To critics, Siemens scandal reveals flaws in sanctions
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)