German engineering giant Siemens agreed last week to pay $1.4 billion to US and German authorities to settle the most wide-ranging corporate bribery case in recent history. German prosecutors uncovered the bribery, which involved Siemens executives and off-the-books funds to pay off officials in more than a dozen countries, using middlemen and suitcases of cash as needed. The US Securities and Exchange Commission reckoned that Siemens had paid $1.4 billion in bribes in return for contracts to build refineries in Mexico, power plants in Israel, metro transit lines in Venezuela and a mobile phone network in Bangladesh.
Fines to be paid to the US by Siemens -- $450 million to the Justice Department and $350 million to the SEC -- dwarf last year's record $33 million paid by oil conglomerate Baker Hughes. (Siemens is held to the standards of the US's Foreign Corrupt Practices Act because of its public listing in the US.) But Siemens still has reasons to celebrate, the New York Times reported:
Crucially, while Siemens admitted violating the United States Foreign Corrupt Practices Act, it avoided either a guilty plea or a conviction for bribery, allowing it to maintain its status as a "responsible contractor" with the federal Defense Logistics Agency. Without that certification, Siemens could have been excluded from public procurement contracts in the United States and elsewhere. German authorities are preparing a similar certification.
Despite the size of the civil and criminal fines in the United States, the deal still represented a partial victory for Siemens because it was far below the estimated $2.7 billion that might have been levied under Justice Department guidelines. Federal authorities said in court papers that they were impressed by the company's efforts to identify wrongdoing and prevent new occurrences through an internal monitor and other measures.
Siemens isn't the only European company associated with bribery these days. Swiss engineering group ABB last week announced that it had set aside $850 million for costs related to bribery and price-fixing investigations. And Swedish anti-corruption prosecutors said last week that they were starting an investigation into whether pharmaceutical giant AstraZeneca influenced the selection of this year's Nobel Prize winner in medicine.
Kosovo PM, Author talk Kosovo OC
In a recent interview with Isria Global Intelligence, Kosovo Prime Minister Hashim Thaci was asked the obvious question about the hold that organized crime and corruption have over the newly independent state. Thaci cited a Gallup International Research poll that placed Kosovo last among the region's countries in terms of organized crime.
Siemens Pays $1.4 B in Bribe Case
Published: 23 December 2008
By beth
An effort to find the poll, first by looking at Gallup's website and later by various web searches? No luck. What I did find was loads of other information that put together an ugly picture of organized crime and corruption, a problem that is enormous: articles like this--reports that the German foreign intelligence service BND had no less than three departments devoted to Kosovo related organized crime before the recent scandal there involving three of its agents, and even European Commission reports.
And this is all fairly straightforward stuff: my own reporting on Kosovo crime didn't pull any punches (this and this), both unfortunately subscription based), while much further down the scale, Serbian reporting on Kosovar Albanian crime is harsh and very often not credible. But what keeps popping up is not pretty – smuggling of everything from cigarettes to construction material to people to heroin, piracy, and complete impunity for the big-time criminals that run the schemes. How much longer Kosovar leaders can afford to ignore it – or make money from it themselves – remains to be seen.
On the other side of the coin, last week anti-mafia writer Roberto Saviano talked up Kosovo organized crime in such a manner that he sounded Serbian, rather than Italian. The author of the best-selling book, "Gomorrah" was quoted by a Tirana television station as saying the Kosovar Albanian mob is keen to turn Kosovo into the Colombia of Europe by developing "transgenic" cocaine that will grow in their new state.
The item appeared only on Serbian websites, which would be the first to buy into the idea of wily Albanians developing Franken-coca to ensure their continued domination of the global underworld. It wasn't clear where Saviano did the interview. He's been under police protection from the Naples-based Camorra mob for two years; if he were trying to avoid places connected to Italian mobsters, Albania would be the last country he'd visit.
NPR: Corruption in "Real Russia"
A correspondent for National Public Radio who spent part of the 1990s reporting from what she called the "real Russia" – the Ural Mountains-area city of Chelyabinsk – revisited the place recently and discovered that corruption is going to be hard to get rid of here, though Russian President Dmitry Medvedev has pledged to do just that.
In Chelyabinsk, corruption has worsened in the past decade. Ask anyone in the city how much he or she makes, and the likely answer is somewhere between $200 and $600 a month.
Russia is expensive — really expensive — even in remote areas, so how they live on that is questionable. People usually say "krutitimsa," translated as "we hustle." Few live on their declared salary. People get paid an additional amount under the table, or they take bribes.
Italy Arrests 90 in Mob Raids
In one of the biggest police operations Sicily has seen, some 1,200 policemen backed up by helicopters arrested 90 purported mobsters last week, part of actions declare to keep La Cosa Nostra down.
Dubbed Operation Perseus after the Greek mythological hero who slew the snaky-headed Gorgon Medusa, the raids and arrests were meant to keep Sicilian mobsters from reconstituting the supreme decision-making body – the Provincial Commission – that in the 1990s declared war on the Italian state and targeted anti-mafia judges and other officials. La Cosa Nostra was weakened by the arrests of top-ranking bosses two years ago; police say that based on wiretaps they had reason to believe that the top godfathers were planning to regroup.
One alleged godfather, Gaetano Lo Presti, committed suicide in his cell after his arrest, prompting some analysts to believe that he had made a faux pas and was trying, through his suicide, to save his family from retaliation.
As Italian authorities await the result of an autopsy into Lo Presti's death, the mobster's family may still not be safe from the mafia's fury.
Three years ago, mafioso Francesco 'Ciccio' Pastoia hanged himself with a sheet after being told by investigators that he had been taped boasting of how he had double-crossed mob boss Provenzano.
Mafia gangsters boycotted his funeral and later desecrated his grave – his tombstone was smashed to pieces and his coffin exhumed and set on fire.
Italian mob arrests, plus the aggressive seizure of mafia assets, has emboldened regular people not to pay "pizzo," or protection money, to the mob. While La Cosa Nostra – and other Italian mob groups – are still wealthy and powerful, Interior Minister Roberto Maroni said the police would continue to go after mob money. This year, he said, the authorities seized some €4 billion in organized crime assets, up threefold from the year before.
Speaking at an end-of-the-year press conference, Maroni said that in 2009 the State intended to ''hit the Mafia where it hurts and seize its assets''.
''It used to be that when a mafioso was arrested or died his wealth and assets were handed down to his heirs. Now when we arrest them we also seize their assets and they become the property of the State,'' the minister said.
Protest Prompts Greek PM Promise
In shutting-the-barn-door-after-the-horse-has-escaped news from Greece, the country's prime minister last week promised to crack down on corruption after 11 days of protests and violence. The protests may have been kicked off by the police killing of a 15-year-old student, but anger about scandals and Greece's sluggish economy has been brewing for a while.
"Long unresolved problems disappoint young people: the lack of meritocracy, corruption in everyday life, a sense of social injustice," (Costas) Karamanlis told his parliamentary team. "The fight against them is hard and constant and we are committed to it."
A detailed reasoning for why Greece exploded into violence this month – rioters destroyed property and hurled Molotov cocktails at police in various Greek cities – can be found here.
But fighting corruption with yet another anti-corruption campaign may not be the way to go, according to a Reuters piece from last week. The article is focused on corruption in Southeast Asia, but the gist of it could apply to any other region as well.
"You cannot fight corruption just by fighting corruption," said Daniel Kaufmann, who spearheaded the World Bank's efforts to improve the study of governance and the rule of law, and who estimates that $1 trillion of bribes are paid every year.
Evidence showed there was little to be gained from "yet another anti-corruption campaign, the creation of more commissions and ethics agencies, and the incessant drafting of new laws, decrees, and codes of conduct," he said, adding that "fundamental and systemic governance reforms" were needed instead.
Economists who specialize in governance say combating corruption is not just a moral imperative -- it is essential for promoting long-term economic growth and investment.
Ukraine Currency Plunge Questioned
Ukraine's currency has lost nearly half its value against the dollar in the past six months, and the country's prime minister has called for prosecutors and an anti-corruption body to investigate the cause, as she believes it is the fault of President Viktor Yushchenko – who happens to be her political rival.
Earlier in the week (Yulia Tymoshenko) accused the president of provoking the plunge of the hryvnia's value, with the support of the national bank, to boost his personal fortune and weaken her government.
"They are pushing the country toward bankruptcy," added Tymoshenko, who is likely to challenge Yushchenko for the presidency in elections due late 2009 or early 2010.
Yushchenko for his part has accused Tymoshenko of populism, saying this was one of the causes for the national currency's collapse.
