Hotel Michelangelo on Via Scarlatti in Milan is one of those business hotels valued mostly for its inconspicuousness and its sterile functionality. It was a setting perfect for a meeting on Jan. 15, 2000; four gentlemen had gathered to discuss matters of extreme confidentiality. There was a ton of money at stake.
Present were two managers from the Italian energy provider Enel and two business partners from the German industry giant Siemens. And the Italians were quick to come to the point: If Siemens' power plant division wanted the contract for five gas turbines worth €132 million ($180 million) then some palms would have to be greased.
Siemens was to transfer €2.65 million ($3.6 million) into the bank accounts of the two Italians in Monaco and Lugano -- payable via a firm in Abu Dhabi called Middle East Energy & Industrial Services. In return, Siemens would receive the lucrative contract.
The dubious transaction has since been expiated: The district court of Darmstadt sentenced Siemens advisor Horst V. in mid-May to nine months probation for abetting bribery. The former director of Siemens' power plant division Andreas K. -- the man who approved the payments -- was sentenced to two years probation.
But that doesn't mean the case is closed. Indeed, the Enel case has led investigators down a whole new path of investigation -- one which could reveal the already far-reaching Siemens affair to be orders of magnitude larger than previously thought.
Well Over a Billion Euros
Company documents obtained by SPIEGEL indicate that the telecommunications division was not the only one to maintain a slush fund for years. The power plant division likewise kept a bit of undocumented cash lying around. Even more shocking, according to a Monday report in Süddeutsche Zeitung, the possible bribe money paid by Siemens could total well over a billion euros. Investigators have already stumbled across dubious payments by the telecommunications division of almost €900 million with up to €300 million more handed out by the power plant division. If substantiated, the payment total would be almost three times the €420 million Siemens has so far admitted to.
According to the documents, the power plant division had an account in Liechtenstein through which hundreds of millions of euros were transferred. And it's a money trail which raises questions of possible money laundering.
Horst V. made use of a Liechtenstein dummy company in order to conceal the flow of payments to the two Enel managers. The head of the Siemens power plant division Andreas K. is said to also have been familiar with the company, called Eurocell. The slush money was transferred from the company's account -- Neue Bank account number 209998 -- in Vaduz to Abu Dhabi via two other Siemens-affiliated dummy companies in Liechtenstein. It was then transferred from Abu Dhabi to the accounts of the two Italians.
"A Recipient Could Not Be Determined."
Investigators in Milan and Darmstadt were still looking into the affair when Siemens also tried to trace the money. In late January of 2005, the power plant division's anti-corruption department employed Erlangen law firm Bissel + Partner to investigate dubious payments from Siemens to Liechtenstein.
In their report dated May 5, 2005, the lawyers arrive at a conclusion whose implications could be explosive: "For the period between 1997 and 1999, 126 payment transactions between Siemens PG and Neue Bank in Liechtenstein were examined." The total volume of the payments was €189,942,306.15 ($259,289,357.43). The transactions include 26 transfers to the Liechtenstein-based dummy company Eurocell, via which the slush money for Enel was paid.
Especially chilling for Siemens is that roughly €40 million ($54.6 million) were paid into the three accounts after February of 1999 -- at a time when bribery payments made abroad were already punishable.
The report states that, in all of the transactions except one, "a recipient could not be determined." In the account books of Siemens, the payments were "
merely attributed to certain projects as expenses, without it being possible to reconstruct a specific intended use."
And the lawyers uncovered other irregularities as well. About a dozen payments worth around €27 million ($36.9) featured only one signature, instead of two as required by internal Siemens regulations.
To all appearances, great efforts were made within the company to obscure the origin of the money. In part, the funds were provided by the Siemens Coordination Center in Brussels. Employees there then ordered the presumed slush fund millions from company accounts at the Bank of America in Frankfurt or Antwerp -- not without explicitly pointing out to the bankers, in bold print, that "the name Siemens should not be mentioned" in connection with the transactions.
It remains unclear to this day what the money -- €190 million ($259) overall -- was used for in the end. The relevant documents often only feature the hand-written remark "neutral payment" under the rubric "purpose of use."
An Interest in Full Transparency
Those answerable at the power plant division apparently got nervous in early 2000. The Eurocell firm was liquidated and its assets were transferred from account number 209998 to a firm in Abu Dhabi called Technical Consulting & Services Ltd. When the investigators in Milan and Darmstadt traced the bribery payments while looking into the Enel case, many at Siemens must have feared that the fund maintained in Vaduz by the power plant division would soon also be discovered.
Afterwards, everything possible was done to trivialize the Enel case. As recently as November of last year -- shortly before the corruption affair in the telecommunications division shook the company to its foundations -- the internal anti-corruption department stated in a confidential report to the audit committee of the board of directors: "Conversations with the public prosecutor's office are ongoing, with the goal of reaching a pre-trial agreement."
Many managers quite obviously feared the corruption findings could spread like wildfire if the question were to be asked in court where the millions of euros paid to Enel actually came from.
Siemens does not want to comment on the case, declining to answer questions regarding the establishment of the bank accounts and inqueries as to where the money from the accounts went. The question of whether Siemens pursued its findings about the accounts in Liechtenstein further remains unanswered just like the one of which members of the board of directors was informed, in 2005, of the insights gathered by the lawyers in Erlangen.
The reason given for the reticence is that investigations -- including in Liechtenstein -- are ongoing. Siemens states that it supports these investigations and has an interest in full transparency. Just a few weeks ago, in its most recent quarterly report, the company did carefully suggest that its internal investigations have now led it to also look into "cash payments in other areas."
A "clear volume of payments has been identified" for which only "limited documentation" exists and which was transferred "via a bank account in Liechtenstein."
The reference is quite obviously to the accounts at Neue Bank in Vaduz.