Six Current, ex-IEC Executives Held in Siemens Bribery Case

Affair dates back to 1999-2001, when Securities Authority investigators say German company paid out millions for contracts.

Avi Bar-Eli
Avi Bar-Eli
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Israel Electric Corp.’s Hadera power station.
Israel Electric Corp.’s Hadera power station.Credit: Tal Cohen
Avi Bar-Eli
Avi Bar-Eli

Six current and former executives with state-owned Israel Electric Corporation were detained Sunday by Israel Securities Authority investigators, in a probe of alleged bribery involving German company Siemens.

The six included Yacov (Yasha) Hain, a senior vice president for engineering projects, who announced last Thursday he was stepping down from the position for what IEC said were health reasons. Tel Aviv Magistrate’s Court extended Hain’s remand by four days after investigators accused him of takings hundreds of thousands of dollars in bribes.

A court-imposed gag order detailing the accusations remains in effect.

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, 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).

The first Israeli arrests in connection with the Siemens affair were made last June, when four people – including former Siemens Israel CEO Oren Aharonson – were arrested in connection with payments of $16 million in bribes from Siemens.

Sunday’s arrests also included another former high-level executive, David Kohn, who served as a vice president for generation and transmission until 2004. His remand was also extended by four days. Kohn, who was chairman of the utility’s tenders committee in 2001, is accused of fraud, money laundering and accepting bribes.

Hain’s attorney, Dov Gilad Cohen, said he could not detail the accusations being made against his client, but insisted Hain had stepped down from his post last week for health reasons. “Nevertheless, we are confident that ultimately it will be shown that he committed no offense,” added Cohen.

Hain was considered a key figure in IEC, heading its widely criticized overseas operations and acting as chairman of the National Coal Company, and unsuccessfully vying twice for the job of CEO. He is known to be close to Foreign Minister Avigdor Lieberman.

Kohn’s lawyer, Yaron Kosteliz, also denied that his client was involved in any improper activity.

Aharonson was arrested for bribery, fraud, breach of trust, money laundering, and other accusations. He had one immunity from prosecution for turning state’s evidence against Judge Dan Cohen, who sat on IEC’s board and its tenders committee and is serving a six-year sentence after admitting taking 4 million shekels ($1.02 million) in bribes from Siemens.

Despite the immunity, Aharonson was arrested last June after Securities Authority investigators said they had uncovered new evidence against him.

On Sunday, IEC said it was doing everything it could to help investigators in the case. “The Siemens affair occurred more than a decade ago, long before the current chairman and CEO assumed their posts,” IEC said. “Management has led a policy of zero tolerance for bribery, and is doing everything in its power to ensure transparency and proper management.”

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