December 15, 2008

Siemens guilty of bribery

The giant German electronics producer Siemens AG was fined a record $450 million Monday after pleading guilty to U.S. bribery charges, federal officials said.

Matthew Friedrich, acting assistant U.S. attorney general who announced the fine, said Siemens and three subsidiaries admitted they violated the Foreign Corrupt Practices Act, which makes it illegal to bribe a foreign official to get business.

"From the 1990s through 2007, Siemens engaged in a systematic and

widespread effort to make and to hide hundreds of millions of dollars

in bribe payments across the globe, Friedrich said at a news conference in Washington. These efforts by Siemens executives included using off-the-books slush fund accounts and shell companies to facilitate bribes; making false entries on the company's books and records by, for example, falsely recording bribes as consulting fees; by accumulating profit reserves as a liability on company books and then using these funds to facilitate bribe payments.

More than $800 million in bribes were paid by Siemens and various of its entities over the course of 2001 to 2007.

In return for the illegal payments, Friedrich said, Siemens received billions of dollars' worth of government contracts.

The Justice Department official cited contracts with Venezuela, Bangladesh and Argentina as examples.

Siemens pleaded guilty to one count and the three subsidiaries also entered guilty pleas. In addition to the fines, Siemens will retain an independent monitor for a period of four years and will continue to implement enhanced controls.

These penalties are strong medicine, Friedrich said, but they are commensurate with the conduct at issue here, which can only be described as egregious.