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Siemens Banned From Bidding in Brazil on Suspected Bribery

Siemens AG, Europe’s biggest engineering company, was banned from bidding on federal contracts in Brazil because of suspected kickback payments.

A federal court ruled that Germany’s Siemens is prohibited from participating in public auctions and signing government contracts in Brazil for the next five years, company spokesman Alexander Becker said today, confirming a report by the Estado de S. Paulo newspaper. The ruling is from January, he said.

Siemens, which in 2008 adopted a “zero tolerance” policy on bribery payments, said in a separate statement that the sanction is tied to tender proceedings in 1999 and 2004 and internal administrative processes by the Brazilian Post and Telegraph Corp. Siemens said it started legal proceedings against the decision in 2010 and has further appealed it.

A German bribery probe into Siemens’ business, that began in 2006 and spread to at least a dozen countries, prompted the resignation of Chief Executive Officer Klaus Kleinfeld and supervisory board Chairman Heinrich von Pierer, and the replacement of the head of the Brazilian subsidiary. The company had more than 2.5 billion euros ($3.5 billion) in costs related to the scandal, and former managers are still the focus of court cases globally.

Including non-federal business, Siemens last year reported sales of 1.95 billion euros in Brazil, where it has about 7,900 employees. That compares with 75.9 billion euros in total revenue. The blacklisting affects about a single-digit percentage of Siemens’ business in Brazil, the company said.

Corruption Scandal

Siemens said in June last year that it has about 1 billion euros in infrastructure project orders related to Brazil’s 2014 soccer World Cup and 2016 Olympic Games. That includes safety and building systems for the Mane Garrincha National Stadium in Brasilia, and energy management systems for the national grid operator, the company said at the time.

Siemens will still be able to maintain its contract with state electricity company Centrais Eletricas Brasileiras S.A., known as Eletrobras, and State Grid Corp. of China to supply substations for the Belo Monte dam transmission line project, according to an Eletrobras representative.

Eletrobras and State Grid won the bid to build the transmission line on Feb. 7. Because State Grid has the majority share of the joint venture, with 51 percent, the contract isn’t at risk.

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