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Telecom corruption: Every country should check Siemens court papers

There are still some who talk about the value of government ownership of telecom operators. In their talk of national interest and local control, rarely is mentioned the word corruption.

The recent case in which Siemens pleaded guilty to massive “accounting violations” and paid large fines should be of interest to all who care about transparency. More than the fines, the court record is of great significance. Investigators and the law firm for Siemens amassed massive amounts of data, starting from the five terabytes of information seized from Siemens offices at the start. They have 100 million documents from 1700 interviews conducted in 34 countries. The lawyers and forensic auditors had more than 1.5 million billable hours. This is the treasure trove that corruption hunters from individual countries should go after. Some indicators of what can be found are in an NYT article, from which excerpts are given below. The countries that pulled in most of the bribes by amount are listed in a separate graphic. Even if your country is not in this list, it does not mean it is clean.

Each year, Mr. Siekaczek said, managers in his unit set aside a budget of about $40 million to $50 million for the payment of bribes. For Greece alone, Siemens budgeted $10 million to $15 million a year. Bribes were as high as 40 percent of the contract cost in especially corrupt countries. Typically, amounts ranged from 5 percent to 6 percent of a contract’s value.

The most common method of bribery involved hiring an outside consultant to help “win” a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient.

MR. SIEKACZEK’S telecommunications unit was awash in easy money. It paid $5 million in bribes to win a mobile phone contract in Bangladesh, to the son of the prime minister at the time and other senior officials, according to court documents. Mr. Siekaczek’s group also made $12.7 million in payments to senior officials in Nigeria for government contracts.

4 Comments to Telecom corruption: Every country should check Siemens court papers

  1. December 22, 2008 at 10:37 am | Permalink

    While it may be possible for Government’s to gain access to this information, can peoples / citizens in countries gain access? They can perhaps demand that government requests and makes public this information, but no prizes for guessing how successful this will be under a corrupt regime.

  2. Abu Saeed Khan's Gravatar Abu Saeed Khan
    December 23, 2008 at 7:59 pm | Permalink

    Siemens is not the lonesome crook in Bangladesh telecoms businesses. It had partnered with Huawei of China and grabbed contracts. The authorities can retrieve the details of this Sino-German nexus using Internet search engine. Here I present only two examples:

    http://www.thedailystar.net/2004/04/16/d4041601022.htm

    http://www.thedailystar.net/2004/10/30/d4103001011.htm

  1. By on December 23, 2008 at 3:50 am
  2. By on December 26, 2008 at 2:11 am

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