DECEMBER 16, 2008 Siemens Pays Record Fine in Probe $800 Million Settlement Will End U.S. Bribery Case for German Conglomerate
By DAVID CRAWFORD and MIKE ESTERL Wall Street Journal http://online.wsj.com/article/SB122936135680907233.html A record $800 million in U.S. fines for bribery allegations levied against Siemens AG on Monday could have been much higher if the German engineering and industrial conglomerate hadn't taken steps to cooperate with prosecutors, officials and lawyers say. When a German government investigation became known in late 2006, Siemens quickly turned to New York law firm Debevoise & Plimpton LLP. The move highlights a widespread practice in the U.S., where prosecutors encourage companies to hire private-sector investigators and then share the information with authorities. In return, companies can expect more lenient fines and sanctions. In a Friday court filing, the Justice Department said it could have sought as much as $2.7 billion in criminal damages from Siemens. In arguing for a lesser fine, it cited the "extraordinary" steps taken by Siemens to cooperate with authorities and to beef up its compliance procedures. The filing said Debevoise's "frequent and extensive reports" to U.S. authorities helped the Justice Department's own investigation "enormously." Authorities add the probes could have lasted much longer and the fines could have been more than twice as high. Siemens said it paid more than $850 million in fees and expenses to Debevoise and the accounting firm Deloitte & Touche. At the peak of the investigation, Debevoise employed about 100 lawyers and more than 100 support staff to direct the investigation. Deloitte used about 1,300 forensic accountants and support staff, Siemens added. A Washington, D.C., federal court on Monday ratified the settlement, in which Siemens agreed to pay separate fines of $450 million and $350 million to end litigation claims by the Justice Department and Securities and Exchange Commission, respectively. It was by far the largest penalty ever imposed under the U.S. Foreign Corrupt Practices Act. In addition, Europe's largest engineering company by revenue said it would pay an additional €395 million ($528 million) in Germany to settle criminal investigations there. The fines are in addition to a €201 million fine levied by a Munich court last year in connection with allegations the company paid more than $1 billion in bribes to gain contracts over a decade. As part of Monday's settlement, Munich-based Siemens didn't have to admit to the bribery allegations, allowing it to keep bidding for U.S. public-sector projects. Instead, it admitted to having had inadequate controls and keeping improper accounts. Some prosecutors investigating the bribery allegations against Siemens in Europe were less enthusiastic about the U.S. practice of using law firms as in-house investigators. "An independent law firm is hired to minimize damage to a firm," said Cuno Tarfusser, a prosecutor in Bolzano, Italy, suggesting there was a potential for conflict of interest. Mr. Tarfusser has been investigating Siemens for several years on suspicion of corruption. Austrian prosecutors investigating Siemens said Debevoise's role slowed their investigation. When a prosecutor's access to evidence comes from a private law firm, "the optic isn't very clear," added Gerhard Jarosch, a spokesman for prosecutors in Vienna. "Debevoise has met with the Vienna prosecutor on more than one occasion, and on each occasion the prosecutor has expressed his appreciation for the cooperation Debevoise has displayed," said Bruce Yannett, the partner in charge of the investigation for Debevoise. Prosecutors in Germany warmed to the idea, after initially balking at cooperating with Debevoise. The relationship with the New York law firm was "pleasant and good," said Hildegard Bäumler-Hösl, a Munich-based prosecutor who investigated Siemens. More than 10 countries are investigating alleged corruption at Siemens. The company has said it could face further fines or sanctions outside the U.S. and Germany but that if it does, it doesn't expect them to be as large. Although German prosecutors have wrapped up legal proceedings against Siemens, they continue to investigate the role of individuals for possible bribery after three former company managers received suspended court sentences earlier this year. Munich prosecutors are working off a list of about 300 suspects, including former management-board members. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
