Tuesday, December 16, 2008

Siemens Bribes Governments For Contracts

Evidently it is not just Senate seats that are up for sale. Siemens AG apparently paid for contracts. The problem with such schemes is that the contracts go to the highest bidder. And now you know one of the reasons government costs so much and accomplishes so little.

Siemens’ scam ran like a suspense novel. “The SEC's complaint alleges that between March 12, 2001, and Sept. 30, 2007, Siemens created elaborate payment schemes to conceal the nature of its corrupt payments, and the company's inadequate internal controls allowed the conduct to flourish. Siemens made thousands of payments to third parties in ways that obscured the purpose for, and the ultimate recipients of, the money,” the commission stated.

“Employees obtained large amounts of cash from cash desks, which were sometimes transported in suitcases across international borders for bribery. The authorizations for payments were placed on post-it notes and later removed to eradicate any permanent record. Siemens used numerous slush funds, off-books accounts maintained at unconsolidated entities, and a system of business consultants and intermediaries to facilitate the corrupt payments.”

“Siemens made at least 4,283 payments, totaling approximately $1.4 billion, to bribe government officials in return for business to Siemens around the world. In addition, Siemens made approximately 1,185 separate payments to third parties totaling approximately $391 million, which were not properly controlled and were used, at least in part, for such illicit purposes as commercial bribery and embezzlement.”
I wonder how much business the state of Illinois did with those mopes?

What is Siemens involved in?

Osram Sylvania - That would be government mandated CFLs
Financial Services - I'm sure that sector has been in the news lately
Health Care - Obama is big on increasing government involvement in that

Here is a more detailed look:
Siemens AG (NYSE:SI) is one of the largest global electronics and engineering companies with reported worldwide sales of $91.5 billion in fiscal 2004. Founded more than 150 years ago, the company is a leader in the areas of Medical, Power, Automation and Control, Transportation, Information and Communications, Lighting, Building Technologies, Water Technologies and Services and Home Appliances. With its U.S. corporate headquarters in New York City, Siemens in the USA has sales of $16.6 billion and employs 70,000 people throughout all 50 states and Puerto Rico. Thirteen of Siemens' worldwide businesses are based in the United States. With its global headquarters in Munich, Siemens AG and its subsidiaries employ 430,000 people in 192 countries.
Interesting. However, even more interesting is what Siemens is doing in Illinois.
Headquartered in Buffalo Grove, Illinois, Siemens Building Technologies, Inc. is one of 14 Siemens operating companies in the United States and is a leading single-source provider of cost-effective facility performance solutions for the comfort, life safety and security of some of the most technically advanced buildings in the world. In North America, Siemens Building Technologies employs 8,000 people and provides local service from more than 100 locations coast-to-coast. Worldwide, the company has 33,000 employees and operates in 125 countries.
I couldn't find anything on State of Illinois buildings that use Siemens building controls. If any one knows anything give me a heads up.

EDN Magazine has a few more details.
The charges were laid out by the SEC (Securities and Exchange Commission), which alleges that Siemens paid bribes on such widespread transactions as the design and construction of metro transit lines in Venezuela, power plants in Israel, and refineries in Mexico. Siemens also used bribes to obtain business developing mobile phone networks in Bangladesh; national identity cards in Argentina; and medical devices in Vietnam, China, and Russia, according to the SEC's complaint. The commission further alleged that Siemens paid kickbacks to Iraqi ministries in connection with sales of power stations and equipment to Iraq under the United Nations Oil for Food Program.
According to the list they ran a clean shop in the USA and did most of their dirty work elsewhere. Nice list of places where the business practices are particularly corrupt though.

Wait a minute. Iraqi power stations and equipment? Wasn't Tony Rezko involved in that? Why yes he was.
Federal authorities are investigating an Iraqi power plant deal involving Antoin "Tony" Rezko, a former top fund-raiser for Gov. Blagojevich charged with defrauding Illinois taxpayers.

Investigators want to talk to Iraq's jailed former electricity minister, Aiham Alsammarae, about how Rezko landed the potentially lucrative contract, a source familiar with the probe told the Chicago Sun-Times.

Alsammarae, who holds dual U.S.-Iraqi citizenship and has a house in Oak Brook, helped Rezko get the deal, another source said.

Rezko and others in the venture were to own the plant and sell electricity back to the Iraqis, but the Iraqi government still was to pay a substantial portion of construction costs, that source added.

The contract, negotiated in 2004, no longer is in effect. It is unknown how much money, if any, Rezko made.

Alsammarae, 55, attended the Illinois Institute of Technology with Rezko in the late 1970s and early 1980s and went on to own an engineering firm in Downers Grove.

In 2003, Alsammarae returned to his native Iraq to lead efforts to help rebuild its war-torn power grid. By January 2005, Rezko's Rezmar Corp. had secured its contract to build a 200- to 300-megawatt plant in the northern Iraqi city of Chamchamal.

Since then, Alsammarae has been arrested and convicted of corruption by Iraq's Commission on Public Integrity.
I wonder if they bought any Siemens equipment?

Cross Posted at Classical Values

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