Wednesday’s arrests of senior Israel Electric Corporation (IEC) officials comes after a painful delay of six to eight years.
In December 2008, the U.S. Securities and Exchange Commission filed charges against the Siemens Corporation, accusing it of paying $1.4 billion in bribes across the globe, mainly in developing countries. The charge sheet showed that, in Israel alone. Siemens paid $20 million, channeled by senior IEC official Oren Aharonson and his brother-in-law, businessman Shlomo Daniel. The charges were settled in a plea bargain, with the the German corporation paying a huge fine.
Two years prior to that, former judge Dan Cohen, a well-connected member of the IEC board of directors, fled to Peru only four days after being questioned in Israel about bribe-taking, mainly from Siemens. After several months, while Cohen was acclimitizing to life in Lima, Aharonson turned state’s witness against him, confessing to paying Cohen a bribe of one million euros. The bribe was intended to win Siemens an IEC contract for the sale of turbines.
The Cohen investigation led to more murky and suspicious goings-on. It turned out that even after Cohen had left the IEC board of directors, supposedly losing all influence, Aharonson continued to transfer enormous sums (over 2.5 million euros) to his offshore company in Jersey. The money came from accounts held by Aharonson’s brother-in-law Shlomo Daniel.
Despite Aharonson’s inability under investigation to explain these lavish gifts to the ex-board member, the state reached a plea bargain with him. A reasonable observer might have concluded that Cohen was continuing to serve as a channel for funneling bribes to other senior IEC figures, but that could not be verified as long as Cohen was studying Spanish at the Catholic University of Lima.
In response to an Israeli extradition request, the Peruvian police arrested Cohen in the spring of 2013. A few months later, now back in Israel, Cohen confessed to accepting a one million euro bribe from Siemens. He was sentenced to six years in prison under a plea bargain.
Cohen could have reduced his sentence by giving up more IEC names, but he declined to do so. It seemed then that the bribery scandal at the IEC was going nowhere and that the identities of the recipients of an additional 15-16 million euros would never be revealed. At that stage, those unidientified people could have easily instructed the managers of their offshore straw companies to send the money elsewhere.
The situation changed when law enforcement agencies got hold of the details of Shlomo Daniels’ accounts in the Swiss bank Credit Suisse. Daniel was Siemen’s ‘counsellor’ in Israel, a position held in high regard in the global bribery industry run by Siemens. The ‘counsellor’ was a neutral person who lent his personal and corporate bank accounts for the transfer of bribe money, in exchange for hefty commissions.
A few months ago, after years of legal wrangling, the Swiss authorities gave the State Prosecutor access to the accounts. It’s unclear why the prosecution didn’t insist on getting access in 2006, when it granted immunity from prosecution to Aharonson and Daniel. Nor is it easy to fathom why the prosecution didn’t realize that it’s not enough to bribe only one person in order to win a tender worth billions of euros - and that Dan Cohen could not have acted alone.
In Israel, as in other corrupt countries like Iraq and Bangladesh, Siemens operated a well-oiled bribery operation, which enriched several key figures. If the prosecution had been more adamant when it had leverage, the mystery of the bribes at IEC would have been resolved years ago.
Daniel’s Swiss accounts showed transfers of millions of dollars to people connected to the tender for turbines. For example, a million dollars found its way to a safe in London, via a businessman close to Aharonson. The safe is believed to be the hiding place of bribe money paid to one of the suspects.
A connection was also established with a former IEC director, attorney Shlomo Ness, who did not hold an official IEC post at the time Siemens won one contract after another, but was close to senior IEC officials. One of the board members who, like most of her colleagues, supported awarding repeated contracts to Siemens was his sister.
When Ness’ wife Lea ran for the Knesset, the Aharonson family donated money. Ness denied doing business with Aharonson when I questioned him two years ago. The question of whether he helped Siemens will now be investigated.
Cautious estimates are that the investigation will lead to several indictments. However, even with the latest revelations, the bribery mystery at the IEC will not be fully resolved until someone gets prisoner Dan Cohen to talk about who he divvied up the loot with.
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