Venezuelan National Assembly to Investigate Siemens’ Bribery Scandal

Last week the Venezuelan National Assembly announced it would investigate bribes that the company Siemens had admitted delivering to Venezuelan officials.
Siemens Transportation Systems, Inc. railway vehicles in Valencia, Carabobo (archive)

Mérida, December 23, 2008 (— Last week the Venezuelan National Assembly announced it would investigate bribes that the company Siemens had admitted delivering to Venezuelan officials.

Siemens was founded in Germany and is the largest electronics company in the world. On December 15 it agreed to pay US$1.6 billion in fines to American and German authorities as a settlement to charges that it routinely used bribes to secure public works contracts in a range of countries. The settlement meant the company avoided a conviction for bribery, enabling it to maintain its status as a “responsible contractor” and to continue to be able to procure public contracts.

Linda Chatman Thomsen, head of the US Securities and Exchange Commission said Siemens had paid $1.4billion in bribes to government officials. The United States claimed partial jurisdiction over the company because it is listed on the New York Stock Exchange, subjecting it to US financial laws and regulations.

Siemens Venezuela said that between November 2001 and May 2007 it paid bribes of an estimated value of US$18.78 million to Venezuelan officials in exchange for favorable treatment in the assigning of two projects. These projects are presumably the construction of subway lines in Maracaibo (Zulia state) and Valencia (Carabobo state).

Julio Moreno, president of the auditing commission of the National assembly, which will work over the December recess on the issue, requested authorization to investigate the Metro of Maracaibo and said a report will be presented in January.

Accusations of responsibility

National Assembly legislator Mario Isea said that Manuel Rosales, opposition mayor of Maracaibo and recently found “politically responsible” by the national assembly for fraud, had “his hands in [the Metro of Maracaibo]”, as he had 60% control over the metro in the years 2000-2001. He explained that judicial documents showed that around US$28.7 million in bribes had gone to officials during the time Rosales was mayor.

Saul Ortega, first vice president of the national assembly pointed out that the respective mayors of the two cities were responsible for the contracts, and both these mayors were in the hands of the opposition at the time the briberies occurred.

Head of opposition party, A New Time, Julio Montoya accused Isea of trying to hide the facts of the corruption.

Speaking in a press conference Montoya called Isea’s declarations “almost gangster and irresponsible.” He argued that in the time that the bribery occurred, Manuel Rosales was not Mayor of Maracaibo, but Governor of the state of Zulia, and that the mayor was responsible for the Metro of Maracaibo, until 2003 when it passed to the national government.

However, in an article by online newspaper,, according to Eliseo Fermin, president of the legislative council of Zulia state, and also member of A New Time, the management of the metro changed hands in 2004, with 67% of the administration going to the national government, 24% to the mayor and 9% to the state government.

Fermin also argued that the national government had changed the original plan for the metro, adding a cost of US$600 million. “The metro proposed by Rosales was simpler, in the style of the Metro of Miami which consists in a train that goes above, allowing for the circulation of vehicles below,” he said.

Meanwhile, Montoya also presented a report that outlined the delivery of US$6.8 million dollars to advisers of the president of Venezuela.

“This report shows the bank records where they delivered [the bribes] to high officials of the central government of Venezuela, that is, the government of president Chavez. The same report says that resources were delivered to the ex-minister of defense and a diplomat, and only two people have those characteristics: Jose Vicente Rangel and the famous minister that is now in Europe, Lucas Rincon,” he said, adding that US$4 million had been delivered to “high-up officials of the national government, that is, to ministers of infrastructure acting during those [specified years of bribery], which start from Diosdado Cabello until the current minister.”

Siemens also pled guilty in the US federal court to charges that it used corrupt practices in foreign business dealings. The contracts that it secured through bribes since the mid 1990s, in addition to those in Venezuela, included one for a national identity card project in Argentina, a mobile phone network in Bangladesh, and a United Nations oil-for-food program in Iraq.