Securities Exchange Commission (SEC) Charges Seven Former Siemens Executives with Bribing Leaders in Argentina

Siemens was previously charged with FCPA violations and paid $1.6 billion to resolve the charges with the SEC, U.S. Department of Justice, and Office of the Prosecutor General in Munich.

The SEC alleges that the executives who perpetuated the scheme worked at Siemens and its regional company Siemens Argentina. One of the executives had left Siemens and acted as a payment intermediary in the scheme. Siemens paid more than $100 million in bribes to such high-ranking officials as two former Argentine presidents and former cabinet members. The executives falsified documents including invoices and sham consulting contracts, and participated in meetings in the United States to negotiate the terms of bribe payments. They used U.S. bank accounts to pay some of the bribes.

"Business should flow to the company with the best product and the best price, not the best bribe," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Corruption erodes public trust and the transparency of our commercial markets, and undermines corporate governance."

In a parallel criminal action, the Department of Justice announced charges against former executives and agents of Siemens. They are charged with conspiracy to violate the FCPA and the wire fraud statute, money laundering conspiracy and wire fraud.

According to the SEC's complaint filed in U.S. District Court in Manhattan, the scheme lasted from approximately 1996 to early 2007. Initially, the bribes were paid to secure a $1 billion contract to produce national identity cards known as Documentos Nacionales de Identidad (DNI) for every Argentine citizen. After a change in Argentine political administrations resulted in the DNI contract being suspended and then canceled, Siemens paid additional bribes in a failed effort to revive the DNI contract. When the company later instituted an arbitration proceeding to recover its costs and expected profits from the canceled contract, Siemens paid additional bribes to suppress evidence that the contract originally had been obtained through corruption.

The former Siemens and Siemens Argentina executives charged by the SEC each had a role in authorizing, negotiating, facilitating, or concealing bribe payments in connection with the DNI contract:

    Uriel Sharef – A former managing board member at Siemens from July 2000 to December 2007. He met in the United States with payment intermediaries and agreed to pay $27 million in bribes to Argentine officials in connection with the DNI contract.
    Ulrich Bock – Former Commercial Head of Major Projects for Siemens Business Services (SBS) from October 1995 to 2001. As the officer responsible for the DNI contract, he authorized bribe payments to Argentine government officials.
    Stephan Signer –Replaced Bock as Commercial Head of Major Projects for SBS and later became Head of Business Operations and Finance at Siemens IT Solutions and Services. He authorized the payment of bribes to government officials in Argentina.
    Herbert Steffen –CEO of Siemens Argentina from 1983 to 1989 and again in 1991, and Group President of Siemens Transportation Systems from 1996 to 2003. Due to his longstanding connections in Argentina and Latin America, Steffen was recruited by Sharef and met directly with Argentine officials and offered bribe payments on behalf of Siemens.
    Andres Truppel –CFO of Siemens Argentina from 1996 to 2002. He regularly communicated with Argentine government officials regarding illicit bribe payments and participated in U.S.-based meetings where bribes were negotiated and promised.
    Carlos Sergi –A former board member of Siemens Argentina and a business consultant for Siemens Argentina. His primary role was to serve as a payment intermediary between Siemens and Argentine government officials in connection with the DNI contract.
    Bernd Regendantz –CFO of SBS from February 2002 to 2004. He authorized two bribe payments totaling approximately $10 million on Siemens' behalf.

According to the SEC's complaint, approximately $31.3 million of the $100 million in bribes paid 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 more than $217 million plus interest for the DNI contract. In August 2009, after settling bribery charges with the U.S. and Germany, Siemens waived the arbitration award.

The SEC complaint alleges that Bock, Regendantz, Sergi, Sharef, Signer, Steffen, and Truppel each violated Section 30A of the Securities Exchange Act of 1934, and aided and abetted Siemens' violations of Section 30A. The complaint also alleges that they violated Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder by authorizing or directing others to falsify documents in furtherance of the bribery scheme. Regendantz violated Rule 13b2-2 by signing false internal certifications pursuant to the Sarbanes Oxley Act (SOX). They each also aided and abetted Siemens' violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) by substantially assisting in the company's failure to maintain internal controls to detect and prevent bribery of government officials in Argentina, and by substantially assisting in the improper recording of the bribe payments in Siemens' accounting books and records.

Regendantz settled the SEC charges without admitting or denying the allegations by consenting to the entry of a final judgment that permanently enjoins him from committing future violations. He paid a €30,000 administrative fine ordered by the Munich prosecutor (equivalent to $40,000 in U.S. dollars).

The SEC's investigation was conducted by Tracy L. Price, Robert Dodge, and Denise Hansberry of the Enforcement Division's FCPA Unit. The SEC appreciates the assistance of the U.S. Department of Justice's Fraud Section, the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the Office of the Prosecutor General in Munich.
 

Additional Materials (direct links)

• Litigation Release No. 22190
• SEC Complaint
• Spotlight on FCPA Cases

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For more information about this enforcement action, contact:

Tracy L. Price
Assistant Director, SEC Enforcement Division's FCPA Unit
202-551-4490

http://www.sec.gov/news/press/2011/2011-263.htm