U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22190 / December 13, 2011
Accounting and Auditing Enforcement No. 3342 / December 13, 2011
Securities and Exchange Commission v. Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel and Bernd Regendantz, Civil Action No. 11 civ 9073 (Judge Scheidlin/Pitman) (S.D.N.Y.)
SEC Charges Seven Former Siemens Executives with Bribing Leaders in Argentina
The Securities and Exchange Commission filed a Civil Action on December 13, 2011, in the U.S. District Court for the Southern District of New York, charging seven former senior executives of Siemens AG ("Siemens") and its regional company in Argentina with violations of the anti-bribery, books and records, and internal controls provisions of the Foreign Corrupt Practices Act in connection with a decade-long scheme to bribe senior government officials in Argentina, including two Presidents and Cabinet Ministers in two Presidential administrations. One of the executives charged was also a payment intermediary for Siemens. According to the SEC complaint, the seven individuals charged today, all foreign nationals, paid scores of millions of dollars in bribes for Siemens to obtain and retain a $1 billion contract to produce national identity cards for Argentine citizens.
The SEC alleges that over $100 million in bribes were paid in connection with Siemens' efforts to secure the contract and obtain the profits from that contract. The defendants charged in the scheme are Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel, and Bernd Regendantz. The most senior of these, Uriel Sharef, is a former Siemens Managing Board member. The SEC alleges that in furtherance of the scheme, the defendants falsified documents, including invoices and sham consulting contracts, participated in meetings in the United States to negotiate the terms of bribe payments, and made use of U.S. bank accounts to pay bribes. According to the SEC's complaint, the bribery scheme lasted for more than a decade, from approximately 1996 until early 2007.
The SEC previously charged Siemens in December 2008 with FCPA violations in Argentina and numerous other countries around the world. Siemens paid over $1.6 billion to resolve the charges with the Commission, the U.S. Department of Justice, and the Office of the Prosecutor General in Munich, Germany.
The SEC's complaint alleges that:
From approximately 1996 until early 2007, senior executives at Siemens and its regional company in Argentina, Siemens S.A. ("Siemens Argentina"), paid bribes to senior Argentine government officials — including two Presidents, and Cabinet Ministers in two Presidential administrations. The bribes were initially paid to secure a $1 billion government contract (the "DNI Contract") to produce national identity cards, or Documentos Nacionales de Identidad, for every Argentine citizen. Later, after a change in Argentine political administrations resulted in the DNI Contract being suspended and then canceled, Siemens paid additional bribes in a failed effort to bring the DNI Contract back into force. Still later, after the company instituted an arbitration proceeding to recover its costs and expected profits from the canceled DNI Contract, Siemens paid additional bribes to suppress evidence that the DNI Contract had originally been obtained through corruption.
Over the course of the bribery scheme, over $100 million in bribes were paid, approximately $31.3 million of which were made after March 12, 2001, when Siemens became a U.S. issuer subject to U.S. securities laws. As a result of the bribe payments it made, Siemens received an arbitration award in 2007 against the government of Argentina of over $217 million plus interest for the DNI Contract. In August 2009, after settling bribery charges with the U.S. and Germany, Siemens waived the arbitration award.
During the relevant 2001 to 2007 time period, defendants Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel, and Bernd Regendantz each had a role in authorizing, negotiating, facilitating, or concealing bribe payments in connection with the DNI Contract. Siemens employed a group of consultants, designated the Project Group and led by defendant Sergi, to serve as payment intermediaries between the company and the Argentine government officials.
Each of the defendants violated Section 30A of the Securities Exchange Act of 1934 (the "Exchange Act") by engaging in the bribery of government officials in Argentina. Each defendant also aided and abetted Siemens' violations of Section 30A. The defendants also violated Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder by authorizing or directing others to falsify documents, including invoices and sham consulting contracts, in furtherance of the bribery scheme. Defendant Regendantz violated Rule 13b2-2 by signing false internal certifications pursuant to the Sarbanes Oxley Act ("SOX"). All defendants aided and abetted Siemens' violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) by substantially assisting in Siemens' failure to maintain internal controls to detect and prevent bribery of government officials in Argentina, and by substantially assisting in the improper recording of the bribe payments in Siemens' accounting books and records. The SEC's complaint seeks permanent injunctive relief, disgorgement and civil penalties from the defendants.
Without admitting or denying the SEC's allegations, defendant Bernd Regendantz has consented to the entry of a final judgment that permanently enjoins him from future violations of Sections 30A and 13(b)(5) of the Exchange Act, and Rules 13b2-1 and 13b2-2 thereunder, and from aiding and abetting violations of Exchange Act Sections 30A, 13(b)(2)(A), and 13(b)(2)(B); and orders him to pay a civil penalty of $40,000, deemed satisfied by Regendantz' payment of a €30,000 administrative fine ordered by the Public Prosecutor General in Munich, Germany.
The SEC appreciates the assistance of the U.S. Department of Justice's Fraud Section, the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the Office of the Prosecutor General in Munich, Germany