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The biggest-ever Foreign Corrupt Practices Act case lives on with the announcement Dec. 13 that eight former executives and agents of Siemens A.G. have been charged with bribing officials in Argentina to get a $1 billion government contract. The indictment comes three years after the German company paid a record $800 million to settle related FCPA charges brought by the U.S. Department of Justice and the Securities and Exchange Commission. (The company paid another $800 million to settle charges in Germany.) Among the individual Siemens executives facing civil and criminal charges is Uriel Sharef, a former member of Siemen’s central executive committee. It’s the first time a board member of a global Fortune 50 company has been charged with a FCPA violation, according to DOJ Criminal Division head Lanny Breuer, who described the scheme as “corruption on an absolutely stunning scale.” According to the DOJ and SEC, the Siemens executives committed to pay $100 million in bribes to win a $1 billion contract to make national identity cards for the government of Argentina. The executives allegedly falsified documents including fake invoices and consulting contracts to hide the $60 million in bribes that the company actually paid out. When Siemens lost the contract after a change in political administrations in Argentina, the company instituted an arbitration proceeding at the World Bank’s International Centre for Settlement of Investment Disputes in Washington to recover $550 million in lost profits and out-of-pocket costs. To suppress evidence in that proceeding of the bribery, Siemens paid out still more bribes to Argentine officials to keep quiet, and in 2007 was awarded $218 million in the arbitration. (The company waived the award in 2008 after it settled the FCPA case with DOJ, which also involved kickbacks in Iraq, Venezuela and Bangladesh). Though the curent DOJ case involves German and Argentine citizens doing business in Argentina, the United States claims jurisdiction because Siemens common shares are registered with the SEC, and its American depository shares trade on the New York Stock Exchange. Also, the executives allegedly laundered $25 million through U.S. banks. “The FCPA is a vital tool in the fight against coruption, and ensures American companies operate on a level playing field abroad,” Breuer said during a conference call with reporters. “This is exactly the right time to continue exactly doing what we are doing.” SEC Enforcement Division head Robert Khuzami added that companies should “compete on quality and price, not on the size of their bribes….There were few lines these executives were not willing to cross to win and maintain the contract.” The SEC charged seven former executives in U.S. district court in New York with violating Section 30A of the Securities Exchange Act of 1934 and Section 13(b)(5) of the Exchange Act. The Justice Department charged six executives and two intermediaries with conspiracy to violate the FCPA, as well as wire fraud and money laundering. None of the defendants are in U.S. custody. Breuer said they are scattered around the world, in countries including Germany, Argentina and Switzerland, and that DOJ was working with its foreign counterparts to extradite them. He also praised Siemens for its “outstanding” cooperation. Breuer said the money laundering charges cary a penalty of up to 20 years in prison, and the FCPA violations could result five years behind bars. Contact Jenna Greene at [email protected].

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