China court gives verdict in Siemens bribery case

10:25, June 22, 2011      

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A former senior executive with state-owned China Mobile has been sentenced to death with a two-year reprieve for taking bribes from Siemens AG, Caixin magazine reported yesterday.

The Higher People's Court of Henan Province upheld an earlier verdict on Shi Wanzhong, former general manager of China Mobile's human resources department, for taking a total of US$5.06 million in bribes together with Tian Qu, a middleman, when Shi was head of China Mobile's Anhui branch from 2002 to 2009.

Shi also accepted 2 million yuan (US$309,598) from a privately-owned Chinese firm during his tenure in the eastern province, the court said.

Tian was jailed for 15 years.

Their trial had not been open to the public as the court deemed it involved state secrets.

More than three years ago, the German technology giant was at the center of a global bribery scandal and some reports claimed Siemens had conducted half of its business in China by offering bribes.

To expand market share in China, Siemens hired Tian, who was a close friend of Shi, as its sales representative to negotiate deals with Shi, then chairman and general manager of China Mobile's Anhui branch and in charge of equipment purchasing for the country's largest telecommunication carrier.

Tian was paid total commission of US$5.06 million after nailing several deals with China Mobile for Siemens. The court said that part of the money was later given to Shi.

The total value of deals signed by Shi between China Mobile and Siemens is not known.

Siemens declined to comment on the court case yesterday.

German broadcaster Deutsche Welle reported in 2007 that 50 percent of Siemens' business in China had involved offering bribes.

But the allegation was denied by Siemens' China spokesman, who said that the accusation was "totally unacceptable and groundless."

The spokesman told Shanghai Securities News at the time that the company had hired a United States law firm to conduct an internal investigation focusing on its contracts with middleman representatives, people hired by Siemens to sell products in a certain area and who were paid commission when deals are signed.

It had become a common practice for such middlemen to offer bribes to buyers, Caixin said.

According to investigation reports disclosed by the US Department of Justice, three subordinate firms under Siemens China, including Siemens Medical Solutions Group, Siemens PTD, Siemens Transportation System, were involved in the bribery scandal.

The three companies said to have offered a total of US$61.4 million in bribes to Chinese officials and anyone who had the final say on a deal to win projects worth a total value of 2.1 billion yuan.

The projects covered areas such as infrastructure construction and medical care.

The Chinese Communist Party's disciplinary body has launched an anti-corruption campaign targeting managers and executives of the country's three major telecom operators - China Mobile, China Unicom and China Telecom.

The investigation is due to end this month and during it, all middle-level and above administrative staff had to hand in their passports.

Bribery scandals involving Siemens were revealed in 2006 and 2007, with some of the company's employees bribing foreign officials to gain contracts and creating slush funds for the purpose.

The CEO of the company, Klaus Kleinfeld, and the chairman of the supervisory board, Heinrich von Pierer, resigned though they were not directly implicated.

Source: Shanghai Daily
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