Skip to main content

Home  »  Business Crime and FraudBusiness NewsTopicalWorld Business & Employment News   »   The Siemens global bribery scandal saw the company fined $1.6 billion

The Siemens global bribery scandal saw the company fined $1.6 billion

Siemens HQ

Siemens HQ

Communications giant Siemens is one of the big names in the industry.

In 2022, the corporation reported a record profit of €10 billion. CEO Roland Busch said: “Siemens delivered another outstanding performance in fiscal 2022, with a record-high profit of more than €10 billion in our Industrial Business.

“We successfully executed our strategy, capturing market share and achieving high-value growth.

“Strong demand continues for our hardware and software offerings, including higher-than-expected growth for our digital business revenue.

“Our people made an incredible contribution in an extremely challenging year.”

But 17 years ago, the German company found itself in a very different position when it became embroiled in one of the largest corporate corruption cases in history.

It all unraveled in 2006, and here’s what happened.

READ MORE: George C Parker: The conman who “sold” the Brooklyn Bridge

Widespread bribery, embezzlement, and tax evasion

The case revolved around Siemens involvement in several incidents of bribery, embezzlement and tax evasion.

It was found Siemens had used bribes to win several contracts around the world.

It was reported the payments totaled $1.4 billion and were paid to government officials and business leaders in countries in Europe, Asia, the Middle East, South America, and Africa.

Money was laundered through a number of shell companies and offshore accounts.

Staff said there was a system of “bribe consultants” and even a list of bribery prices for different types of contracts.

READ MORE: Former Wall Street traders jailed after long-running precious metals fraud

What happened next?

Once the scandal was exposed, Siemens was hit with severe punishments.

The company admitted violating the U.S. Foreign Corrupt Practices Act in December 2008.

It agreed to pay more than $1.6 billion to U.S. and European authorities, which was one of the biggest fines ever imposed at the time.

Need Career Advice? Get employment skills advice at all levels of your career

Jail time

Several executives and other employees were charged and sentenced as a result of the Siemens bribery scandal.

Heinz-Joachim Neubürger, the former Chief Financial Officer, and several other executives were charged in Germany.

Reinhard Siekaczek, a former manager at Siemens, was also convicted in a German court in 2008.

He was given a two-year suspended sentence and fined 108,000 euros.

He was seen as being at the heart of the scandal and was responsible for running a system of slush funds and fake contracts to siphon off money for bribes.

One of the most prominent instances of bribery happened in Greece, and several more high-ranking executives in the country were also prosecuted.

Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement, said:

“This pattern of bribery by Siemens was unprecedented in scale and geographic reach. The corruption alleged in the SEC’s complaint involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East, and the Americas. Our success in bringing the company to justice is a testament to the close, coordinated working relationship among the SEC, the U.S. Department of Justice, and international law enforcement, particularly the Office of the Prosecutor General in Munich.”

What did Siemens do?

The scandal led to significant changes in Siemens.

It took extensive actions to improve its internal compliance procedures and reshape its corporate culture.

Several high-level executives were ousted, and new leadership was installed.

The company also undertook a significant effort to recoup some of the bribes from former employees.

The Siemens case is often used as a case study in business schools and ethics courses to illustrate the dangers of corruption and the importance of corporate compliance.

It is considered a landmark in the global fight against corporate corruption.

Follow us on YouTubeTwitterLinkedIn, and Facebook.

Related Articles

Skip to content