Monday, December 22, 2008

Siemens Bribery Case: New York Times Perspective

The New York Times published an excellent article over the weekend about the Siemens A.G. bribery case: At Siemens, Bribery Was Just A Line Item. The article describes the exploits of Reinhard Siekaczek, described as an accountant with Siemens, who between 2002 and 2006, "oversaw an annual bribery budget of about $40 million to $50 million." According to the report, Siekaczek and a "small group" of other accountants directed payments to officials in countries all over the world, particularly third-world countries, in exchange for favorable treatment on contracts for the company. For his part, Siekaczek has cooperated with German authorities since his 2006 arrest and was ordered to pay a $150,000 fine and placed on a 2 year probation by a German court. Incredibly, prior to 1999, bribes were deductible as business expenses under the German tax code - this changed in February 1999 when Germany signed on to the international convention banning bribery of foreign officials. According to the article, Siemens officials continued the practice and worked to try to better disguise the payments to foreign officials, often made via transfers of funds to off-shore accounts. The article describes how at Siemens, bribes were referred to as “NA” - “n├╝tzliche Aufwendungen” which means “useful money.” The article went on to describe the "most common method of bribery involved hiring an outside consultant to help “win” a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient."

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