On December 15, while driving through a snow-storm, I wasn’t paying too much attention to a radio newscaster talking about Siemens AG, a German company, agreeing to pay a US$ 1.6 billion fine to US and German governments. The BBC newscaster went on to say that Siemens behaved as if bribes were just another line-item expense, with executives flying out with suitcases full of cash to give it to corrupt officials.
US$ 1.6 billion is a lot of money to pay as a penalty, but even then I was concentrating more on the driving. My ears perked up, however, when one of the recipients of the bribes was named as the son of a former prime minister of Bangladesh.
It started with a 30-year old law in the USA: The Foreign Corrupt Practices Act (FCPA) that prohibits US companies from bribing foreign officials for contracts. Siemens AG is a German company but are subject to FCPA because its shares are traded on the New York Stock Exchange. The charges against Siemens are detailed in the US Securities and Exchange Commission complaint:
2. During this period, Siemens-made Thousands of separate payments to third parties in ways that obscured the purpose for, and the ultimate recipients of, the money. At least 4,283 of those payments, totaling approximately $1.4 billion, were used to bribe government officials in return for business to Siemens around the world. Among the transactions on which Siemens paid bribes were those to design and bu.ild metro transit lines in Venezuela; metro trains and signaling devices in China; power plants in Israel; high voltage transmission lines in China; mobile telephone networks in Bangladesh; telecommunications projects in Nigeria; national identity cards in Argentina; medical devices in Vietnam, and Russia; trafEc control systems in Russia; refineries in Mexico; and mobile communications networks in Vietnam. Siemens also paid kickbacks to Iraqi in connection with sales of power stations and equipment to Iraq under the United Nations Oil for Food Program. Siemens earned over $1.1 billion in profits on these fourteen categories of transactions that comprised 332 individual projects or individual sales.
In section 19 of the same report, the SEC alleged, and Siemens later agreed, that it funneled money to corrupt officials through what Siemens called “Business Consultants.” For us, the relevant sections start on page 19:
47. Between 2004 and 2006, Siemens COM paid approximately $5.3 rnillion in bribes to government ofiioials in Bangladesh in connection with a oocntract with the
Bangladesh Telegraph & Telephone Board (“BTTB”) to install mobile telephone services. The total value ofthe contract was approximately $40.9 million. The payments made to three business oonsultants pursuant to sham arrangements calling for services associated with the mobile telephone project. The ultimate recipients ofthe payments included the son of the then·Prime Minister in Bangladesh, the Minister of the Ministry of Posts & Telecommunications in Bangladesh, and the BTTB Director of Procurement.
ln addition, Siemens Limited Bangladesh, a regional company, hired relatives of two other BTTB and Ministry of Post and Telecom oflicials. Most ofthe money paid to the business consultants was routed through correspondent accounts in the United States, with at least one payment originating from a U.S. account. Since approximately September 2004, a Siemens business consultant who served as a principal payment interrnediary on the Bangladesh bribe payments has been resident in the United States.
It is alleged by the Bangladesh Anti Corruption Commission that parts of the bribe received by Mr. Arafat Rahman Koko from Siemens is included in the 11.66 crore taka frozen by the Singapore government. Additional details are available from a Prothom Alo report:
The Anti-corruption commission and the attorney general of Bangladesh is also sitting on a confession and a statement from the person who helped Mr. Rahman open the bank account in Singapore.
[See the sentence about the “QC Shipping” employee who advised Koko? This is Salahuddin Kader Chowdhury (SaKa)’s shipping company. Hmm.. I wonder if the ACC is looking into questioning this helpful international fiance expert about any bank accounts in Singapore that Mr. SaKa Chowdhury owns.]
The Dubai-based telecom company that also paid into Arafat Rahman’s account? That would be Warid Telecom, and we wrote about this in June 2007.
The major player in Bangladesh, and one who stands to lose his high-paying job as the country director of Nokia-Siemens in Bangladesh, is one Mr. Khaled Shams. But then again, 2 months ago TeleTalk and Nokia-Siemens announced a contract to expand TeleTalk’s network. I guess it will be business as usual, and the contract between a corrupt company headed by a corrupt executive and another corrupt government agency headed by corrupt government employees will be consummated.
Yes, there are also specifically named Bangladesh government employees in the investigation report conducted by Debevoise & Plimpton, a US law firm hired by Siemens to conduct an independent investigation. The Prothom-Alo report names those individuals, who are now senior executives in TeleTalk or BTCL.
The caretaker government has struck a deal with Khaleda Zia, and Mr. Arafat Rahman is outside the country because of that. Even if Awami League comes to power after the election, I don’t anticipate them pursuing these charges too vigorously, because they have to protect their own skin for the future when BNP comes to power. So I guess Mr. Rahman will be safe in Bangkok or whereever he wishes to remain. That will very likely mean The TeleTalk and BTCL employees as well as Mr. Shams will not face criminal prosecution in Bangladesh, for the fear that they will start singing and implicate Koko. BNP doesn’t want that, AL doesn’t want that, and neither does the Army-backed Caretaker government.
I guess crime does pay.