Seventeen people — eight current and nine former managers of Siemens AG — were accused Friday of bribing officials to help win a contract to produce national identity cards while Carlos Menem was president of Argentina in the late 1990s.
The accused include a former member of the Siemens central executive committee and managing board member, Uriel Sharef, who (among others) had faced FCPA conspiracy and other charges in the United States in 2011.
Federal Judge Ariel Lijo indicted the men for bribery, stating in his 300-page resolution that the managers paid more than $106 million to middlemen who were representing Menem’s administration in the bidding process.
Judge Lijo ordered payment of fines totalling 500 million pesos ($77 million), noting how the bribes were made so Siemens’ subsidiary in Argentina could produce the ID cards and how Siemens implemented a system to justify the multi-million dollar expenses that were flowing to its affiliate.
In February 1988, Siemens won a $1.3 billion contract to produce ID cards and build a border control system, which then-president Menem signed. The $600 million contract was soon doubled to $1.2 billion and raised suspicions from the start.
In 2001, Menem’s successor, Fernando de la Rua, canceled the contract and cited irregularities in it. Investigations were initiated and Siemens admitted that it had paid bribes to government officials in connection with obtaining the contract. In 2007, Siemens was fined $287 million by the Munich public prosecutor’s office in settlement over foreign corruption.
In December 2011, eight former Siemens executives and agents were indicted by U.S. prosecutors with conspiracy to violate the FCPA, conspiracy to commit wire fraud, conspiracy to commit money laundering and substantive wire fraud. Six of those defendants also faced civil charges brought by the SEC for bribing government officials in Argentina.
None of the defendants have answered the criminal charges in court as they all lived in either Germany, Switzerland and Argentina and could not be criminally tried in the United States, barring an arrest overseas or extradition.
In 2011, Bernd Regendantz agreed to pay a civil penalty of $40,000 to the SEC to resolve FCPA violations.
In February of this year, a federal judge in New York City threw out the SEC’s civil FCPA enforcement action against one of the SEC defendants, Herbert Steffen. Steffen was a former chief executive officer at Siemens SA Argentina, and the judge ruled that he did not have sufficient minimum contacts with the United States to subject him to the SEC’s personal jurisdiction.
In April of this year, Sharef settled the civil FCPA charges against him with the SEC without admitting or denying the allegations in the SEC’s complaint.
In the Argentina indictment, five of the eight defendants that were criminally charged in 2011 are on the list again: Uriel Sharef, Otto Bock, Eberhard Reichert, Andres Truppel and Miguel Czysch.
The others facing charges are Luis Schirado, Ernst Brechtel, Bernd Regendatz, Ralph Kleinhempel, Jose Ares, Carolos Soriano and Jose Antonio David.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.