by Larry Neimeister and Pete Yost, Associated Press
NEW YORK (AP) — Eight former Siemens senior executives and agents were charged in a $100 million foreign bribery scheme that spanned a decade and resulted in a "shocking level of deception and corruption," an assistant U.S. attorney general said Tuesday.
The defendants were accused in an indictment returned late Monday in federal court in New York of involvement in the company's scheme from 1996 to early 2007 to retain a $1 billion contract to produce national identity cards for Argentine citizens.
A former member of the central executive committee of Siemens AG 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 Uriel 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 and it was not immediately clear who might represent him in legal proceedings.
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, director of enforcement at the SEC.
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 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.
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 an arbitration proceeding.
The SEC notes 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.