Three years after Germany's Siemens AG settled the biggest FCPA case in history, eight of its former executives and agents have been indicted for a criminal conspiracy to violate the FCPA, launder money, and commit wire fraud.
The defendants also face civil charges brought by the SEC for bribing government officials in Argentina.
A ninth man, Bernd Regendantz, has already settled the SEC's charges by agreeing to pay a civil penalty of $40,000. The penalty was 'deemed satisfied by Regendantz' payment of a €30,000 administrative fine ordered by the Public Prosecutor General in Munich, Germany.' He was not charged in the U.S. criminal indictment. That may indicate he's already cooperating with the DOJ's prosecutors.
The defendants named in the DOJ's indictment were:
- Uriel Sharef, a former member of the central executive committee of Siemens AG
- Herbert Steffen, a former chief executive officer of Siemens Argentina
- Andres Truppel, a former chief financial officer of Siemens Argentina
- Ulrich Bock, Stephan Signer, and Eberhard Reichert, former senior executives of Siemens Business Services, and
- Carlos Sergi and Miguel Czysch, who served as intermediaries and agents of Siemens in the alleged bribe scheme.
The defendants allegedly bribed a series of Argentine government officials beginning in 1994 for ten years to win a billion dollar contract to produce national identity cards. After the contract was terminated, they paid bribes to reinstate it. They also paid further bribes to suppress evidence when the termination of the contract was being arbitrated.
The defendants live in Germany, Switzerland, or Argentina. They have not yet been arrested or extradited.
'Over the course of the bribery scheme,' the SEC said, 'over $100 million in bribes were paid, approximately $31.3 million of which were made after March 12, 2001, when Siemens became a U.S. issuer subject to U.S. securities laws. As a result of the bribe payments it made, Siemens received an arbitration award in 2007 against the government of Argentina of over $217 million plus interest for the [contract]. In August 2009, after settling bribery charges with the U.S. and Germany, Siemens waived the arbitration award.'
Siemens AG's settlement in December 2008 with the DOJ and SEC for $800 million is still the biggest FCPA case of all time. It paid a criminal fine of $450 million in the DOJ settlement and $350 million in disgorgement of profits under its agreement with the SEC. Siemens' Argentina subsidiary was named in the 2008 enforcement action. In Germany, Siemens also paid €596 million in 2007 and 2008 to settle actions brought by the Munich Public Prosecutor.
The DOJ's Lanny Breuer said today: 'This indictment reflects our commitment to holding individuals, as well as companies, accountable for violations of the FCPA.'
The indictment charged the defendants with conspiracy to violate the anti-bribery, books and records, and internal control provisions of the FCPA; conspiracy to commit wire fraud; conspiracy to commit money laundering; and substantive wire fraud.
The most senior defendant, the SEC said, was Uriel Sharef, a former Siemens Managing Board member. It said all of the defendants allegedly 'falsified documents, including invoices and sham consulting contracts, participated in meetings in the United States to negotiate the terms of bribe payments, and made use of U.S. bank accounts to pay bribes.'
The DOJ's Breuer said, 'This is the first time we’ve charged a board member of a Fortune global 50 company with FCPA violations.'
Robert Khuzami, head of the SEC’s enforcement division, said it is the largest civil enforcement action ever brought by the SEC against defendants accused of bribing foreign officials.
The DOJ praised Siemens' 'laudable actions . . . in disclosing potential FCPA violations.' It said,
Siemens AG disclosed these violations after initiating an internal FCPA investigation of unprecedented scope; shared the results of that investigation; cooperated extensively and authentically with the department in its ongoing investigation; and took remedial action, including the complete restructuring of Siemens AG and the implementation of a sophisticated compliance program and organization.
Siemens AG's American Depositary Receipts trade on the NYSE under the symbol SI.
The criminal case is U.S. v. Sharef, 11-01056, U.S. District Court, Southern District of New York (Manhattan).
View the DOJ's December 13, 2011 release here.
View the SEC's Litigation Release No. 22190 and Accounting and Auditing Enforcement No. 3342 (both dated December 13, 2011) in Securities and Exchange Commission v. Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel and Bernd Regendantz, Civil Action No. 11 civ 9073 (Judge Scheidlin/Pitman) (S.D.N.Y.) here.
Download the SEC's civil complaint here.