To crit­ics, Siemens scan­dal re­veals flaws in sanc­tions

Kyiv Post - - Busi­ness -

Only busi­ness

Al­though Siemens touts it­self as a re­li­able part­ner to all cus­tomers, the com­pany seems to have fa­vorites — Rus­sian state-owned com­pany Gazprom in par­tic­u­lar, Gon­char said.

“Siemens is a long-term part­ner of Gazprom, work­ing on the Nord Stream un­der­sea gas pipe­line and var­i­ous other projects,” Gon­char said,

Gazprom’s of­fi­cial web­site reads that in 2015, dur­ing a meet­ing in St, Peters­burg, Gazprom chair­man Alexey Miller and Siemens CEO Joe Kae­sar dis­cussed prospects for co­op­er­a­tion — in par­tic­u­lar, the procurement of equip­ment and tech­nol­ogy for the Nord Stream 2 pipe­line, the sec­ond stage of the Nord Stream project. To­gether, when Nord Stream 2 is com­pleted in 2019, the twin pipe­lines will have the ca­pac­ity to trans­port 110 bil­lion cu­bic me­ters of nat­u­ral gas — about the same ca­pac­ity as Ukraine’s pipe­lines that will be by­passed.

Gon­char said Siemens had picked a side in the Ukraine-Rus­sia gas con­flict long ago.

Back in 2013, Siemens can­celed a deal to sup­ply equip­ment needed to mod­ern­ize the Ukrainian gas trans­porta­tion sys­tem due to fears it might lose con­tracts in Rus­sia, An­driy Kobolev, the head of the Ukrainian state-owned gas com­pany Naftogaz of Ukraine, said at the an­nual Yalta Euro­pean Strat­egy sum­mit in Kyiv on Sept. 15.

Naftogaz’s press ser­vice told the Kyiv Post on Sept. 25 that in 2013 Ukr­transgaz, the sub­sidiary of Naftogaz that runs the gas tran­sit pipe­line net­work, signed a con­tract on April 29, 2013, with Ger­many’s Fer­roS­taal In­dus­riean­la­gen GmbH for the mod­ern­iza­tion of the Bar com­pres­sor station in Vin­nyt­sya Oblast. The mod­ern­iza­tion was to have in­cluded the sup­ply of Siemens tur­bines.

But four months af­ter the con­tract was signed, Fer­roS­taal in­formed Ukr­transgaz that Siemens had re­fused to sup­ply tur­bines for the project. As a re­sult, Ukraine had to find an­other sup­plier, fi­nally choos­ing tur­bines and soft­ware from U.S. com­pany Gen­eral Elec­tric. The first part of the GE soft­ware ar­rived in Ukraine early in Septem­ber. Ukr­transgaz ex­pects the mod­ern­iza­tion to be com­pleted by 2018.

Asked if Siemens had re­fused to sup­ply tur­bines to Ukraine in 2013 be­cause of its busi­ness con­sid­er­a­tions in Rus­sia, Trost said only: “We looked into these al­le­ga­tions and can tell you that we have no in­di­ca­tion from our own ser­vice di­vi­sion that this is the case.”

In­ves­ti­gate or not?

Re­ichel said he was not aware if a crim­i­nal in­ves­ti­ga­tion of Siemens is un­der way by Ger­man law en­force­ment.

But U. S. news­pa­per The Wall Street Jour­nal re­ported in July that the Ger­man gov­ern­ment had in fact called Siemens of­fi­cials in for ques­tion­ing over how their tur­bines got to Crimea.

“I’m not sure Ger­many or Europe is go­ing to in­ves­ti­gate and fine Siemens, but the U.S. might,” Gon­char said. “They’ve al­ready done that with the other Ger­man com­pany that vi­o­lated the sanc­tions — Deutsche Bank.”

In Jan­uary, U.S. and U.K. author­i­ties fined Deutsche Bank $630 mil­lion for us­ing its of­fices in Moscow and London to move $10 bil­lion out of the U.K.

Amer­ica has fined Siemens be­fore. In 2008, the U. S. Se­cu­ri­ties and Ex­change Com­mis­sion ac­cused the Ger­man man­u­fac­turer of vi­o­lat­ing the For­eign Cor­rupt Prac­tices Act by sys­tem­at­i­cally pay­ing bribes to for­eign gov­ern­ment of­fi­cials to ob­tain busi­ness. The SEC al­leged that Siemens had paid bribes in Venezuela, Is­rael, Mex­ico, Bangladesh, Ar­gentina, Viet­nam, China, and Rus­sia.

Ac­cord­ing to the SEC, Siemens also paid kick­backs to Iraqi min­istries in con­nec­tion with sales of power sta­tions and equip­ment to Iraq un­der the United Na­tions Oil for Food Pro­gram, and earned more than $1.1 bil­lion in profits on these and sev­eral other trans­ac­tions.

At that time Siemens agreed to pay $350 mil­lion to set­tle the SEC’s charges, and paid a $450 mil­lion fine to the U. S. De­part­ment of Jus­tice to avoid prose­cu­tion.

Rus­sian Gazprom board mem­ber Alexey Miller (L) and Siemens AG CEO Joe Kaeser (R) speak dur­ing a meet­ing at the St. Peters­burg Eco­nomic Fo­rum in 2016. (Gazprom)

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