NEW YORK, Dec 13 (Reuters) - U.S. prosecutors charged eight former Siemens AG executives with paying $100 million in bribes for more than a decade to Argentina officials to help win a $1 billion contract to produce national identity cards.
The executives, who live in Germany, Switzerland and Argentina, have not yet been arrested to face the charges, U.S. officials said.
The defendants include Uriel Sharef, who was a member of Siemens’ managing board. He is the first former board member of a Fortune Global 50 company to be indicted under the U.S. Foreign Corrupt Practices Act, officials said.
A lawyer for Sharef in Germany could not immediately be reached to comment.
Between 1996 and 2007, the executives paid bribes intended for top Argentina officials, including two presidents and cabinet ministers, according to the criminal charges and a separate civil lawsuit brought by the top market regulator, the U.S. Securities and Exchange Commission. The charges were filed in U.S. District Court in Manhattan.
The defendants face criminal charges of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) anti-fraud statute, as well as wire fraud and money laundering, crimes that carry a possible maximum prison term of 25 years.
In December 2008, Siemens and its subsidiary in Argentina pleaded guilty to criminal violations of the U.S. Foreign Corrupt Practices Act and paid $449 million in fines over the same national identity card contract.
Siemens’ cooperation in the case against the executives was “extraordinary,” said Assistant Attorney General Lanny Breuer.
He declined to answer questions about whether the United States was seeking extradition of the executives. Argentina’s extradition treaty with the United States does cover the FCPA charges. Germany does not extradite its own citizens. Former Siemens board member Sharef is also being charged by the German government.
A Siemens spokesman declined to comment, saying the case involved individuals and not the company.
Breuer told reporters on a conference call that the executives hid the bribes in numerous ways, “using offshore shell companies, fake consulting contracts and large cash payments hand-carried across borders.”
The case was filed in New York because the former executives took part in meetings in the United States and used U.S. bank accounts, the government said.
It is not surprising that U.S. authorities targeted individuals, and the case may have taken years to bring because the evidence was overseas, said James Tillen, a partner at law firm Miller & Chevalier and an expert on Foreign Corrupt Practices cases.
“It’s certainly the DOJ and SEC’s strategy to prosecute more individuals because it sends a stronger deterrent message than going after corporations,” he said. “When you put someone in jail — especially an executive — it sends a much stronger message than fining a company.”
The SEC, in its case against seven former executives, said they paid $100 million in bribes in Argentina, about $31.3 million of which took place after March 12, 2001, when Siemens became subject to U.S. securities laws.
Siemens won the contract to produce identity cards for every Argentine citizen in 1998, but the contract was suspended, and then canceled, following a change in administrations.
“Siemens paid additional bribes in a failed effort to bring the contract back into force,” the SEC complaint said. “Still later, after the company instituted an arbitration proceeding to recover its costs and expected profits from the canceled contract, Siemens paid additional bribes to suppress evidence that it had originally obtained the contract through corruption.”
SEC enforcement division chief Robert Khuzami told reporters on a conference call that the action was the regulator’s largest against individuals accused of bribing foreign officials.
“There were few lines that these executives were not willing to cross to win and maintain the contract,” Khuzami said.
The cases are USA v Uriel Sharef et al No. 11-1056 and U.S. Securities and Exchange Commission v Uriel Sharef et al, No. 11-9073 both in U.S. District Court for the Southern District of New York.
Additional reporting by Basil Katz, Jeremy Pelofsky and Marilyn Gerlach; Editing by Gerald E. McCormick, Matthew Lewis, Lisa Von Ahn, and Phil Berlowitz