Germany engineering giant Siemens has told a court in Washington that it is willing to settle bribery charges filed against it under the Foreign Corrupt Practices Act in the US, by agreeing to pay $800 million for the $1.36 billion it paid in bribes to government officials globally to secure contracts.
The Munich-based company is accused of fudging its book of accounts from 2001 to 2007 in order to conceal bribes paid to Iraqi government officials in the United Nations oil-for-food programme and accused of paying bribes to secure contracts varying from mobile networks, transport, traffic-control systems and power plants by its subsidiaries in Bangladesh, Venezuela, Argentina and Russia.
Siemens created elaborate payment schemes to conceal the bribes paid out and it involved employees at all levels of the company, including former senior management.
The court is scheduled to hold a hearing today to decide on whether to accept the company's offer of settlement, wherein the prosecutors are proposing a fine of $450 million on the company's subsidiaries in Venezuela, Argentina and Bangladesh and separately it will sign an agreement with the US Securities and Exchange Commission and the Justice Department, where it will forego its profits of $350 million and submit itself to monitoring to ensure conformity with anti-bribery laws.
The bribery scandal, which was first discovered in 2006, led to investigations in many countries and officials of the company decided to fully co-operate with the investigations.
Last year, in Germany, a Munich court had fined Siemens $1.33 million for bribing government officials in Russia, Libya and Nigeria and the company's insurers comprising Allianz, Zurich Financial Services and HDI-Gerling had to pay the cost of the corruption case. (See: Alliance, other insurers to foot Siemens' corruption bill: report)
According to prosecutors, Siemens was involved in the $1 billion national identity card contract scandal in Argentina, where it paid more than $100 million in bribes after securing the contract while in Venezuela, it paid $18.8 million in bribes to government officials to secure rail mass-transit contracts in two cities.
In Iraq, four of the company's subsidiaries paid $1.7 million in bribes to get contracts worth $80 million under the United Nations oil-for-food program while in Bangladesh, another subsidiary paid $5.3 million to win a telecommunications infrastructure project.
Siemens was also involved in paying bribes in China, Mexico, Nigeria and Vietnam.
The investigation by US and German authorities, had led to the resignation of the Siemens' chief executive and chairman last year and the head of its healthcare division and Peter Loescher, the new Chief executive went on to clean the mess by firing many senior executives and hired new division chiefs.
Siemens, had uncovered evidence of systemic use of slush funds to win contracts over a number of years in an in-house probe and it has made provision $1.3 billion as expected legal costs in the US and Germany.