Siemens agrees to pay $1.3B in bribery settlement

Here is an article about corporate corruption , one of the biggest engineering firms in the world admitting guilt in a long standing case of corruption in its business practices. Assistant Attorney General Matthew Friedrich stated:

"Corruption is not a victimless offense. Corruption is not a gentleman's agreement where no one gets hurt. People do get hurt. And the people who get hurt the worst are often residents of the poorest countries on the face of the earth."

This case has been prosecuted under the Foreign Corrupt Practices Act and is a very good example of the insidiousness of corruption and its impact throughout the world. Please read the article and make your comments about it and about the issues of corruption, fraud and mismanagement.

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FRANKFURT, Germany – Siemens AG — rocked by a series of corruption cases that has cost the company both prestige and money — agreed Monday to pay more than $1 billion in fines in Germany and the U.S. as it moved a step forward in closing a dark chapter in its history.

Munich-based Siemens agreed to pay more than $800 million in fines to settle long-standing corruption charges in the United States and another 395 million euros ($533.6 million) to European authorities. The announcements of the amounts of both fines came Monday.

Siemens, which makes products ranging from wind turbines to trams, has been embroiled in a far-reaching corruption scandal and has acknowledged making dubious payments to secure business. An investigation commissioned by Siemens found evidence of violations across the company, and in several countries.

In July, Siemens said it planned to sue two former chief executives and nine other former executives for alleged supervisory failings in the corruption scandal, which has cost the company many millions in fines and damaged its reputation.

In Washington on Monday, U.S. District Judge Richard Leon accepted guilty pleas from lawyers for the conglomerate — Germany's biggest engineering company — in federal court in Washington D.C.

Under the terms in the U.S., Siemens and three of its international subsidiaries will pay approximately $450 million to the U.S. Justice Department to settle charges of making bribes and trying to falsify corporate books from 2001 to 2007. It will pay another $350 million to settle charges from the U.S. Securities and Exchange Commission.

The company is listed on the New York Stock Exchange and Germany's DAX.

U.S. prosecutors described schemes during which Siemens executives bribed foreign officials with suitcases stuffed with money and created vast slush funds to win government contracts. Though the company agreed to settle the case by paying in fines and penalties, acting Assistant Attorney General Matthew Friedrich left open the possibility that the executives themselves could face future charges.

"Today's filings make clear that for its business operations overseas, bribery was nothing less than the standard operating procedure for Siemens," Friedrich said at a Justice Department news conference in Washington.

He added: "Corruption is not a victimless offense. Corruption is not a gentleman's agreement where no one gets hurt. People do get hurt. And the people who get hurt the worst are often residents of the poorest countries on the face of the earth."

Siemens said it will pay for an independent compliance monitor who will report to the Justice Department on the company's actions. Former German Finance Minister Theo Waigel will serve in that position, Siemens said in a statement.

The Justice Department called the charges against Siemens "further reaching in scope and magnitude" than any other case it had seen under the Foreign Corrupt Practices Act. But prosecutor Laurie Weinstein told Leon the company had cooperated with the investigation, including "helping investigate itself and unaffiliated third parties."

As part of the plea deal, Siemens will still be considered a "responsible contractor," and can still bid for government contracts.

Leon said he was "more than satisfied" with the plea agreement.

"This court believes this is a responsible and fair disposition of this case," Leon said.

In Munich, German prosecutors said they would fine the company 395 million euros for a "lack of control over its business activities," which a market regulatory filing late Monday said Siemens had accepted. Other investigations into former executives and managers in connection with the scandal continue, the announcement said.

The announcements were widely expected and Siemens announced earlier this year that it was setting aside approximately 1 billion euros to be booked in the last quarter of its September-ended 2008 fiscal year for any settlements.

The global economic downturn and the corruption scandal have both had negative effects on the company, with the shares trading at 47.15 euros, more than 55 percent of their 52-week high of 109.89 euros, set little more than a year ago.

Still, analysts said putting an end to the corruption issues surrounding the company should be good for the company. UniCredit Monday reiterated its "Buy" rating on the stock.

Obama's Victory Shames Africa

This article by Prof. George Ayittey strikes at the heart of what this blog is all about. It crystallises the dire need for a fresh and new approach to African leadership and governance. It gives a sense of urgency to the plight of nearly a billion people in Africa. Prof. Ayittey, in his own way gives clear and distinct advice to President elect Obama and his soon to be new administration and cabinet members dealing with Africa and African politics, economics and governance.

I like the following points that he (as do many Africans) feel are absolutely essential for Africa and Africans:

• An independent central bank: to assure monetary and economic stability, as well as stanch capital flight out of Africa. Witness Zimbabwe where the rate of inflation is 11 million percent - whatever that means. It even ran out of paper on which to print the currency.
• An independent judiciary -- essential for the rule of law.
• A free and independent media to ensure free flow of information. Get the media out of the hands of corrupt and incompetent governments in Africa.
• An independent Electoral Commission to ensure free and fair elections.
• An efficient and professional civil service to deliver essential social services to the people on the basis of need and not on the basis of ethnicity or political affiliation.
• The establishment of a neutral and professional armed and security forces.
  

Prof. Ayittey concludes: "Give Africans these institutions and they themselves will do the rest of the job of cleaning up the continent".

I totally concur with his statement. The only question I raise about the article is the fact that Prof. Ayittey, in the same article states that: Obama should set an example for African leaders, as Nelson Mandela did, and only serve one term. Here, I beg to differ with him. It is up to Africans and African leaders to follow the example of the Democratic rights of the American people that brought Mr. Obama to power. The process that brought Mr. Obama to power and the peaceful transfer of power that will be concluded on January 20, 2009 should be enough as an example to Africa's dictators. If they can observe and learn, that will be a miracle in itself. Overall, I enjoyed reading his article, as I am sure you will. So read on... by clicking on the link above.