extraterritorially.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Criminal Fine, Disgorgement, Prosecution of Individuals
Year Resolved: 2008
Compliance Monitor:
Ongoing: No
Details:
On 15 December 2008, Siemens settled charges with the DOJ and the SEC for a record-breaking USD 800 million in fines and penalties.
Under its plea agreement with the DOJ, Siemens pleaded guilty to two counts of violating the books and records and internal controls provisions of the FCPA. Siemens Argentina pleaded guilty to one count of conspiracy to violate the FCPA and Siemens Venezuela and Siemens Bangladesh each pleaded guilty to one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA. Siemens was required to pay a USD 448.5 million criminal fine and Siemens Argentina, Bangladesh, and Venezuela were each required to pay a USD 500,000 criminal fine, bringing the total amount in criminal fines in the United States to USD 450 million.
Siemens, without admitting or denying the SEC's allegations, consented to the entry of a final judgment permanently enjoining the Company from future violations of the FCPA's anti-bribery, books and records, and internal controls provisions. Siemens was also required to pay USD 350 million in disgorgement of profits.
Both the DOJ and SEC noted Siemens' extraordinary cooperation during the investigation and the extensive remedial measures undertaken by the Company, including the scope of its internal investigation after disclosing the conduct to the U.S. enforcement authorities, disciplinary actions against individuals involved, and the restructuring of the Company's compliance program.
On 9 January 2009, the DOJ announced that it had filed a forfeiture action against Siemens' accounts in Singapore held by multiple account holders. The funds in the accounts were allegedly related to bribes paid by Siemens and China Harbor Engineering to Arafat "Koko" Raman, the son of Bangladesh's former prime minister in connection with the award of a public works project in Bangladesh. The funds allegedly were paid in U.S. dollars and flowed through banks in the United States before being deposited into accounts in Singapore.
Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Criminal Fine, Plea Agreement, Prosecution of Individuals
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
UNITED STATES (Individual Prosecutions)
On 13 December 2011, the DOJ charged eight former executives and agents of Siemens AG and its subsidiaries for allegedly engaging in a decade-long scheme to bribe senior government officials in Argentina to secure, implement, and enforce a USD 1 billion contract with the government of Argentina to produce national identity cards. The defendants in the DOJ action, Uriel Sharef, Herbert Steffen, Andres Truppel, Ulrich Bock, Eberhard Reichert, Stephan Signer, Carlos Sergi, and Miguel Czysch, are not U.S. citizens and reside outside of the United States. Unless the U.S. government obtains extradition of the men, they cannot be tried on the criminal charges.
The SEC also filed a civil action on related charges against seven men, alleging that over USD 100 million in bribes were paid in connection with Siemens' efforts to secure the contract and obtain the profits from that contract. As for these charges, legal process requires that the defendants be served with the complaint in the lawsuit, but SEC lawyers were unable to serve the four German defendants (Sharef, Signer, Steffen, and Bock) via the Hague Convention, absent the cooperation of the German government, which responded to requests for assistance in service by stating:
"The German government has recently advised that an action by the SEC seeking civil penalties for violations of U.S. federal securities laws is not, under German law, a 'civil or commercial matter' within the meaning of the Hague Convention."
Therefore, the SEC attorneys requested permission to serve the four men through newspaper notices and emails to their attorneys. On 26 June 2012, the U.S. court agreed to this request.
On 12 October 2012, Herbert Steffen filed a motion to dismiss for lack of jurisdiction and for failure to satisfy the statute of limitations. On 19 February 2013, Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York granted Steffen's motion to dismiss for lack of personal jurisdiction, saying that Steffen did not have sufficient contacts with the United States to meet the requirements of personal jurisdiction and that exercising jurisdiction over him would be unreasonable due to his age and other factors.
In December 2011, Regendantz settled the SEC charges without admitting or denying the allegations by consenting to the entry of a final judgment permanently enjoining him from committing future violations. He paid an EUR 30,000 (USD 40,000) administrative fine ordered by the Munich prosecutor.
On 15 April 2013, media reported that Uriel Sharef agreed to pay USD 275,000 to settle the SEC's civil suit against him. Sharef did so without admitting or denying the SEC's allegations.
On 16 November 2013, media reported that Andres Truppel reached settlement terms with the SEC and consented to a final judgment, on 3 February 2014, in which he agreed to pay a USD 80,000 civil penalty.
On 4 February 2014, Signer and Bock were ordered to pay a combined USD 1.46 million for their roles in a USD 1 billion Argentine government contract bribery scheme, the largest FCPA penalties ever levied against individuals. U.S. District Judge Shira A. Scheindlin entered a default judgment against both individuals and ordered each to pay a USD 524,000 civil penalty and Block to pay an additional USD 413,957 for disgorgement. The two German nationals allegedly bribed Argentine government officials as part of a decade-long scheme to retain a USD 1 billion government contract to produce Argentine national identity cards.
On 30 September 2015, Andres Truppel pleaded guilty in the Southern District of New York to conspiring to pay tens of millions of dollars in bribes to Argentine government officials to secure, implement and enforce a USD 1 billion contract to create national identity cards. As of 15 March, 2018 he has not yet been sentenced.
15 March 2018 - Eberhard Reichert, a former Siemens Business Services executive, pleaded guilty in the Southern District of New York to one count of conspiring to violate the FCPA anti-bribery, internal controls and books and records provision, and to commit wire fraud. While at Siemens, Reichert was involved in a decade-long scheme to pay millions in bribes to Argentine government officials in exchange for a USD 1 billion contract to create national identity cards.
Agencies: World Bank: International Center for Settlement of Investment Disputes
Results:
Year Resolved: 2009
Compliance Monitor: Theodor Waigel (German monitor); Joseph Warin (U.S. counsel to German monitor)
Ongoing: No
Details:
ARGENTINIAN ARBITRATION:
Siemens AG filed a request for arbitration against Argentina with the International Center for Settlement of Investment Disputes (ICSID) of the World Bank. Siemens AG claimed that Argentina had unlawfully terminated its contract with Siemens for the development and operation of a system for the production of identity cards, border control, collection of data and voters' registers (DNI project) and thereby violated the Bilateral Investment Protection Treaty between Argentina and Germany (BIT). Siemens AG sought damages for expropriation and violation of the BIT of approximately USD 500 million. A unanimous decision on the merits was rendered by the ICSID arbitration tribunal on February 6, 2007, awarding Siemens AG compensation in the amount of USD 217.8 million, plus compound interest thereon at a rate of 2.66% since May 18, 2001. The tribunal also ruled that Argentina is obligated to indemnify Siemens AG against any claims of subcontractors in relation to the project (amounting to approximately USD 44 million) and, furthermore, that Argentina would be obligated to pay Siemens AG the full amount of the contract performance bond (USD 20 million) in the event this bond was not returned. The time period set by the tribunal for returning the contract performance bond subsequently elapsed without delivery. As previously reported, Argentina subsequently filed applications with the ICSID aiming at the annulment and reversal of the decision and a stay of enforcement of the arbitral award. On August 12, 2009, Argentina and Siemens AG reached an agreement to mutually settle the case and discontinue any and all civil proceedings in connection with the case without acknowledging any legal obligations or claims. No payment was made by either party.
Discovery Method: Voluntary Disclosure
Details:
In November 2006, German law enforcement executed a series of dawn raids on Siemens offices and the homes of senior executives. Siemens then voluntarily disclosed the conduct to the DOJ and SEC.
Country: