Six former senior Israel Electric Corporation officials were indicted for fraud in Israeli court Monday, as part of a years-long investigation into a multi-million dollar corruption case involving the German engineering company Siemens AG, the Justice Ministry said.
The Securities Authority investigation alleges Siemens bribed senior IEC executives to ensure the engineering giant would win bids to supply turbines to the state-owned utility company between 1999 and 2005, the business daily Globes reported on Tuesday.
The Justice Ministry also announced Monday that Siemens would pay a penalty of NIS 160 million ($42.7 million) and would appoint an external inspector to supervise its business in Israel in exchange for state prosecutors dropping charges of securities fraud against the German company.
The former IEC employees, who were arrested in December 2014, were charged with fraud, money laundering and breach of trust for their role in the affair.
Investigators believe the six collectively took bribes amounting to $16 million, which was then transferred to Swiss bank accounts or smuggled out of the country in cash-filled suitcases.
According to the report, the six are former IEC senior deputy director general David Kohn, former senior deputy CEO Yakov Hain, former engineering and planning department deputy director Haim Bar-Ner, planning and development department deputy director David Elmakis, former engineering and planning department director Yona Schweitzer, and former planning department departmental head Zvi Eyal.
“A give and take relationship was created in which Siemens systematically paid bribes to Israel Electric Corporation executives so they would utilize their positions in order to favor and advance the interests of Siemens in the IEC,” the indictment said, according to the Haaretz daily.
The Securities Authority launched its investigation into Siemens in 2009, after Israel purchased gas turbines from Siemens for more than $650 million in the early 2000s.
In response to the announcement, Siemens announced it planned to continue its business in Israel, including purchasing locally made products and services as well as investing in Israeli companies.
In 2014, former District Court judge Dan Cohen, who sat on the IEC board, was found guilty of giving Siemens an edge in winning the tender in exchange for an NIS 4 million bribe. He fled to Peru in 2005 and was eventually extradited back to Israel, where he agreed to a plea deal that put him in jail for six years.
Siemens’s run-in with Israel’s Securities Authority not the first time in recent years the largest engineering company in Europe has been associated with fraud.
In October, former Siemens executive Andres Truppel pleaded guilty to funneling nearly $100 million in bribes to Argentine government officials in hopes of securing a $1 billion bid to produce national identity cards in 2011, according to reports in German media,
Truppel, who wired large sums of the kickback money to US bank accounts, admitted to committing wire fraud and conspiracy to violate American banking regulations in his New York court case.
Two months later, Siemens agreed to pay a $1.6 billion penalty to US and German authorities to resolve the case.
German prosecutors are also investigating the company for suspected corruption for its role in the reconstruction of Berlin Brandenburg Airport, a project which has been plagued by cost overruns and delays.
In December, attorneys representing the airport consortium accused Siemens and two other German firms of padding “suspicious” invoices submitted to the construction company building Berlin’s third airport.