International engineering giant Siemens AG will plead guilty today to U.S. charges it handed out more than $1 billion in bribes to foreign officials around the world — including to members of Saddam Hussein’s Baathist government — in an effort to land lucrative contracts.
Authorities have been in negotiations with the Munich-based conglomerate, which has offices in the United States, for more than a year. Under an agreement reached with prosecutors, Siemens will pay $800 million to settle the bribery charges, a law enforcement source said.
Under the deal, first reported by Bloomberg news service, the company will hand over $450 million in fines and another $350 million in profits for pay-to-play dealings in countries ranging from Bangladesh to Venezuela, according to a law enforcement source and court papers filed Friday.
Documents filed at the U.S. District Court for the District of Columbia make it clear company executives saw bribes to government officials as a business expense — and one well worth the money. The company routinely hired former employees to shower cash on officials in poor countries, court papers state. The company has also been implicated in the Iraq oil-for-food scandal, in which dictator Saddam Hussein dodged international sanctions by awarding lucrative contracts for bribes.
Friday’s court papers state Siemens ran a shadow company inside itself, with off-book payments, hidden bribes and disguised kickbacks.
Siemens’ role in the oil-for-food scandal became public in late 2006. It hired a new leader, Peter Loescher, about six months later. Loescher fired half of the company’s executives and restructured the company’s command structure. Under Loescher, Siemens cooperated with the government investigation, the law enforcement source said.
The deal may not end troubles for the company. Several former executives are still subjects of ongoing criminal investigations and indictments could roll out early next year, the source said, speaking on condition of anonymity because of the sensitivity of the investigation.
