Speech by SEC Staff:
Statement at News Conference Announcing Siemens AG Settlement
Linda Chatman Thomsen
Director, Division of Enforcement
U.S. Securities and Exchange Commission
December 15, 2008
Good afternoon. I am Linda Thomsen, the Director of the Division of Enforcement at the Securities and Exchange Commission. With me today are some extraordinarily talented and dedicated SEC Enforcement staff members, and we are very pleased to join our law enforcement counterparts here today to announce this $1.6 billion settlement with Siemens AG for bribing government officials around the world to obtain business. Siemens’ pattern of bribery was unprecedented in scale and geographic reach.
Our collective actions say, first, the worldwide community will vigorously and tenaciously pursue those who bribe government officials for business, and, second, the consequences for this type of behavior will be severe. If a company bribes government officials anywhere on the globe, law enforcement will work around the globe to hold that company accountable.
Bringing Siemens to justice today is a testament to the close, coordinated working relationship among the SEC, the U.S. Department of Justice, and other U.S. and international law enforcement, particularly the Office of the Prosecutor General in Munich, Germany.
In the SEC’s action, we allege that Siemens paid a staggering $1.4 billion in brides to government officials in Asia, Africa, Europe, the Middle East, and the Americas. The scope of the bribery scheme is astonishing, and the tone set at the top at Siemens was a corporate culture in which bribery was tolerated and even rewarded at the highest levels of the company.
The SEC portion of the Siemens settlement — $350 million in disgorgement — is by far the largest settlement amount ever obtained by the SEC under the Foreign Corrupt Practices Act (FCPA). To put this in context, the largest prior SEC FCPA settlement was reached in 2007 and was for $33 million. The SEC’s settlement with Siemens is more that 10 times that amount.
Furthermore, the $1.6 billion total that Siemens will pay in these settlements is the largest amount that any company has ever paid to resolve corruption-related charges.
And that is fitting because the alleged conduct by Siemens was egregious and brazen. It was systematic, it involved thousands of payments, and it occurred over an extensive six-year period. Siemens created elaborate payment schemes to conceal these corrupt payments to foreign officials. The company’s inadequate internal controls allowed the conduct to flourish.
The details tell a very unsavory story: employees obtained large amounts of cash for Siemens’ cash desks; employees sometimes carried that cash in suitcases across international borders to pay bribes; payment authorizations were recorded on post-it notes that were later removed to avoid leaving any permanent record; there were slush funds and a cadre of consultants and intermediaries to facilitate paying the bribes.
Investigating this intricate scheme and righting Siemens’ wrongs has taken a remarkable and unprecedented level of coordination among many law enforcement agencies around the world. I would like to thank everyone involved for their outstanding work, cooperation and coordination:
- The Fraud Section of the United States Department of Justice
- The Fraud and Public Corruption Section of the United States Attorney’s Office for the District of Columbia
- The Federal Bureau of Investigation
- The Internal Revenue Service
- The Office of the Prosecutor General in Munich, Germany
- The Financial Services Authority in the United Kingdom
- And the Hong Kong Securities and Futures Commission.
This marks the first time that United States and foreign prosecutors have coordinated their enforcement efforts to address violations of anti-bribery laws. I expect it will not be the last.
I also want to thank the SEC’s Office of International Affairs that assisted us in reaching out to foreign jurisdictions. Finally, I want to say how very proud I am of the tenacious SEC team that has worked so hard on this matter — Cheryl Scarboro, Reid Muoio, Tracy Price, Robert Dodge, Denise Hansberry, Amanda Yingling, and Sarah Otte.
As always, those of us in the Enforcement Division at the SEC are extremely grateful for our Commission’s support of our work and for its steadfast commitment to enforcing the Foreign Corrupt Practices Act. In the past three years, the Commission has brought about three dozen FCPA cases. All of our FCPA actions have helped to combat bribery and public corruption throughout the world.
The SEC will continue to work closely with other law enforcement, foreign and domestic, to pursue wrongdoing wherever it occurs. The message today is clear: when any company circumvents the rules of fair play and honest competition by making improper payments to win business, it will face a strong and united front from law enforcement around the globe.