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Siemens Execs Charged for Bribing Argentine Officials to Secure $1 Billion Contract and for Accounting Fraud

The Justice Department charged six former executives and two intermediary agents of Siemens AG (“Siemens”) with agreeing to pay more than $100 million in bribes to Argentine officials in order to obtain a $1 billion contract with the Argentine government to produce national identity cards.  The defendants were charged with conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”) and the wire fraud statute, money laundering conspiracy, and wire fraud.

“As alleged, the defendants in this case bribed Argentine government officials in two successive administrations and paid off countless others in a successful effort to secure a billion dollar contract,” said U.S. Attorney Bharara.  “When the project was terminated, they even sought to recover the profits they would have reaped from a contract that was awarded to them illegitimately in the first place.  Bribery corrupts economic markets and creates an unfair playing field for law-abiding companies.  It is critical that we hold individuals as well as corporations accountable for such corruption as we are doing today.”

In addition, the Securities & Exchange Commission (“SEC”) filed a compliant against Siemens charging the company with falsifying its corporate books and records and circumventing internal controls from the mid-1990s to 2006.  Specifically, the SEC complaint claims that Siemens engaged in numerous improper activities including, but not limited to, using off-books accounts for corrupt payments, engaging former employees to facilitate the corrupt payments to government officials, and mischaracterizing corrupt payment as consulting fees on the company’s books and records. 

The New York Times reported that Robert Khuzami, a director of enforcement for the SEC, indicated that the Siemens case was important because “one of most critical functions of law enforcement is to communicate to companies and individuals that they’re not dupes for obeying the law.” By enforcing the FCPA, he added, “we reward those companies who refuse to pay bribes,” and “root out competitors who do stoop to those levels.”

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