NEW YORK (AP) — Eight former Siemens senior executives and agents were charged with plotting to pay $100 million in bribes to secure a $1 billion contract to produce national identity cards for Argentine citizens, in a scam involving a "shocking level of deception and corruption," an assistant U.S. attorney general said Tuesday.
An indictment returned late Monday in federal court in New York charged the defendants with conspiring together from 1996 to early 2007 when they worked for the German engineering company based in Munich.
A former member of the central executive committee of Siemens AG, Uriel Sharef, and two former chief executive officers of Siemens Argentina were among those charged with conspiracy to violate the Foreign Corrupt Practices Act and the wire fraud statute, the Justice Department said. They were also charged with money laundering, conspiracy and wire fraud.
"Today's indictment alleges a shocking level of deception and corruption," Assistant Attorney General Lanny A. Breuer said. "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."
The charges against Sharef marked the first time a board member of a Fortune Global 50 company had been charged in a Foreign Corrupt Practices Act case, Breuer said. He was not in custody Tuesday. A message left with a lawyer who has represented him in the past was not immediately returned. None of the bribe recipients were named in the indictment and none of the defendants is in the United States.
Breuer said it was Justice Department policy not to name people who are not indicted and that the U.S. would work with other countries to bring the defendants to justice.
Seven of the defendants were also charged in a civil case in New York in which the Securities and Exchange Commission accused them of violating the Foreign Corrupt Practices Act. It's the largest action the SEC has ever brought against people accused of bribing foreign officials, said Robert Khuzami, SEC director of enforcement.
Ronald T. Hosko, the FBI's agent in charge of the bureau's Washington field office criminal division, and Khuzami emphasized the complexity of the investigation, which authorities unraveled with what Breuer called "extraordinary" cooperation from Siemens, the German engineering company.
"The company is not indicted," said Alexander Becker, a Siemens spokesman. "We can't comment on proceedings against individuals."
The conspirators committed to pay $100 million in bribes to Argentine officials and actually paid more than $60 million, including more than $25 million laundered through the U.S. banking system, Breuer said. The SEC said about $31.3 million in bribes was arranged after March 12, 2001 when Siemens became subject to U.S. securities laws.
After the identity card project was terminated, the defendants tried to recover profits they would have gotten from the contract that was awarded to them illegitimately, U.S. Attorney Preet Bharara said.
The SEC said bribes were initially paid to secure a $1 billion contract to produce national identity cards known as Documentos Nacionales de Identidad for Argentine citizens. According to the indictment, the government of Argentina invited bids in 1994 to create state-of-the-art national identity cards to replace manually created national identity booklets that citizens previously received.
The contract issued to a special-purpose subsidiary of Siemens was suspended and then canceled after a change in Argentine political administrations, the indictment said.
The SEC said Siemens paid additional bribes in a failed effort to revive the contract and paid still more bribes to suppress evidence that the contract had been obtained through corruption when it tried to recover its costs and expected profits from the canceled contract through a sham arbitration proceeding.
What was made to look like a settlement of the arbitration was actually just another way to conceal the bribes, authorities said.
The SEC said Sharef, a member of Siemens' corporate executive committee and a board member from 2000 to December 2007, met in Manhattan with payment intermediaries and agreed to pay $27 million in bribes to Argentine officials. It said bribes were intended for top government officials in Argentina, including two presidents and cabinet ministers in two presidential administrations.
The SEC noted that Siemens was previously charged with violations of the act and paid $1.6 billion to resolve the charges with the SEC, the Department of Justice and the office of the Prosecutor General in Munich.