With the ink barely dry on a record €1bn settlement, the engineering giant's managers are keen to move on, writes Derek Scallyin Berlin
JUST DON'T mention the bribes. German engineering giant Siemens has reached a curious place in its 160-year history. Recently, it agreed to pay a record €1 billion to settle charges of crooked business practices worldwide after a two-year corruption investigation.
With the ink barely dry on the largest settlement of its kind, however, Siemens managers are determined - insistent, even - on what is known in management-speak as "moving forward".
"Siemens employees broke the law," said company chief executive Peter Löscher to foreign journalists recently in Berlin. "Of course there is corruption [in the sector], but that is not our business."
Ask Löscher to explain the corporate culture that allowed this corruption virus to thrive - at a cost of €2.5 billion and counting - and the chief executive gives an angry glare before returning to politely formulated, forward-looking talking points.
"I do not expect any Siemens employee to break the law. I've always said that Siemens stands for clean business, everywhere."
Admirable words, but ones that fail to explain how or why Siemens managers used slush funds, cash-filled suitcases and dodgy "consultants" to secure lucrative contracts around the world. US investigators described corruption, Siemens-style, as "unprecedented in scale and geographic reach", driven by "executives who viewed bribery as a business strategy".
As Der Spiegelmagazine put it, "corruption was accepted as a business practice right into the Siemens bone marrow". After conducting an investigation into its business practices, firing senior management and earning top marks from US authorities for its new corporate compliance measures, Löscher considers the "Siemens Affair" closed.
It's not that simple. Several investigations are continuing in Germany and in South America, and key figures in the affair still have to have their day in court.
Siemens is seeking monetary damages from 11 former board members, including former chief executive and later chairman Heinrich von Pierer, who was until the Siemens affair a leading light of the German business world.
The most interesting figure in the affair, however, is middle manager Reinhard Siekaczek. For four years until 2006 this unassuming figure was the money man in the largest bribery ring uncovered in modern times. After his arrest that year, he explained to investigators how he set up a complex system to funnel bribe money from Germany through Liechtenstein and Switzerland to offshore bank accounts from Dubai to the British Virgin Islands.
Investigators say this slush fund was used to make 4,283 illegal payments in 332 dubious projects - from suburban train projects in Venezuela to a medical technology centre in Vietnam. Particularly sleazy was the Siemens telecommunications unit, where managers had an annual bribery budget of up to $50 million at their disposal. Documents reveal that projects in Greece were allocated up to $15 million a year. The average bribe "surcharge" on projects was about 5 per cent of project value, though in some South American states bribes comprised as much as 40 per cent of a project's cost.
In total, more than 2,700 local "consultants" were hired for their knowledge of local bribery customs. "I was not the one responsible for the bribery," Siekaczek told investigators on his arrest. "I just organised the money."
Remarkably, German prosecutors say there is no evidence that the Siemens bag man ever enriched himself from the millions passing through his hands.
All the same, Siekaczek feels Siemens set him up as the fall guy and claims that managers who dreamt up the system will never face prosecution. The scandal finally addressed an open industry secret about the company's operations: that corruption was part of the company's fabric for 60 years.
Chairman Gerhard Cromme tries to explain it historically. "Companies from the 'loser' of the war, Germany, were not allowed into the 'good' countries," he told Der Spiegel. "So the company started in more difficult countries, and adapted to local business practices."
German tax laws allowed bribes to be disguised in the books and were known within the company as "Nützliche Aufwendungen", meaning useful expenses.
When Germany adopted international anti-bribery legislation in 1999, Siemens went through the motions of complying, only to adapt the old habits to the new regime. The modified system worked for four years until European investigators began exchanging information about suspicious bank transactions in 2006 and, on November 15th, raided the homes of Siekaczek, several chief executives and the company headquarters in Munich.
