(CN) - The SEC sued seven Siemens SA executives for allegedly taking part in bribery scheme that spanned the better part of a decade and involved the payment of millions of dollars to secure a $1 billion contract to produce national ID cards in Argentina.
     The SEC says that Siemens senior executives as well as directors at Siemens in Argentina paid more than $100 million in bribes to top officials in the Argentinean government, including Presidents Carlos Menem and Fernando De la Rua, and members of their cabinets.
     "The bribes were initially paid to secure a $1 billion government contract (the 'DNI contract') to produce national identity cards, or Documentos Nacionales de ldentidad, for every Argentine citizen. After paying bribes, Siemens was awarded the DNI contract in 1998. Later, after a change in Argentine political administrations resulted in the DNI Contract being suspended, and then canceled, Siemens paid additional bribes in a failed effort to bring the contract back into force. Still later, after the company instituted an arbitration proceeding to recover its costs and expected profits from the canceled DNI contract, Siemens paid additional bribes to suppress evidence that it had originally obtained the contract through corruption. Excluding evidence of bribery cut off a potential defense to Siemens' arbitration claim and ensured that Siemens would finally receive the economic benefit that its bribery scheme was intended from the start to provide," the federal complaint states.
     "Business should flow to the company with the best product and the best price, not the best bribe," Robert Khuzami, Director of the SEC's Division of Enforcement said in a statement. "Corruption erodes public trust and the transparency of our commercial markets, and undermines corporate governance."
     According to the SEC, from roughly 1996 to early 2007, Siemens paid millions of dollars in bribes. $31.3 million was dished out after the firm became subject to U.S. federal securities laws in early 2001, the commission claims. From that point on, defendants Uriel Sharef, Ulrich Bock, Carlos Sergi, Stephan Signer, Herbert Steffen, Andres Truppel and Bernd Regendantz "each had a role in authorizing, negotiating, facilitating, or concealing bribe payments in connection with the DNI contract," the lawsuit states.
     "The most senior of these was defendant Uriel Sharef, who was a member of Siemens' Managing Board, or Vorstand. Siemens employed a group of consultants, designated the Project Group and led by defendant Sergi, to serve as payment intermediaries between the company and the bribed Argentine government officials," the complaint states.
     In 2002, Siemens went into arbitration against Argentina after the government canceled the DNI contract, seeking $550 million in lost profits. According to the SEC, Siemens suppressed evidence of corruption by paying more bribes to Sergi and the Project group, which had threatened to reveal the "corrupt nature" of the contract.
     "As a result of the bribes it paid, Siemens in 2007 received an award in arbitration against the government of Argentina of over $217 million, plus interest," the complaint states.
     The SEC said in a news release that Siemens was previously charged with Foreign Corrupt Practices Act violations for worldwide bribery, and paid a $1.6 billion settlement.
     Regendantz, who became CFO of Siemens in 2002, was initially resistant to authorizing the bribes, according to the SEC's lawsuit, but was pressured by Signer, Steffen and Truppel. Steffen told Regendantz that it was his "moral duty" to advance $10 million as part of the $27 million that was unpaid the lawsuit states. It adds that Regendantz eventually caved and authorized the advance payment to the Project Group.
     Regendantz settled the SEC charges without any admission of wrongdoing, and paid a $40,000 fine, the SEC said in the statement.
     SEC attorney Paul Kisslinger filed suit on the agency's behalf.