Second former Siemens board member charged

According to reports in several newspapers, Munich prosecutors indicted a former Siemens Manager in connection with the Siemens bribery scandal. Multiple sources allege the affected person to be former Siemens board member Uriel Sharef. He would be the second Siemens Manager within a few months having to stand trial.

Already in May 2011, the lawsuit against the former Siemens board member Thomas Ganswindt was dropped without court decision in return for payment of KEUR 175.  Ganswindt was inter alia charged with deliberate infringement of his obligatory supervision (Section 130 of the German Law on Regulatory Offenses). He pled not guilty.

Sharef is accused of being enmeshed in a system of illicit accounts and bribe payments in South America and might be found guilty of embezzlement (Section 266 para. 1 of the German Criminal Code). The former Argentine president Carlos Menem, several members of his cabinet, State Secretaries and further hierarchs allegedly were to accept payments of at least US $ 27 million and conversely award Siemens a contract to produce forgery-proof identity cards for every Argentinean citizen.

Although the project failed and the deal fell through former government officials in Argentina insisted on payments amounting to US $ 27 million of which de facto about one-third was paid from clandestine accounts. Sharef allegedly filled up these accounts afterwards by transferring further millions of Siemens’ capital.

Moreover, the prosecutors assume that Sharef was informed in early 2004 by the then head of the Argentinean Siemens subsidiary about several accounts kept by bogus companies on Argentine banks with a total sum of US $ 40 million. Although the local Siemens manager planned to transfer this money back to consolidated accounts, Sharef allegedly declined that. Apparently Sharef also failed to disclose the existence of clandestine accounts to other board members of Siemens AG, a way of proceeding he would have been obliged to under German Law. Currently, the Munich district court reviews the allegations and decides whether to instigate court proceedings.

In the meantime another recent incident concerning Siemens occurred. Siemens managers initiated investigations of incidents involving employees of the company. The investigations led to the arrest of three managers in Kuwait. After an attempt to bribe representatives of the Department of Energy became known to responsible Siemens personel, public prosecutor’s office in Munich as well as US Stock Exchange Supervisory body SEC were informed immediately.

Major industrial group agrees on compensatory payment of EUR 35 million

Furthermore a second incident was reported by several newspapers. On June 8, 2011, Linde AG, a major German producer of industrial gases, and Munich state prosecutors agreed on the company paying EUR 35 million. to German treasury as a compensation for bribery, according to a Linde press officer. Linde allegedly benefited from illegal practices generating purchase orders.

Investigations against Linde were initiated after suspicions arose during legal proceedings against MAN AG, a German automotive group.

During the investigations against MAN presumptions of suspicious transactions involving Linde leaked and the chairman of the board Wolfgang Reitzle had joint transactions with a MAN-subsidiary investigated by the public prosecutor as a precaution. As a result, preliminary proceedings against several Linde employees were initiated. Board members were not included.

These recent developments could be suggestive of a tendency towards an increased willingness of companies to comply with anti-corruption rules and to cooperate with prosecutors in cases of alleged attempts of bribery by employees. This is also made plain not only by an undersupply of people trained and experienced in the area of compliance on the German job market but also by a noticeable tendency of medium-sized companies to devote attention to compliance.