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Educators At Siemens, Bribery Was Just a Line Item BY SIRI SCHUBERT AND T. CHRISTIAN MILLER Reinhardt Siekaczek Interview

The unusual journey of Reinhardt Siekaczek, a former midlevel executive at the German engineering giant Siemens, helps explain how the company ended up paying $1.6 billion in the largest fine for bribery in modern corporate history.


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Blog tracking corruption trends, also publishes a "Grand Corruption Watch List". Reactions Siri Schubert is a reporter with the Investigative Reporting Program at UC Berkeley. Schubert has been published in Fortune International, Business 2.0, The Wall Street Journal Europe and Scientific American Mind.


T. Christian Miller is a senior reporter with ProPublica, an investigative media project. He reported for The Los Angeles Times from 1997 until 2008. Editor's Note: This reporting is the result of a joint investigation of international bribery by PBS FRONTLINE, ProPublica and the Investigative Reporting Program at UC Berkeley. A FRONTLINE documentary, Black Money, will air on April 7, 2009 at 9 P.M. ET on PBS. This story was published by The New York Times on Sunday, Dec. 21, 2008.


MUNICH - Reinhard Siekaczek was half asleep in bed when his doorbell rang here early one morning two years ago. Still in his pajamas, he peeked out his bedroom window, hurried downstairs and flung open the front door. Standing before him in the cool, crisp dark were six German police officers and a prosecutor. They held a warrant for his arrest. At that moment, Mr. Siekaczek, a stout, graying former accountant for Siemens A.G., the German engineering giant, knew that his secret life had ended. "I know what this is about," Mr. Siekaczek told the officers crowded around his door. "I have been expecting you."


To understand how Siemens, one of the world's biggest companies, last week ended up paying $1.6 billion in the largest fine for bribery in modern corporate history, it's worth delving into Mr. Siekaczek's unusual journey. A former midlevel executive at Siemens, he was one of several people who arranged a torrent of payments that eventually streamed to well-placed officials around the globe, from Vietnam to Venezuela and from Italy to Israel, according to interviews with Mr. Siekaczek and court records in Germany and the United States. What is striking about Mr. Siekaczek's and prosecutors' accounts of those dealings, which flowed through a web of secret bank accounts and shadowy consultants, is how entrenched corruption had become at a sprawling, sophisticated corporation that externally embraced the nostrums of a transparent global marketplace built on legitimate transactions. Mr. Siekaczek (pronounced SEE-kah-chek) says that from 2002 to 2006 he oversaw an annual bribery budget of about $40 million to $50 million at Siemens. Company managers and sales staff used the slush fund to cozy up to corrupt government officials worldwide. Mr. Siekaczek says that from 2002 to 2006 he oversaw an annual bribery budget of about $40 million to $50 million at Siemens.

The payments, he says, were vital to maintaining the competitiveness of Siemens overseas, particularly in his subsidiary, which sold telecommunications equipment. "It was about keeping the business unit alive and not jeopardizing thousands of jobs overnight," he said in an interview.


Siemens is hardly the only corporate giant caught in prosecutors' cross hairs.


Three decades after Congress passed a law barring American companies from paying bribes to secure foreign business, law enforcement authorities around the world are bearing down on major enterprises like Daimler and Johnson & Johnson, with scores of cases now under investigation. Both companies declined comment, citing continuing investigations.


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