SEC v. Siemens Aktiengesellschaft (D.D.C. 2008)

• Case Name
• SEC v. Siemens Aktiengesellschaft (D.D.C. 2008)

• Date Filed
• 12/15/2008

• Enforcement Agency
• SEC

• Countries
• Argentina, Bangladesh, China, Germany, Iraq, Israel, Mexico, Nigeria, Russia, Venezuela, Vietnam

• Foreign Official
• 1) Venezuelan officials; 2) Chinese officials; 3) former director of the Israeli state owned electricity company; 4) procurement director for Bangladeshi state owned telecommunications company; 5) Nigerian government officials, potentially including the President and Vice President; 6) Argentine officials, including the President, the Minister of the Interior, and the Immigration Chief; 7)  Vietnamese health ministry officials; 8) doctors and officials of Chinese state owned hospitals; 9) senior officials of the Moscow Project Implementation Unit, a Russian quasi governmental entity; 10) a senior official of the state owned Mexican petroleum company, Pemex; 11)  officials at Russian government owned medical entities; and 12) officials at the Vietnamese defense ministry and state owned telecommunications company.

• Date of Conduct
• 2001 to 2007

• Nature of Business
• Siemens Aktiengesellschaft (“Siemens AG”), a German corporation, manufactures industrial and consumer products and operates in approximately 190 countries worldwide.  During the relevant period, a class of Siemens’ securities were registered pursuant to Section 12(b) of the Exchange Act and were traded on the New York Stock Exchange.

• Influence to be Obtained
• Siemens Aktiengesellschaft (“Siemens AG”) and several of its subsidiaries allegedly paid more than $1.7 million in kickbacks to the Iraqi government to win 42 contracts worth more than $80 million under the U.N. Oil‑for‑Food Program.  Additionally, Siemens AG allegedly engaged in systematic efforts to falsify books and records and circumvent internal controls to permit this and other corrupt payments to occur.
  
  The SEC alleged a wide range of corrupt payments, spread across several of Siemens’s divisions.  Significantly, in some cases, the sole jurisdictional basis for certain of the bribes was based on the use of correspondent bank accounts.  Siemens allegedly paid almost $19 million in bribes to Venezuelan government officials, using sham consultants and other intermediaries, in connection with mass transit systems in the Venezuelan cities of Valencia and Maracaibo. 
  
  Between 2002 and 2007, Siemens allegedly paid approximately $22 million to business consultants who used some portion of those funds to bribe government officials in China in connection with a $1 billion project to construct metro trains and signaling devices.  Also in China, between 2002 and 2003, Siemens allegedly paid approximately $25 million in bribes to government customers in connection with two projects involving installation of high voltage transmission lines.  The projects were worth approximately $838 million, and as in many other instances, Siemens allegedly funneled payments through multiple intermediaries.  Siemens also allegedly paid approximately $14.4 million in bribes in connection with $295 million in sales of medical equipment to five Chinese state‑owned hospitals, and funded expensive trips for doctors at Chinese state‑owned hospitals.
  
  In Israel, between 2002 and 2005, Siemens allegedly paid approximately $20 million in bribes through a business consultant to a former director of the state‑owned electricity company in connection with four contracts worth approximately $786 million to build and service power plants.
  
  In Bangladesh, Siemens allegedly made more than $5.3 million in corrupt payments between 2004 and 2006 to Bangladeshi government officials and senior employees of the state‑owned Bangladesh Telegraph & Telephone Board (“BTTB”) in connection with a BTTB mobile telephone contract worth almost $41 million, using three sham business consultants.  The SEC alleged payments to the son of the former Prime Minister of Bangladesh, though it is not clear if the SEC alleged that he was a government official. 
  
  In Nigeria, Siemens allegedly made approximately $12.7 million in suspicious payments, including at least $4.5 million in bribes, in connection with four telecommunications projects with state‑owned companies worth approximately $130 million.  These payments were allegedly made through various intermediaries, including sham business consultants and the wife of a former Nigerian Vice‑President, and the recipients were alleged to include the President and Vice‑President of Nigeria. 
  
  In Argentina, Siemens allegedly paid approximately $95 million, directly or indirectly, to officials in the Argentine government, in connection with the company’s bid for a project valued in excess of $1 billion involving the development of a national identification card. 
  Siemens allegedly paid almost $750,000 in bribes to officials of the Moscow Project Implementation Unit, a quasi‑governmental entity in Russia responsible for implementing a traffic control system in Moscow.  Siemens allegedly paid approximately $55 million in bribes through a Dubai intermediary to Russian state‑owned hospitals in connection with sales of medical equipment.
  
  Siemens also paid approximately $2.6 million in bribes to a business consultant in Mexico, some portion of which allegedly was routed to a senior official of the state‑owned petroleum company, Pemex. 
  
  Siemens allegedly paid $383,000 in bribes in connection with $6 million in sales of medical devices on two projects involving the Vietnamese Ministry of Health.  Finally, Siemens allegedly paid approximately $140,000 in bribes to officials at the Vietnamese defense ministry and state‑owned telecommunications company Vietel in connection with a $35 million tender for the supply of telecommunications equipment and services. 

• Enforcement
• On December 15, 2008, Siemens consented to the entry of final judgment enjoining it from committing further FCPA violations.  Without admitting or denying the allegations, Siemens agreed to pay $350 million in disgorgement and also agreed to the imposition of an independent monitor for a period of up to four years.  Theo Wiegle, a former German finance minister, will serve as the Monitor and will be assisted by a U.S. law firm, marking the first time that a non‑U.S. monitor has been appointed in an FCPA case. 
  
  On the same day, Siemens AG pleaded guilty to conspiring to violate the FCPA’s internal controls and books-and-records provisions; Siemens Argentina pleaded guilty to conspiring to violate the FCPA’s books and records provisions; and Siemens Bangladesh and Siemens Venezuela each pleaded guilty to conspiring to violate the FCPA’s anti‑bribery and books-and-records provisions.  Siemens AG and its subsidiaries agreed to pay criminal fines totaling $450 million.  On the same day, Siemens also entered into a settlement with German authorities, agreeing to pay penalties of €395 million in addition to the €201 million in penalties that it previously paid in an earlier settlement.
  
  In addition, the DOJ brought a forfeiture action against more than $3 million contained in several bank accounts held by or for the benefit of the son of the former Prime Minister of Bangladesh and two of the intermediaries involved in the bribery scheme involving Siemens Bangladesh.
  
  In July 2009, Siemens reached a settlement with the World Bank over bribery allegations.  The Bank’s investigation focused specifically on an urban‑transport project the Bank financed in Russia.  Siemens agreed to pay $100 million over 15 years to help anticorruption efforts and also agreed to forgo bidding on any of the Bank’s projects for two years.  The settlement means that Siemens and its subsidiaries will not face additional sanctions from the World Bank.
  
  Separately, on August 12, 2009, Siemens AG stated that it would drop a case against Argentina’s government in the World Bank’s International Center for Settlement of Investment Disputes, which had demanded $200 million related to the cancellation of a contract to make identity cards.  Siemens had been accused of paying bribes to win the contract.  Siemens stated that it would continue to cooperate with investigations by Argentine authorities.

• Amount of the Value
• Over $1.4 billion.

• Amount of Business Related to Payment
• Over $4.2 billion.

• Intermediary
• Consultants; Agents.

• Citizenship of Parent Entity
• Germany

• Total Sanction
• $ 350,000,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 800,000,000

• Related Enforcement Actions
• United States v. Siemens Aktiengesellschaft (D.D.C 2008)
  United States v. Siemens S.A. (Argentina) (D.D.C 2008)
  United States v. Siemens Bangladesh Ltd. (D.D.C 2008)
  United States v. Siemens S.A. (Venezuela) (D.D.C 2008)
  United States v. Uriel Sharef, Herbert Steffen, Andres Truppel, Ulrich Bock, Eberhard Reichert, Stephan Signer, Carlos Sergi, and Miguel Czysch (S.D.N.Y. 2011)
  SEC v. Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel, and Bernd Regendantz (S.D.N.Y. 2011)
  

Siemens Aktiengesellschaft 

• Citation
• SEC v. Siemens Aktiengesellschaft, No. 08-CV-02167 (D.D.C. 2008).

• Date Filed
• 12/15/2008

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• Germany