Corporate giant Siemens AG has admitted to orchestrating a massive pay-to-play bribery conspiracy involving government officials from Bangladesh and Iraq to Venezuela, and will pay the U.S. government $800 million to settle the charges.
The scheme, as laid out in court documents, worked very simply: The German company and its subsidiaries, which produce light bulbs, wind turbines. trains and more, made more than 4,000 payments, totaling $1.4 billion, to government officials around the globe.
In one example cited in the documents, investigators say the company pursued 42 contracts as part of the United Nations' Oil for Food program in Iraq. The company paid $1.7 million in bribes to corrupt Iraqi officials to secure contracts worth $124 million, which would net $38 million in profits, the court documents say.
Another example cited in the court documents comes from Venezuela, where between 2001 and 2007, Siemens paid about $16.7 million in bribes to government officials in connection with the construction of metro transit systems in the cities of Valencia and Maracaibo.
Part of the court documents filed by the Justice Department and Securities and Exchange Commission at the U.S. District Court in Washington charge that Siemens and shell companies set up by the firm paid out huge amounts of bribes to officials around the world, in excess of $1 billion.
The firm pleaded guilty today to violating the bribery, internal controls and books and records provisions of the Foreign Corrupt Practices Act.
At the hearing at the federal courthouse in Washington, the company agreed to pay a criminal fine of $450 million to the Department of Justice and $350 million in civil penalties to the Securities and Exchange Commission
During the hearing, it was also disclosed that Siemens would pay fines to German regulators: 395 million euros (about $528.7 million) as a result of this corrupt business activity. The conglomerate also paid 201 million euros (about $269 million) to German authorities last year.
After the hearing, Peter Solmssen, Siemens AG general counsel, said, "This is the end of a difficult chapter in the company's history."
In total, the documents said that the firm paid out more than $800 million in kickbacks and bribes from 2001 to 2004.
According to charging documents filed by the Justice Department, in one part of the scheme, Siemens operated "cash desks" from 2001 to 2004, which withdrew $66 million for corrupt cash payments to officials around the globe in governments and other entities.
The documents also noted that the company paid "$192,000,000 to third parties through slush funds" in offshore accounts and entities of Siemens from 2001 to 2004.
Siemens' global headquarters are located in Munich and Berlin, but the company employs 69,000 people in the United States and Puerto Rico, according to its Web site. Globally, the company employs more than 400,000 people in 190 countries.