(Corrects currency of revenue figure in third paragraph of story published Dec. 15.)

Dec. 15 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, pleaded guilty to violating U.S. anti- corruption laws and will pay $1.6 billion to settle bribery probes in the U.S. and Germany.

Siemens will pay 596 million euros ($814 million) in Germany, including a 201 million-euro fine levied in 2007, Peter Solmssen, its top lawyer, said today. The company will also pay $800 million in criminal and civil penalties in the U.S. for falsely accounting for $1.36 billion in bribes and questionable payments.

The Munich-based company, which had revenue of 77.3 billion euros in the year ended in September, has been embroiled in a bribery scandal since 2006, leading to investigations in at least a dozen countries. A probe of former company executives is continuing and Siemens is cooperating, a U.S. prosecutor said.

“Bribery was nothing less than standard operating procedure at Siemens,” U.S. Acting Assistant Attorney General Matthew Friedrich said at a press conference. Means of payment included “the time-tested method of suitcases filled with cash.”

Judge Richard Leon accepted the plea at a hearing today in Washington. No executive was charged. The company’s Bangladesh and Venezuela units pleaded guilty to conspiracy to commit bribery charges, while the parent company didn’t, meaning Siemens can still bid on U.S. government contracts, Solmssen said.

From the mid-1990s until last year, units of the company paid kickbacks and bribes to win contracts from Iraq’s government in the United Nations oil-for-food program and for projects including commuter rail in Venezuela, mobile-phone networks in Bangladesh, power plants in Israel and traffic-control systems in Russia.

Clean Up

Siemens used off-book accounts to conceal the illegal payments, U.S. prosecutors said in the charging documents.

Chief Executive Officer Peter Loescher, hired in July 2007 to clean up after the bribery scandal erupted, replaced half of the company’s top 100 executives and appointed division heads to eliminate decision making by consensus on the Siemens board.

“We expressly regret that wrongdoing occurred in the past,” Gerhard Cromme, chairman of the supervisory board, said at a press conference in Munich. “Considering how intimidating the magnitude of the case was, it seems like a miracle that so little time passed to reach a settlement with the authorities.”

The settlements’ amount “far outweighs” remaining probes in other countries, Cromme said. “Most of it is behind us.”

None of the contracts won with the illegal bidding will have to be surrendered, and anyone receiving bribes from the company would have to be prosecuted by law enforcement authorities in their own countries, according to Friedrich.

Monitoring Compliance

Former German Finance Minister Theo Waigel will monitor the company’s compliance with the terms of the U.S. settlement over the next four years, Siemens said. The company said last month it set aside 1 billion euros to settle U.S. and German charges.

“The settlement fines were less than the multibillion fines most were anticipating,” Nick Heymann, an analyst with Sterne Agee & Leach Inc. in New York, said in a note to investors. “The timing is important as well.”

With a new U.S. administration starting in early next year, resolution could have “easily stretched out” to at least late 2009, said Heymann, who recommends holding the stock.

Siemens, which traces its origins back to 1847, fell 23 cents to 47.15 euros at closing in Frankfurt trading. The stock has dropped 56 percent this year.

300 Suspects

Munich prosecutors are still probing about 300 suspects, including former Siemens CEO Heinrich von Pierer and Klaus Kleinfeld. Both men have denied wrongdoing.

Three former Siemens employees were convicted in Munich in the first two trials over the scandal this year. Former board member Johannes Feldmayer was found guilty and sentenced in a related case in Nuremberg, Germany, last month.

“There were slush funds at many company units, which were used to pay bribes,” the Munich prosecutors’ office said.

The U.S. settlement includes a fine of $450 million for the company and units in Venezuela, Argentina and Bangladesh. Under the agreement with the Securities & Exchange Commission and the Justice Department, Siemens will also forfeit $350 million in profits.

The cases are U.S. v. Siemens Aktiengesellschaft, 08-cr-367, and U.S. Securities and Exchange Commission v. Siemens Aktiengesellschaft, 08-cv-2167, U.S. District Court, District of Columbia (Washington).

To contact the reporters on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net; Karin Matussek in Berlin at kmatussek@bloomberg.net

Last Updated: December 16, 2008 03:21 EST