Federal investigators on Tuesday charged six former executives of Siemens AG, including a board member, with conspiring to spend $100 million bribing Argentine officials in an effort to secure a $1 billion contract for the global engineering giant.
“The allegations in this indictment reflect a stunning level of deception and corruption,” Assistant Attorney General Lanny A. Breuer, who oversees the Justice Department’s criminal division, said in a conference call announcing the indictments.
The charges came more than a decade after the alleged conspiracy began and three years after Siemens paid $1.6 billion to settle accusations in the United States and Germany that the company engaged in a systematic effort to win business by paying bribes in various countries.
None of the defendants, who face charges in parallel cases brought by the Justice Department and the Securities and Exchange Commission, resides in the United States, officials said. Each could face up to 20 years in prison for money laundering, Breuer said.
The allegations against the former executives include violating the Foreign Corrupt Practices Act, which prohibits companies from paying bribes to attain business abroad, as well as conspiracy to commit wire fraud and money laundering, according to an indictment filed in a Manhattan federal court.
According to law enforcement officials and filings by the Justice Department and the SEC, the scheme dates to the late 1990s and was part of an effort to secure and later enforce a $1 billion contract to make national identity cards for the Argentine government.
According to the indictments, the officials ultimately spent $60 million in bribes and conjured up an elaborate set of attempts to conceal them, from opening Swiss bank accounts to creating offshore shell companies and fake consulting contracts to carrying large cash payments by hand across international borders.
Along the way, the effort allegedly involved payments to high-ranking government officials, including former Argentine presidents Carlos Menem and Fernando de la Rua. In addition, more than $25 million was laundered through U.S. banks, according to the allegations.
“Our investigation reveals there were few lines these executives were not willing to cross in order to win the contract,” Robert Khuzami, director of enforcement for the SEC, told reporters.
The defendants in the criminal case, including two individuals who worked as intermediaries on behalf of Siemens, are Uriel Sharef, a former member of the Siemens board of directors; Herbert Steffen; Andres Truppel; Ulrich Bock; Eberhard Reichert; Stephan Signer; Carlos Sergi; and Miguel Czysch. The six former Siemens executives are also named in the SEC case.
A lawyer for Sharef in Germany did not immediately respond to a request for comment. Lawyers for the other defendants either could not be reached or could not be located. A Siemens spokeswoman in the United States referred inquires to a company spokesman in Germany, who did not immediately respond.
The Siemens case represents a central example of a practice that has flourished as the U.S. government tries to nab companies suspected of paying bribes overseas: Law enforcement officials are leaving much of the detective work to the very companies under investigation.
The settlement with Siemens in December 2008 came after the company spent millions of dollars on an internal investigation of its practices. The global probe and follow-up actions, according to a company accounting at the time, cost nearly $1 billion — almost triple the annual budget of the SEC’s enforcement division at the time.
The inquiry formed the backbone of the government's accusations that Siemens engaged in a systematic effort to win business by paying bribes in various countries, and government officials then cited the company’s investigation as a model.
On Tuesday, even as they detailed corruption charges against individual executives, federal officials once again praised Siemens for its help in the investigation.
“Siemens’ cooperation was simply outstanding and extraordinary, and it obviously played a large role in how we approached this matter,” said Breuer, head of the Justice Department’s criminal division.