The former technical manager of the Major Projects division of Siemens Business Services GmbH & Co. OGH (SBS), a wholly owned subsidiary of Siemens AG, pleaded guilty this week to conspiring to pay tens of millions of dollars in bribes to Argentine government officials to secure, implement, and enforce a $1 billion contract to create national identity cards.
Eberhard Reichert, of Munich, Germany, was employed by Siemens AG from 1964 until 2001. Beginning in approximately 1990, Reichert was the technical manager of the Major Projects division of SBS. He pleaded guilty on March 15, 2018, in the Southern District of New York to one count of conspiring to violate the anti-bribery, internal controls and books and records provisions of the Foreign Corrupt Practices Act and to commit wire fraud.
Reichert was arraigned last December on a three-count indictment filed in December 2011 charging him and seven other individuals. He will be sentenced by U.S. District Judge Denise Cote of the Southern District of New York, who accepted his plea.
In 1998, the government of Argentina awarded to a subsidiary of Siemens AG a contract worth approximately $1 billion to create state-of-the-art national identity cards (the Documento Nacional de Identidad or DNI project). The Argentine government terminated the DNI project in 2001.
In connection with his guilty plea, Reichert admitted that he engaged in a decade-long scheme to pay tens of millions of dollars in bribes to Argentine government officials in connection with the DNI project, which was worth more than $1 billion to Siemens. Reichert admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds.
Reichert also admitted that he used a $27 million contract between a Siemens entity and a company called MFast Consulting AG that purported to be for consulting services to conceal bribes to Argentine officials.
In 2008, Siemens AG, a German entity, pleaded guilty to violating the books-and-records provisions of the FCPA; Siemens Argentina pleaded guilty to conspiracy to violate the books-and-records provisions of the FCPA; and Siemens Bangladesh Limited and Siemens S.A. – Venezuela each pleaded guilty to conspiracy to violate the anti-bribery and books-and-records provisions of the FCPA. As part of the plea agreements, the Siemens companies paid a total of $450 million in criminal fines.
The Securities and Exchange Commission also brought a civil case against Siemens AG alleging that it violated the anti-bribery, books and records and internal controls provisions of the FCPA. In resolving the SEC case, Siemens AG paid $350 million in disgorgement of wrongful profits. The Munich Public Prosecutor’s Office also resolved similar charges with Siemens AG that resulted in a fine of $800 million. In August 2009, following these corporate resolutions with U.S. and German authorities, Siemens AG withdrew its claim to the more than $200 million arbitration award.