In the largest case of its kind, Siemens AG pled guilty to violations of the Foreign Corrupt Practices Act and agreed to pay a criminal fine of $450 million.
From the 1990s through 2007, Siemens engaged in a systematic and widespread effort to make and to hide hundreds of millions of dollars in bribe payments across the globe.
These efforts by Siemens executives included using off-the-books slush fund accounts and shell companies to facilitate bribes, making false entries on the company’s books and records by, for example, falsely recording bribes as consulting fees; by accumulating profit reserves as a liability on company books, and then using these funds to facilitate bribe payments.
These efforts also included short-changing audits that might have gotten too close to so-called “business consultants,” who were in fact conduits for illicit payments; using removable post-it notes so as to hide the identity of executives who had authorized illicit payoffs; and last, the time-tested method of suitcases filled with cash. More than $800 million in bribes were paid by Siemens and various of its entities over the course of 2001 to 2007.
For a time these efforts worked as the corrupt officials held up their side of the bargain, and in exchange, Siemens received billions of dollars worth of government contracts. For example, in the case of Siemens Venezuela, the prize was a $340 million contract to build two city rail systems. In the case of Siemens Bangladesh, corrupt payoffs there resulted in a $40 million mobile phone project. And in the case of Siemens Argentina, the goal was a billion dollar contract for work on Argentina’s national identity card.
The Times report is here.