Two former managers for the engineering conglomerate siemens told a German court on Tuesday that they participated in paying bribes of roughly 6 million euros in Italy as part of the company’s plan to anchor itself in the booming market for power generation equipment.
But the two men, Horst Vigener and Andreas Kley, mounted a vigorous defense of the payments, arguing that Siemens benefited greatly from them. Both men also contended that they did not violate a German law forbidding bribery of public officials abroad because the Italian company in question, Enel, was already effectively privatized.
The Darmstadt trial is one of a host of legal difficulties facing Siemens, a pillar of German industry, that has shaken the country unlike any other recent business scandal. One involving its telecommunication arms surfaced late last year, while another involving employee representatives emerged last month.
Prosecutors in Darmstadt, a university town south of Frankfurt, are basing the Italian case on a recent German law derived from a decade-old anti-bribery convention at the Organization for Economic Cooperation and Development. It is one of the first instances that prosecutors in Germany have used the law as the basis for a case.
“Without this accord, we would never have been able to make this case,” said Ulrich Busch, the chief prosecutor in Darmstadt.
The case dates back to payments that were made through a web of bank accounts in Liechtenstein and Switzerland to executives in Dubai, Abu Dhabi and Monaco, to secure 450 million euros in equipment supply contracts with Enel from 1999 to 2002. Both men testified that the payments went to two Enel managers who solicited payments in the bidding process.
Prosecutors are charging both former managers with breach of trust, a charge indicating inappropriate stewardship of company money. They are not accused of personal enrichment.
Mr. Vigener, an engineer who retired from Siemens in the early 1990s for health reasons and then returned as an independent consultant late in the decade, emphasized his distance from the entire affair, despite his having made the payments.
“Italy was never my area of responsibility,” he told the court.
Mr. Kley, the former head of sales for Siemens’ power generation division, admitted to approving the payments directly, but he vigorously disputed that the company had suffered any adverse effect.
“The alternative would have been to turn down the project, which would have denied Siemens not only that business but also a foot in the door in the Italian market,” Mr. Kley told the court.
Both sides in the trial, which is scheduled to wrap up in early April, geared up for a protracted wrangle over whether Enel managers were public officials.
Prosecutors argued that Germany’s law prohibiting the bribery of public officials should apply because Italy owned a controlling stake — 68 percent — in Enel at the time the bribes were paid. The defense emphasized that Enel, through its partial privatization, was listed on stock exchanges.
Mr. Busch, the prosecutor, said the Darmstadt case was likely to be one of only a few in which the definition of a public official becomes an issue in cases of bribery abroad. In 2002, Germany passed an additional law extending the prohibition on bribery to all employees abroad, whether at public or private companies.
If the prosecutors win their case, they can petition the courts to make Siemens pay back the 338 million euros it earned from the contracts.
The Darmstadt case predates an investigation, now under way in Munich, where Siemens is based, focusing on the possible use of 420 million euros for bribes to sell telecommunications equipment abroad.
“There were no connections to other areas of the company,” Mr. Busch said. “That does not mean they do not exist, but we did not find that.”
source:www.chron.com
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