Wall Street's Best Investment: 10 Deregulatory Steps to Financial Meltdown
Cleaning Up the Mess: New Rules for Financial Regulation
Closing the Regulatory Gap: Derivatives and the Hedge Fund Industry
Foreclosed: The Failure to Regulate Abusive Lending Practices
Names In the News
Paying for Pay-offs
Siemens Aktiengesellschaft (Siemens AG), a German corporation, and three of its subsidiaries pled guilty in December to violations of and charges related to the Foreign Corrupt Practices Act (FCPA). As part of the plea agreements, Siemens AG agreed to pay a criminal fine of $450 million.
According to court documents, beginning in the mid-1990s, Siemens AG engaged in systematic efforts to falsify its corporate books and records, and knowingly failed to implement and circumvent existing internal controls. It made more than $1.4 billion in corrupt payments to foreign officials.
Charging and plea documents show a range of Siemens’ corrupt schemes. These include more than $1.7 million in kickbacks to Iraqi officials on 42 contracts on which Siemens earned $38 million in profits; more than $30 million in bribes to Argentine officials in exchange for favorable business treatment in connection with a $1 billion national identity card project; more than $18 million to Venezuelan officials, in exchange for favorable business treatment in connection with two major metropolitan mass transit projects; and more than $5 million to various Bangladeshi officials in exchange for favorable treatment during the bidding process on a mobile telephone project.
“This pattern of bribery by Siemens was unprecedented in scale and geographic reach. The corruption involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and the Americas,” says Linda Chatman Thomsen, director of the SEC’s Division of Enforcement.
In connection with the criminal plea, Siemens settled civil complaints from the Securities and Exchange Commission, and agreed to the disgorgement of $350 million in profits relating to bribery violations.
The company also agreed to resolve an ongoing investigation by the Munich Public Prosecutor’s Office of Siemens AG’s operating groups other than the telecommunications group. In connection with those charges, Siemens AG agreed to pay approximately $569 million.
Blackwater on Trial
Five Blackwater security guards were charged in December by the U.S. government with voluntary manslaughter, attempt to commit manslaughter and weapons violations, for their alleged roles in the September 16, 2007, shooting at Nisur Square in Baghdad, Iraq.
Fourteen unarmed civilians were killed and 20 wounded in the shooting.
A sixth Blackwater security guard pled guilty to charges of voluntary manslaughter and attempt to commit manslaughter for his role in the shooting at Nisur Square.
The indictment represents the first prosecution under the Military Extraterritorial Jurisdiction Act (MEJA) to be filed against non-Defense Department private contractors, which was not possible prior to the 2004 amendments to MEJA that specifically expanded the reach of MEJA to non-Defense Department contractors who provide services “in support of the mission of the Department of Defense overseas.”
“The government alleges in the documents unsealed today that at least 34 unarmed Iraqi civilians, including women and children, were killed or injured without justification or provocation by these Blackwater security guards in the shooting at Nisur Square. Today’s indictment and guilty plea demonstrate that those who engage in unprovoked and illegal attacks on civilians, whether during times of conflict or times of peace, will be held accountable,” said Patrick Rowan, Assistant Attorney General for National Security.
At the time of the shooting, the defendants were employed as independent contractors and employees of Blackwater Worldwide, a contractor of the Department of State.
LG’s LCD Cartel
Three leading electronics manufacturers — LG Display, Sharp and Chunghwa Picture Tubes — agreed in November to plead guilty and pay a total of $585 million in criminal fines for their roles in conspiracies to fix prices in the sale of liquid crystal display panels.
Of the $585 million in fines, LG will pay $400 million, the second highest criminal fine ever imposed by the U.S. Justice Department’s Antitrust Division.
In January, executives from LG Display and Chunghwa Picture Tubes agreed to plead guilty and serve jail time in the United States for participating in the global price-fixing conspiracy.
Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Companies directly affected by the LCD price-fixing conspiracies are some of the largest computer, television and cellular telephone manufacturers in the world, including Apple, Dell and Motorola.
“These price-fixing conspiracies affected millions of American consumers who use computers, cell phones and numerous other household electronics every day,” says Thomas Barnett, assistant attorney general in charge of the Department’s Antitrust Division during the Bush administration.
— Russell Mokhiber