US charges seven former Siemens officials with handing out bribes in Argentina

Following an exhaustive international investigation on three continents, the US Justice Department on Tuesday indicted seven former Siemens executives for carrying out a decade-long bribery scheme in Argentina to win and retain a $1-billion government contract to make national identification cards (DNI).

The payoffs took place during the presidential terms of Carlos Menem (1989- 1999) and Fernando de la Rúa (1999-2001), Washington officials said in a statement. They were indicted with violations of the US Foreign Corrupt Practices Act.

Siemens allegedly paid more than $100 million in bribes to high-ranking government officials. The United States assumed jurisdiction in the case because they used US bank accounts to pay some of the bribes.

The charges were filed with the Justice Department by the US Securities and Exchange Commission (SEC). "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 enforcement division.

The seven, including former Siemens Argentina CEO Herbert Steffen, were also indicted on charges of conspiracy, wire fraud and money laundering.

According to the Justice Department, the payoffs continued after a change in administrations in Argentina "resulted in the contract being suspended and then canceled." Company officials also paid bribes to keep evidence from surfacing that the contract was won through the payoff scheme, the statement said.

Lawyers for some of the defendants who live in Germany told The New York Times on Wednesday that their clients were "surprised" by the indictment and didn't know about the investigation.

According to the SEC, $31.3 million of the $100 million in bribes were made after March 12, 2001 when Siemens began issuing securities under US law. After losing the contract, the government in Argentina paid Siemens in 2007 a $217 million award following arbitration. However, it forfeited the money as part of a deal with the United States and Germany over the bribery scandal.

Still, the individuals who took part in the scheme were not covered by the settlement. Besides Steffen, also indicted is Uriel Sharef, a former managing board director; Ulrich Bock, former commercial head of major products; Stephan Signer, business operations and finance manager; Andres Truppel, a chief financial officer; Carlos Sergi, a former board member; and Bernd Regendantz, another former CFO, who served from 2002 to 2004 and is accused of authorizing two bribes totaling $10 million on Siemens' behalf.