Siemens AG, Europe’s largest engineering company, was sued by a former compliance officer in its China unit who claimed he was fired after exposing evidence of hospital kickbacks.
Meng-Lin Liu filed a whistle-blower complaint in Manhattan federal court today, claiming he uncovered a scheme in which Siemens Ltd. China submitted inflated bids to sell medical diagnostic and scanning equipment to public hospitals in China and North Korea, and then sold the equipment at reduced prices to intermediaries that charged the hospitals the full bid price.
“This had all of the hallmarks of a classic bribery or ‘kickback’ scheme and there was no legitimate explanation for the huge price differentials that existed between the prices at which Siemens sold the equipment and the prices paid by the end-user hospitals,” Liu claimed in the complaint.
Liu, who said he was hired by Siemens in March 2008, claims he was fired after presenting evidence of the scheme to Siemens China’s chief financial officer for health care. He’s seeking unspecified damages.
Alexander Becker, a spokesman for Munich-based Siemens, declined to comment on the allegations in Liu’s suit.
In 2008, Siemens paid $1.6 billion to settle bribery investigations by U.S. and German authorities.
Liu claimed that shortly after starting at Siemens China, he found a culture of “evading and circumventing” the anti-corruption controls that Siemens agreed to adopt in its 2008 plea agreement with the U.S. government. He claimed that senior compliance officials, lawyers and executives at Siemens AG and Siemens China were aware of evidence that employees were intentionally evading the company’s due-diligence policies.
“The internal control evasions uncovered by Liu involved intentional conduct which had no possible innocent explanation,” according to his complaint.
Liu said hospitals that bought the Siemens equipment, including magnetic resonance imaging machines and computed tomography scanners, paid the intermediaries a markup 20 percent to 130 percent higher than the price paid to Siemens. He said he concluded the gap represented money that was being channeled as bribes to corrupt hospital procurement officials.
Liu claimed he was put on a leave of absence within a week of showing a spreadsheet of the suspect transactions to the health-care CFO and his contract wasn’t renewed when it ended three months later.
The case is Liu v. Siemens AG, 13-CV-317, U.S. District Court, Southern District of New York (Manhattan).