Four senior officials, including a former CEO, at the Israel Electric Corporation were arrested on Wednesday on suspicion of accepting $16 million in bribes from the Israeli branch of Siemens, the German engineering and electronics giant.
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Former Siemens Israel CEO Oren Aharonson and the three other men — who are under investigation for bribery, fraud, breach of corporate trust, money laundering and obstruction of justice — were questioned by the Israel Securities Authority earlier this week.
The other men are Aharonson’s brother-in-law Shlomo Daniel, currency trader Anton Dalin, an associate of Aharonson, and Haim Bar-Ner, who until recently was the deputy manager of IEC’s planning division. Attorney Shlomo Nes was also questioned for his alleged involvement.
The bribes were allegedly given to rig an IEC tender for power station turbines. The Israeli investigation is part of a worldwide bribery scandal involving Siemens. 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, $20 million of them in Israel alone.
This figure raises suspicion that other senior businessmen and officials in Israel have been bribed.
The four suspects were brought before the Tel Aviv Magistrate’s Court on Wednesday and placed under house arrest until Thursday, subject to hundreds of thousands of shekels’ bail.
Aharonson was to be tried for bribing former District Court Judge Dan Cohen, who had served as a director on IEC’s board. But Aharonson turned state’s witness in a deal that granted him immunity from standing trial in exchange for testifying against Cohen.
The Tel Aviv District Prosecutor now says new evidence indicates that Aharonson violated the agreement. As a result the case against him has been reopened.
About a year ago, Cohen confessed he had received about 1 million euros ($1.36 millon) in bribes as part of a plea bargain and was sentenced to six years in prison.
In 2006, the Securities Authority found that Siemens had paid Cohen, then an IEC director, millions of shekels in bribes for helping the company win a tender to purchase turbines. A few months before the finding, Cohen fled to Peru, where he stayed for seven years until he was extradited to Israel.
The bribe money was transferred via foreign bank accounts to an overseas company Cohen held in the British Virgin Islands.
In January 2014, Haaretz reported that a Swiss court had agreed to pass to the prosecution details of a bank account belonging to Aharonson’s brother-in-law Shlomo Daniel, who is suspected of using his accounts to transfer the bribes from Siemens to senior IEC officials, including Bar-Ner.
The Securities Authority told the court on Wednesday that from 2002-2005 Siemens funneled via Aharonson and Daniel millions of dollars in bribes to third parties, including Bar-Ner and others.
The authority found that some 5.5 million euros had been funneled to Daniel’s accounts overseas, of which he passed on at least 4 million euros, at Siemens and Aharonson’s instructions.
“The findings indicate that the suspects acted with ingenuity and camouflaged the bribe transfers via several bank accounts in various places abroad,” the prosecution said in its request to put conditions on the suspects' release.
Aharonson’s attorney Jacques Chen and Nes declined to comment. The other suspects’ attorneys denied the allegations against their clients.