- The Washington Times - Tuesday, December 13, 2011

Eight former executives and agents of Siemens AG and its subsidiaries have been charged in a decade-long scheme to bribe senior government officials in Argentina to secure, implement and enforce a $1 billion contract to produce national identity cards, the Justice Department said Tuesday.

The indictment charges the eight with conspiracy to violate the Foreign Corrupt Practices Act (FCPA), accusing them of paying bribes to Argentine officials, including two presidents and Cabinet ministers in two administrations, to secure the contract.

The U.S. Securities and Exchange Commission filed a related civil complaint Tuesday, claiming seven executives of Munich-based Siemens and its Argentine subsidiary paid bribes.

“Today’s indictment alleges a shocking level of deception and corruption,” said Assistant Attorney General Lanny A. Breuer, adding that the Siemens executives, along with agents and conduits for the company, agreed to pay more than $100 million in bribes to high-level Argentine officials to win a $1 billion contract.

“Business should be won or lost on the merits of a company’s products and services, not the amount of bribes paid to government officials,” said Mr. Breuer, who heads the department’s criminal division.

The Siemens officials charged were Uriel Sharef, 67, former member of Siemens‘ central executive committee; Herbert Steffen, 74, former chief executive officer; Andres Truppel, 57, former chief financial officer; Ulrich Bock, 69, Stephan Signer, 51, and Eberhard Reichert, 74, former senior executives; and Carlos Sergi, 78, and Miguel Czysch, 79, who served as intermediaries and agents.

The Argentine government sought bids in 1994 to replace an existing system of manually created identity booklets with state-of-the-art identity cards, and in 1998 awarded the contract to a special-purpose subsidiary of Siemens AG.

The indictment said that during the bidding and implementation phase, the co-conspirators caused Siemens to pay nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party and candidates for office who were likely to come to power during the project.

It also said the co-conspirators worked to conceal the illicit payments through various means, including depositing $10 million in cash from Siemens general-purpose accounts in Germany into Swiss bank accounts for transfer to government officials. It also said Siemens transferred by wire more than $7 million in bribes to a bank account in New York disguised as a foreign exchange hedging contract relating to the project.

Over the duration of the conspiracy, the indictment said, the conspirators used at least 17 off-shore shell companies to disguise and launder the funds, often documenting the payments through fake consulting contracts.

Ronald T. Hosko, special agent in charge of the FBI’s Washington field office´s criminal division, said backroom deals and corrupt payments to foreign officials to obtain business “wear away public confidence” in the global marketplace. He said the investigation shows that the FBI is “committed to curbing corruption and will investigate those who try to advance their businesses through foreign bribery.”

The charges announced Tuesday follow the Dec. 15, 2008, guilty pleas by Siemens AG and its subsidiary, Siemens Argentina, to criminal violations of the FCPA. As part of a plea agreement, Siemens AG and Siemens Argentina agreed to pay fines of $448.5 million and $500,000, respectively.

The case was investigated by FBI agents assigned to the bureau’s Washington field office.

Siemens AG is Europe’s largest electronics and electrical engineering company and employs 420,000 people across nearly 190 countries.