Former Siemens Executive Pleads Guilty In Manhattan Federal Court To $100 Million Foreign Bribery Sc

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https://www.justice.gov/usao-sdny/pr/former-siemens-executive-pleads-guilty-manhattan-federal-court-100-million-foreign

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, March 15, 2018

Former Siemens Executive Pleads Guilty In Manhattan Federal Court To $100 Million Foreign Bribery Scheme

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Justice Department’s Criminal Division, announced that EBERHARD REICHERT, a former executive at Siemens Aktiengesellschaft (“Siemens AG”), pled guilty today in Manhattan federal court to conspiring to pay $100 million in bribes to senior Argentine government officials to secure, implement, and enforce a $1 billion contract between Siemens and the Argentine government to produce national identity cards. He is the second individual defendant to plead guilty in the massive scheme. REICHERT, a citizen of Germany, pled guilty to one count of conspiring to violate the Foreign Corrupt Practices Act’s anti-bribery, internal controls, and books and records provisions, and to commit wire fraud, before U.S. District Judge Denise L. Cote. His guilty plea followed his September arrest in Croatia and subsequent voluntary extradition to the United States in December.
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REICHERT was employed by Siemens AGfrom 1964 until 2001. Beginning in approximately 1990, REICHERT was the Technical Manager of the Major Projects division of Siemens Business Services GmbH & Co. OGH (“SBS”), a subsidiary of Siemens AG.

In 1994, the government of Argentina issued a tender for bids to replace an existing system of manually created national identity booklets with state-of-the-art national identity cards (the DNI project). The value of the DNI project was $1 billion. In order to obtain the project, Siemens committed to paying nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party, and candidates for office who were likely to come to power during the performance of the project. In 1998, the Argentine government awarded the DNI project to Siemens, and REICHERT was one of the individuals in charge of the project.

REICHERT and his co-conspirators worked to approve and conceal the illicit payments through various means, including by funneling the payments through shell companies associated with bribe recipients to disguise the true purpose for the payments. REICHERT also admitted to approving a $27 million sham contract between a Siemens entity and a company called MFast Consulting AG that was being used as a vehicle to funnel money to Carlos Sergi, REICHERT’s co-defendant, for bribe payments. Several years after leaving the company, SERGI initiated a Swiss arbitration to collect on the contract. REICHERT testified on SERGI’s behalf and, ultimately, REICHERT’s co-conspirators caused Siemens to pay an additional $8.8 million in 2007 to settle the arbitration.

In May 1999, the Argentine government suspended the DNI project, due in part to instability of the local economy and an impending presidential election. When a new government took power in Argentina, and in the hopes of getting the DNI project resumed, members of the conspiracy committed Siemens to paying additional bribes to the incoming officials, and to satisfying existing obligations to officials of the outgoing administration, many of whom remained in influential positions within the government. When the project was terminated in May 2001, members of the conspiracy nevertheless sought to recover the anticipated proceeds of the DNI project by causing Siemens AG to file a fraudulent arbitration claim against the Republic of Argentina in Washington, D.C. Members of the conspiracy also continued the bribe scheme, in part to prevent disclosure of the bribery in the arbitration but also to ensure Siemens’ ability to secure future government contracts in Argentina and elsewhere in the region. In four installments between 2002 and 2007, members of the conspiracy allegedly caused Siemens to pay approximately $28 million in further satisfaction of the obligations.

Siemens’s corrupt procurement of the DNI project was not exposed during the lifespan of the conspiracy, and, in February 2007, the arbitration tribunal in Washington sided with Siemens AG, awarding the company nearly $220 million on its DNI claims, plus interest. The company, however, never claimed the award money, because after Siemens reached corporate resolutions with the U.S. and German authorities, Siemens AG agreed to forego its right to receive the award.
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