Former Siemens Executive Pleads Guilty In Manhattan Federal Court To $100 Million Foreign Bribery Scheme

Press Release Former Siemens Executive Pleads Guilty In Manhattan Federal Court To $100 Million Foreign Bribery Scheme Thursday, March 15, 2018 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Justice Department’s Criminal Division, announced that EBERHARD REICHERT, a former executive at Siemens Aktiengesellschaft (“Siemens AG”), pled guilty today in Manhattan federal court to conspiring to pay $100 million in bribes to senior Argentine government officials to secure, implement, and enforce a $1 billion contract between Siemens and the Argentine government to produce national identity cards. He is the second individual defendant to plead guilty in the massive scheme. REICHERT, a citizen of Germany, pled guilty to one count of conspiring to violate the Foreign Corrupt Practices Act’s anti-bribery, internal controls, and books and records provisions, and to commit wire fraud, before U.S. District Judge Denise L. Cote. His guilty plea followed his September arrest in Croatia and subsequent voluntary extradition to the United States in December. Manhattan U.S. Attorney Geoffrey S. Berman stated: “Eberhard Reichert tried to sidestep laws designed to root corruption out of the government contracting process. As he admitted in Manhattan federal court today, Reichert helped to conceal tens of millions of dollars in bribes that were paid to unfairly secure a lucrative contract from the Argentine government. Today’s plea should be a warning to others that our office is committed to bringing corrupt criminals to justice, no matter how long they run from the law.” Acting Assistant Attorney General John P. Cronan said: “Far too often, companies pay bribes as part of their business plan, upsetting what should be a level playing field and harming companies that play by the rules. In this case, one of the largest public companies in the world paid staggeringly large bribes to officials at the uppermost levels of the government of Argentina to secure a billion-dollar contract. Eberhard Reichert’s conviction demonstrates the Criminal Division’s commitment to bringing both companies and corrupt individuals to justice, wherever they may reside and regardless of how long they may attempt to avoid arrest.” According to the Indictment and statements made at today’s plea hearing: REICHERT was employed by Siemens AGfrom 1964 until 2001. Beginning in approximately 1990, REICHERT was the Technical Manager of the Major Projects division of Siemens Business Services GmbH & Co. OGH (“SBS”), a subsidiary of Siemens AG. In 1994, the government of Argentina issued a tender for bids to replace an existing system of manually created national identity booklets with state-of-the-art national identity cards (the DNI project). The value of the DNI project was $1 billion. In order to obtain the project, Siemens committed to paying nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party, and candidates for office who were likely to come to power during the performance of the project. In 1998, the Argentine government awarded the DNI project to Siemens, and REICHERT was one of the individuals in charge of the project. REICHERT and his co-conspirators worked to approve and conceal the illicit payments through various means, including by funneling the payments through shell companies associated with bribe recipients to disguise the true purpose for the payments. REICHERT also admitted to approving a $27 million sham contract between a Siemens entity and a company called MFast Consulting AG that was being used as a vehicle to funnel money to Carlos Sergi, REICHERT’s co-defendant, for bribe payments. Several years after leaving the company, SERGI initiated a Swiss arbitration to collect on the contract. REICHERT testified on SERGI’s behalf and, ultimately, REICHERT’s co-conspirators caused Siemens to pay an additional $8.8 million in 2007 to settle the arbitration. In May 1999, the Argentine government suspended the DNI project, due in part to instability of the local economy and an impending presidential election. When a new government took power in Argentina, and in the hopes of getting the DNI project resumed, members of the conspiracy committed Siemens to paying additional bribes to the incoming officials, and to satisfying existing obligations to officials of the outgoing administration, many of whom remained in influential positions within the government. When the project was terminated in May 2001, members of the conspiracy nevertheless sought to recover the anticipated proceeds of the DNI project by causing Siemens AG to file a fraudulent arbitration claim against the Republic of Argentina in Washington, D.C. Members of the conspiracy also continued the bribe scheme, in part to prevent disclosure of the bribery in the arbitration but also to ensure Siemens’ ability to secure future government contracts in Argentina and elsewhere in the region. In four installments between 2002 and 2007, members of the conspiracy allegedly caused Siemens to pay approximately $28 million in further satisfaction of the obligations. Siemens’s corrupt procurement of the DNI project was not exposed during the lifespan of the conspiracy, and, in February 2007, the arbitration tribunal in Washington sided with Siemens AG, awarding the company nearly $220 million on its DNI claims, plus interest. The company, however, never claimed the award money, because after Siemens reached corporate resolutions with the U.S. and German authorities, Siemens AG agreed to forego its right to receive the award. * * * REICHERT, 78, of Munich, Germany, faces a maximum sentence of five years in prison and three years of supervised release. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Andres Truppel, who was charged in the same indictment, pleaded guilty in 2015 and is yet to be sentenced. Charges against the other individuals named in the indictment – Uriel Sharef, Herbert Steffen, Ulrich Bock, Stephan Signer, Carlos Sergi, and Miguel Czysch – are pending. The charges and allegations against these other individuals are merely accusations, and these defendants are presumed innocent unless and until proven guilty. On December 15, 2008, Siemens AG and Siemens Argentina entered guilty pleas to criminal violations of the FCPA. As part of the plea agreement, Siemens AG and Siemens Argentina agreed to pay fines of $448.5 million and $500,000, respectively. Mr. Berman praised the Federal Bureau of Investigation’s New York and Washington D.C. Field Offices for their work on the case. The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Niketh Velamoor and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section are in charge of the prosecution. Updated March 15, 2018 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 18-081

Press Release Former Siemens Executive Pleads Guilty In Manhattan Federal Court To $100 Million Foreign Bribery Scheme Thursday, March 15, 2018 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John P. Cronan, the Acting Assistant Attorney General of the Justice Department’s Criminal Division, announced that EBERHARD REICHERT, a former executive at Siemens Aktiengesellschaft (“Siemens AG”), pled guilty today in Manhattan federal court to conspiring to pay $100 million in bribes to senior Argentine government officials to secure, implement, and enforce a $1 billion contract between Siemens and the Argentine government to produce national identity cards. He is the second individual defendant to plead guilty in the massive scheme. REICHERT, a citizen of Germany, pled guilty to one count of conspiring to violate the Foreign Corrupt Practices Act’s anti-bribery, internal controls, and books and records provisions, and to commit wire fraud, before U.S. District Judge Denise L. Cote. His guilty plea followed his September arrest in Croatia and subsequent voluntary extradition to the United States in December. Manhattan U.S. Attorney Geoffrey S. Berman stated: “Eberhard Reichert tried to sidestep laws designed to root corruption out of the government contracting process. As he admitted in Manhattan federal court today, Reichert helped to conceal tens of millions of dollars in bribes that were paid to unfairly secure a lucrative contract from the Argentine government. Today’s plea should be a warning to others that our office is committed to bringing corrupt criminals to justice, no matter how long they run from the law.” Acting Assistant Attorney General John P. Cronan said: “Far too often, companies pay bribes as part of their business plan, upsetting what should be a level playing field and harming companies that play by the rules. In this case, one of the largest public companies in the world paid staggeringly large bribes to officials at the uppermost levels of the government of Argentina to secure a billion-dollar contract. Eberhard Reichert’s conviction demonstrates the Criminal Division’s commitment to bringing both companies and corrupt individuals to justice, wherever they may reside and regardless of how long they may attempt to avoid arrest.” According to the Indictment and statements made at today’s plea hearing: REICHERT was employed by Siemens AGfrom 1964 until 2001. Beginning in approximately 1990, REICHERT was the Technical Manager of the Major Projects division of Siemens Business Services GmbH & Co. OGH (“SBS”), a subsidiary of Siemens AG. In 1994, the government of Argentina issued a tender for bids to replace an existing system of manually created national identity booklets with state-of-the-art national identity cards (the DNI project). The value of the DNI project was $1 billion. In order to obtain the project, Siemens committed to paying nearly $100 million in bribes to sitting officials of the Argentine government, members of the opposition party, and candidates for office who were likely to come to power during the performance of the project. In 1998, the Argentine government awarded the DNI project to Siemens, and REICHERT was one of the individuals in charge of the project. REICHERT and his co-conspirators worked to approve and conceal the illicit payments through various means, including by funneling the payments through shell companies associated with bribe recipients to disguise the true purpose for the payments. REICHERT also admitted to approving a $27 million sham contract between a Siemens entity and a company called MFast Consulting AG that was being used as a vehicle to funnel money to Carlos Sergi, REICHERT’s co-defendant, for bribe payments. Several years after leaving the company, SERGI initiated a Swiss arbitration to collect on the contract. REICHERT testified on SERGI’s behalf and, ultimately, REICHERT’s co-conspirators caused Siemens to pay an additional $8.8 million in 2007 to settle the arbitration. In May 1999, the Argentine government suspended the DNI project, due in part to instability of the local economy and an impending presidential election. When a new government took power in Argentina, and in the hopes of getting the DNI project resumed, members of the conspiracy committed Siemens to paying additional bribes to the incoming officials, and to satisfying existing obligations to officials of the outgoing administration, many of whom remained in influential positions within the government. When the project was terminated in May 2001, members of the conspiracy nevertheless sought to recover the anticipated proceeds of the DNI project by causing Siemens AG to file a fraudulent arbitration claim against the Republic of Argentina in Washington, D.C. Members of the conspiracy also continued the bribe scheme, in part to prevent disclosure of the bribery in the arbitration but also to ensure Siemens’ ability to secure future government contracts in Argentina and elsewhere in the region. In four installments between 2002 and 2007, members of the conspiracy allegedly caused Siemens to pay approximately $28 million in further satisfaction of the obligations. Siemens’s corrupt procurement of the DNI project was not exposed during the lifespan of the conspiracy, and, in February 2007, the arbitration tribunal in Washington sided with Siemens AG, awarding the company nearly $220 million on its DNI claims, plus interest. The company, however, never claimed the award money, because after Siemens reached corporate resolutions with the U.S. and German authorities, Siemens AG agreed to forego its right to receive the award. * * * REICHERT, 78, of Munich, Germany, faces a maximum sentence of five years in prison and three years of supervised release. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Andres Truppel, who was charged in the same indictment, pleaded guilty in 2015 and is yet to be sentenced. Charges against the other individuals named in the indictment – Uriel Sharef, Herbert Steffen, Ulrich Bock, Stephan Signer, Carlos Sergi, and Miguel Czysch – are pending. The charges and allegations against these other individuals are merely accusations, and these defendants are presumed innocent unless and until proven guilty. On December 15, 2008, Siemens AG and Siemens Argentina entered guilty pleas to criminal violations of the FCPA. As part of the plea agreement, Siemens AG and Siemens Argentina agreed to pay fines of $448.5 million and $500,000, respectively. Mr. Berman praised the Federal Bureau of Investigation’s New York and Washington D.C. Field Offices for their work on the case. The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Niketh Velamoor and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section are in charge of the prosecution. Updated March 15, 2018 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 18-081