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Manufacturing
Essen, Germany
Nationality of Foreign Officials: Argentina
Summary of Allegations:
The company allegedly brokered corrupt deals in Argentina on behalf of other German companies. Ferrostaal allegedly paid a six figure bribe to an Argentine defense ministry officials to obtain an Argentine Coast Guard contract.
In addition, other sources report that Ferrostaal's offices in Buenos Aires were raided in June 2010 at the direction of Federal Criminal Court Judge Ariel Lijo, who is overseeing an investigation into allegations that the company paid bribes to win a EUR 3.5 million design contract for coastal patrol vessels. Eight individuals - including several Argentina senior naval officers and several Ferrostaal managers - have reportedly been charged in Argentina in connection with the matter.
Approximate Alleged Payments to Foreign Officials: Six figure amount (EUR)
Business Advantage Allegedly Obtained: Argentine Coast Guard contract, of unspecified value
Nationality of Foreign Officials: Colombia
Summary of Allegations:
The company allegedly brokered corrupt deals in Colombia on behalf of other German companies. Ferrostaal allegedly paid EUR 625,000-850,000 in bribes to key Colombian officials in the Navy and Ministry of Defense in order to secure a EUR 28 million deal to sell a coast guard vessel to the Colombian Navy.
Approximate Alleged Payments to Foreign Officials: EUR 625,000-850,000
Business Advantage Allegedly Obtained: Sale of coast guard vessel to Colombian Navy, of unspecified value
Nationality of Foreign Officials: Greece
Summary of Allegations:
Separate press reports also state that the Munich Public Prosecutor's Office is also looking into Ferrostaal's sale of submarines to the Greek government; the Greek authorities have reportedly opened an investigation into the matter as well.
Approximate Alleged Payments to Foreign Officials: Unspecified
Business Advantage Allegedly Obtained: Unspecified
Nationality of Foreign Officials: Indonesia
Summary of Allegations:
According to press reports, the company was under investigation for allegedly paying DM 200,000 (EUR 102,258, USD 138,099) to former Indonesian President Bacharuddin Jusuf Habibie. It appears that the Abacha and Habibie matters are no longer being pursued because the payments occurred prior to Germany's accession to the OECD Anti-Bribery Convention and thus such "useful expenditures," or payments made to procure contracts, were not yet illegal in Germany.
The company also allegedly brokered corrupt deals in Indonesia on behalf of other German companies. Ferrostaal allegedly paid bribes to officials at the Indonesian state-owned banknote printing company in order to secure sales of printing and embossing machines.
Approximate Alleged Payments to Foreign Officials: DM 200,000
Business Advantage Allegedly Obtained: Sales of printing and embossing machines to Indonesian state-owned banknote printing company, of unspecified value
Nationality of Foreign Officials: Nigeria
Summary of Allegations:
Since 2003, Ferrostaal has been under investigation for allegedly having paid DM 460 million in bribes to the late General Sani Abacha of Nigeria to win a contract for the construction of a metals factory in Nigeria. Ferrostaal allegedly made two payments into Abacha's UBS bank account in Switzerland in October 1996 worth DM 20 million. According to the Swiss Attorney General of Canton de Genève, Daniel Zapelli, the payments were made for active corruption by Ferrostaal AG . Allegedly, it was later confirmed that this was bribery to win contracts.
British-based businessman and Labor party donor, David Uri, was charged and convicted in Switzerland for laundering the Abacha money. His judgment by Daniel Zapelli also raises the possibility that UBS, the Swiss bank that held the funds, knew the account was being used by the Abacha family, an allegation the bank strongly denies.
Approximate Alleged Payments to Foreign Officials: DM 460 million
Business Advantage Allegedly Obtained: Contract for construction of a metals factory, of unspecified value
Nationality of Foreign Officials: Portugal
Summary of Allegations:
According to press reports, the company is currently under investigation for allegedly making EUR 1.6 million in improper payments to an honorary Portuguese consul for his assistance as a "consultant" in securing the EUR 880 million sale of two Type 209 submarines to Portugal in November 2003, as well as allegedly paying EUR 1 million to a rear admiral in the Portuguese Navy.
Approximate Alleged Payments to Foreign Officials: EUR 1.6 million (Portuguese honorary consul); EUR 1 million (rear admiral in Portuguese Navy)
Business Advantage Allegedly Obtained: Contracts for the sale of two Type 209 submarines to the Portuguese Navy, valued at EUR 880 million
Agencies: Argentina: Federal Criminal Court, City of Buenos Aires
Results: Prosecution of Individuals
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In addition, other sources report that Ferrostaal's offices in Buenos Aires were raided in June 2010 at the direction of Federal Criminal Court Judge Ariel Lijo, who is overseeing an investigation into allegations that the company paid bribes to win a EUR 3.5 million design contract for coastal patrol vessels. Eight individuals - including several Argentina senior naval officers and several Ferrostaal managers - have reportedly been charged in Argentina in connection with the matter.
Agencies: Germany: Munich Public Prosecutor's Office
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In the course of their investigation into Ferrostaal's former parent company, engineering group MAN, Munich prosecutors obtained certain key documents related to potential bribery by Ferrostaal in connection with the sale of eight oceangoing tugs to a Hamburg shipping company. This prompted a raid on Ferrostaal offices in Essen in July 2009.
According to press reports, on 24 March 2010, Klaus Lesker, a member of Ferrostaal's executive board, was arrested. The Munich Public Prosecutor's Office is investigating Lesker and two other former board members and multiple senior executives for serious bribery of foreign public officials, as well as for suspected tax evasion. Investigators appear to be focusing on five particular projects, worth a total of almost EUR 1 billion, which Ferrostaal is believed to have secured through bribery.
According to press reports, Munich prosecutors commenced proceedings (case number 565 Js 33037/10) against Ferrostaal in late March 2010 and are relying on extensive testimony by two witnesses.
On 11 April 2011, it was reported that two former Ferrostaal managers were charged by Munich prosecutors in connection with EUR 62 million (USD 89.7 million) in alleged bribes paid between 2000 and 2007 to receive contracts to supply submarines to Greece and Portugal. According to press reports on 14 October 2011, these proceedings are ongoing.
Separate press reports also state that the Munich Public Prosecutor's Office is also looking into Ferrostaal's sale of submarines to the Greek government; the Greek authorities have reportedly opened an investigation into the matter as well.
Agencies: Greece: Athens Public Prosecutor's Office
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
Separate press reports also state that the Munich Public Prosecutor's Office is also looking into Ferrostaal's sale of submarines to the Greek government; the Greek authorities have reportedly opened an investigation into the matter as well.
On 14 October 2011, it was reported that Ferrostaal shareholders had approved paying a EUR 149 million fine to settle the Greek submarine bribery case, although no formal agreement has yet been reached with prosecutors.
Agencies: Switzerland: Unspecified
Results: Prosecution of Individuals
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:
In 2004, Swiss banking regulators publicly reprimanded UBS for failing to conduct proper checks in the case.
In December 2004, the son of the late General Abacha was arrested in Germany while allegedly attempting to close an account of which he was the sole holder and was facing extradition in Switzerland in connection with looted funds stashed away in the country's bank. Abba Abacha was arrested when German authorities were alerted by the Deutsche Bank Branch in Essen. The account which Abba allegedly attempted to close is said to be containing part of the USD 700 million frozen by the Swiss authorities in 1999, after Nigeria asked for assistance in investigating the financial network allegedly set up by the former head of state. Funds embezzled by the Abacha clan include several million Deutsche marks paid in bribes by the Ferrostaal steel group in connection with the building of an aluminum factory in Nigeria. In November 2009, a magistrate in Geneva found Abba Abacha guilty of participation in a criminal organization, sentenced him to a suspended prison term and ordered confiscation of USD 350 million in funds held in Luxembourg and the Bahamas.
British-based businessman and Labor party donor, David Uri, was charged and convicted in Switzerland for laundering the Abacha money. His judgment by Daniel Zapelli also raises the possibility that UBS, the Swiss bank that held the funds, knew the account was being used by the Abacha family, an allegation the bank strongly denies.
David Uri was found guilty of aggravated professional money laundering, forgery and support of criminal organization. He was fined but escaped a jail sentence because he cooperated fully with the investigation and was judged to have shown sincere contrition. He nevertheless lost USD 1 million in profits he made from the scheme.
Discovery Method: Media or Investigative Report
Details:
In 2000, the German weekly Der Spiegel published the case of the German bank M.M. Warburg which channeled millions of German marks through their subsidiary in Switzerland in 1998. According to Der Spiegel, Warburg money was paid to Abacha by the German construction firm, Ferrostaal, to secure an order for building an aluminum plant in Southern Nigeria. The bribes, which amounted to millions of German marks according to Der Spiegel, were paid from Warburg in Hamburg to their subsidiary in Luxemburg, via their branch in Zurich.
The Swiss Banking Commission, a watchdog organization to supervise the nation's banking sector, learned about the transaction in 1998 when it was alerted by Warburgs Swiss auditors and intervened. As a result, the supervisory board replaced leading employees of the Swiss Warburg subsidiary. The Banking Commission published the case in its 1998 annual report, albeit without naming Abacha, Nigeria, or Warburg and alerted the authorities in Germany and Luxemburg to the transaction and an investigation was launched.
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