Six Israel Electric Corporation Managers May Be Indicted in Siemens Bribery Case

Executives alleged to have taken millions of shekels from Siemens to help the German company win a gas turbine tender and other contracts.

Tomer Appelbaum

The Tel Aviv District Attorney’s Office said on Sunday that six current and former Israel Electric Corporation executives may face indictments for accepting bribes from the German company Siemens.

The prosecutor’s office also warned the German electronics giant and its Israeli subsidiary that they are suspected of bribery, fraud and breach of trust as well as offenses under the Prevention of Money Laundering Law.

The six IEC employees include Yacov (Yasha) Hain, a senior vice president for engineering projects until he stepped down 10 months ago, and David Kohn, who served as a vice president for generation and transmission and head of IEC’s tenders committee until 2004. They will be given a hearing before a final decision is made.

The others include Yona Schweitzer, a former head of engineering planning; Tzvi Eyal, a former manager in the utility’s planning division; Haim Brenner, a former manager in charge of engineering planning; and David Elmakais, a planning manager, the only one of the six who remains employed at IEC.

Elmakais ‘ attorneys, Adi Barkay and Sassy Gez, said they expected their client to avoid prosecution. “We are relying on the judgment of the prosecutor’s office and are confident that in the end a decision will be made that it is not appropriate to prosecute Elmakais, who for many years has done nothing but acted in good faith and for the benefit of IEC,” the two said in a statement.

As to why he remained employed at IEC, the utility said, “IEC, which has a policy of zero tolerance for corruption, is weighing the appropriate steps to take in regard to this policy.”

The Israeli investigation is part of a worldwide bribery scandal involving Siemens, Europe’s largest engineering firm. According to an indictment filed against Siemens in the United States, the company paid a total of $1.4 billion in bribes to facilitate deals worldwide.

In Israel, where the investigation got under way in secret in 2009, the bribes Siemens admitted to amount to $20 million and were allegedly given to rig an IEC tender for power station turbines during the years 1999-2001, when the utility awarded Siemens contracts for more than 540 million euros ($659 million at the current exchange rate).

Dan Cohen, a former judge, was sentenced two years ago to six years imprisonment and fined 10 million shekels ($2.6 million) for accepting bribes, fraud and breach of trust while serving as an IEC director. The six IEC managers named on Thursday were arrested in December last year in connection with the probe.

The district attorney’s office said they are alleged to have taken millions of shekels from Siemens to help the German company win a gas turbine tender and other contracts during the years 2000-05. The money is alleged to have been transferred by Oren Aharonson, who was head of Siemens Israel’s energy and industry division and later a deputy CEO, to his brother-in-law Shlomo Daniel, who deposited the money in foreign bank accounts belonging to the six managers.