Sunday, May 25, 2008
Siemens Bribery Trial Could Widen Probe
Siemens AG, the target of multinational bribes-for-business probes which became public when German prosecutors raided Siemens' offices in Nov 2006, is expecting the probes to widen to include charges being filed against more senior level managers. The first trial starts on Monday, with 58 counts of breach of trust against Reinhard Siekaczek, a manager at Siemens' ICN fixed-line communications unit in Munich until 2004.
Another indicator that the probe was all set to target senior level managers is this report from Thomson Financial which says that the Siemens Supervisory Board just suspended their statute of limitation on damage claims, noting that there was possible participation by Board Members in 'non-complaint activities'. Secondly, Bribery charges were dropped against Reinhard Siekaczek just before his trial starts, which seems to indicate that he's co-operating with prosecutors in exchange for some charges being dropped.
(Update 1: Reinhard Siekaczek admits in Munich court that he set up a system of slush funds and that superiors in his unit were aware of his actions, and specifically named two of them -Michael Kutschenreuter and Thomas Ganswindt. Both are suspects in the Munich probe.)
Background: A network of sham companies and slush funds was set up to route bribes worth 1.3 billion Euros between 2000 to 2006 for telecom projects in Egypt, Saudi Arabia, Indonesia, Vietnam and Greece. In 2003, auditors for a bank owned by Liechtenstein's royal family flagged unusual transactions involving an offshore firm called Martha Overseas, controlled by one Prodromos Mavridis, a Siemens executive in Greece. This account was being funded by another offshore firm controlled by another Siemens executive based at the company's Munich headquarters. This triggered a 3 year investigation by German prosecutors, and last year, German prosecutors fined Siemens 201 million euros after tracing 12 million euros in bribes to Nigeria, Russia and Libya. Siemens now says it has identified 1.3 billion euros in suspicious transactions worldwide between 2000 and 2006.
Kathimerini, a Greek Daily, has details about the parallel ongoing probe in Greece, where Siemens AG allegedly bribed Greek politicians just before their national election, in connection with the Olympic Games in 2004. German electronics and engineering giant Siemens deposited some 1.4 million euros into a bank account. The money was allegedly paid via a Dubai-based firm in three installments between March 8 and April 8 2004 into the account of a company called Placid Blue Corporation which, according to the deposition of a former Siemens employee, was controlled by the former managing director of Siemens Hellas Michalis Christoforakos. Money from this account was allegedly used to secure the support of both New Democracy and PASOK politicians. The ex-Siemens employee Reinhard Siekaczek told a prosecutor in Munich that between 1 and 4 million euros were paid into the Placid Blue account each year so there were enough funds to bribe politicians in Greece.
Reuters report says that the SEC is also looking into the matter and the company faces the possibility of large fines or U.S. sanctions that could exclude it from bidding for certain contracts.
References:
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100003_03/05/2008_96135
http://www.australianit.news.com.au/story/0,24897,23001958-24169,00.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=atoQPMHk6CiA
Another indicator that the probe was all set to target senior level managers is this report from Thomson Financial which says that the Siemens Supervisory Board just suspended their statute of limitation on damage claims, noting that there was possible participation by Board Members in 'non-complaint activities'. Secondly, Bribery charges were dropped against Reinhard Siekaczek just before his trial starts, which seems to indicate that he's co-operating with prosecutors in exchange for some charges being dropped.
(Update 1: Reinhard Siekaczek admits in Munich court that he set up a system of slush funds and that superiors in his unit were aware of his actions, and specifically named two of them -Michael Kutschenreuter and Thomas Ganswindt. Both are suspects in the Munich probe.)
Background: A network of sham companies and slush funds was set up to route bribes worth 1.3 billion Euros between 2000 to 2006 for telecom projects in Egypt, Saudi Arabia, Indonesia, Vietnam and Greece. In 2003, auditors for a bank owned by Liechtenstein's royal family flagged unusual transactions involving an offshore firm called Martha Overseas, controlled by one Prodromos Mavridis, a Siemens executive in Greece. This account was being funded by another offshore firm controlled by another Siemens executive based at the company's Munich headquarters. This triggered a 3 year investigation by German prosecutors, and last year, German prosecutors fined Siemens 201 million euros after tracing 12 million euros in bribes to Nigeria, Russia and Libya. Siemens now says it has identified 1.3 billion euros in suspicious transactions worldwide between 2000 and 2006.
Kathimerini, a Greek Daily, has details about the parallel ongoing probe in Greece, where Siemens AG allegedly bribed Greek politicians just before their national election, in connection with the Olympic Games in 2004. German electronics and engineering giant Siemens deposited some 1.4 million euros into a bank account. The money was allegedly paid via a Dubai-based firm in three installments between March 8 and April 8 2004 into the account of a company called Placid Blue Corporation which, according to the deposition of a former Siemens employee, was controlled by the former managing director of Siemens Hellas Michalis Christoforakos. Money from this account was allegedly used to secure the support of both New Democracy and PASOK politicians. The ex-Siemens employee Reinhard Siekaczek told a prosecutor in Munich that between 1 and 4 million euros were paid into the Placid Blue account each year so there were enough funds to bribe politicians in Greece.
Reuters report says that the SEC is also looking into the matter and the company faces the possibility of large fines or U.S. sanctions that could exclude it from bidding for certain contracts.
References:
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100003_03/05/2008_96135
http://www.australianit.news.com.au/story/0,24897,23001958-24169,00.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=atoQPMHk6CiA
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