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Argentine police raid Siemens offices

Argentine authorities on Friday searched the Buenos Aires offices of German technology giant Siemens in an investigation of the payment of bribes during the 1989 to 1999 government of former Argentine president Carlos Menem.

German media reported in recent days, based on court documents, that Menem allegedly received a direct payment from Siemens of US$16 million. The firm reportedly expected to pay US$100 million in bribes to Argentine officials including Menem and the then-ministers of finance and interior.

Siemens’ Argentine headquarters, located near the historic Plaza de Mayo in central Buenos Aires, were searched in an effort to secure evidence on an order from Judge Ariel Lijo.

Former Siemens officials claimed — in the context of a broader investigation against the German multinational firm — that the company paid bribes in Argentina. German courts forwarded the information to authorities in Buenos Aires.

Siemens in the 1990s was seeking a US$1.26 billion contract to digitalize Argentine identity documents and other services, the daily Sueddeutsche Zeitung reported. The contract was signed under Menem in 1998 but canceled in 2001 by his successor, former Argentine president Fernando de la Rua.

Later, Siemens allegedly paid further bribes until 2004 — under former Argentine president Nestor Kirchner, husband of current President Cristina Fernandez de Kirchner — in an effort to have the contract restored.

Meanwhile in Germany, Spiegel magazine reported that Siemens ignored its own anti-corruption procedures in a slush fund scandal that has brought down a number of former group executives.

“Netzwerk-compliance,” a network comprising more than 400 businesses created to secure good company governance, found “considerable structural shortcomings” in Siemens’ anti-corruption rules, a “strictly confidential” document by Hengeler Mueller lawyers’ office for Siemens said.

Hengeler Mueller pinpointed a conflict of interest in the company’s auditing office tasked with preventing corruption and protecting the group if corruption cases were revealed, the magazine said in its edition to be published today.

Steps to improve the way the auditing office works also met with “considerable opposition by management,” it said.

With its 80 members, the audit department was understaffed compared to its US competitor General Electric, which employs 300 people in its compliance department, an internal 2005 study quoted by the magazine said.

Siemens said late last month it would pursue former directors for damages in an unprecedented action based on a claim they ignored widespread corruption revealed nearly two years ago.

Among the 11 executives targeted are former Siemens bosses Heinrich von Pierer and Klaus Kleinfeld, the company said in a statement.

The company “bases its claims on breaches of their organizational and supervisory duties in view of the accusations of illegal business practices and extensive bribery” that marked operations from 2003 to 2006.

The sprawling conglomerate has acknowledged that 1.3 billion euros (US$2 billion) was funneled into various funds used to obtain foreign contracts, and that the practice was widespread across its numerous divisions.

The 160-year-old group manufactures products from light bulbs and medical equipment to railway trains and power stations, and employs around 400,000 people worldwide.

It agreed last October to pay a fine of 201 million euros to put an end to some German legal proceedings, but is also the subject of a potentially damaging probe by the US Securities and Exchange Commission.

Siemens shares are listed in the US where it could be barred from bidding on public contracts — one reason why it might have taken such historic action.

Siemens was also accused of having built up the leader of a small independent trade union in exchange for support against actions by the giant IG Metall union.
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