By Lucy Komisar
Inter Press Service (IPS), Aug 30, 2007

U.S. officials from the Securities and Exchange Commission, the Justice Department and the Federal Bureau of Investigation met with Munich prosecutors this week regarding the $1.3-billion bribe fund run by Siemens, the German multinational technology company.

After talking to the Germans about tracking the financial flows of the largest illicit slush-fund ever discovered, the U.S. investigators would do well to visit Luxembourg on Germany’s western border.

There they could seek information from Clearstream, the international financial clearing house, that might tell them how Siemens moved so much money and where it went. That is because Siemens has the unusual status of being one of only four non-financial companies among 2,500 Clearstream members. It gained membership on the insistence of a former CEO who was fired after a scandal.

Seimens 1995 accounts in Clearstream.

Siemens 2000 accounts in Clearstream.

Siemens 2001 accounts in Clearstream.

Siemens bribe money, according to German investigators, was transferred through a network of front companies, mostly in offshore Liechtenstein, Switzerland, the British Virgin Islands and Dubai in the United Arab Emirates. But it would have had to get there via onshore banks in Germany or other countries where Siemens operated.

Banks might have questioned multi-million-dollar transfers lacking credible paperwork. Siemens would have needed to skirt the due diligence that banks are supposed to apply. It would have wanted to avoid scrutiny by law enforcement agencies that receive banks’ reports of suspicious activities. Siemens could have gone offshore, to Clearstream, in Luxembourg, which has built its wealth on bank secrecy.

Clearstream is one of two international clearing houses that move financial paper — stocks, bonds, derivatives, etc., between members representing buyers and sellers. The other is Euroclear in Brussels. Members are banks and brokerages or other financial institutions.

However, Clearstream spokesperson Bruno Rossignol told IPS that there are four non-financial members: Siemens, the Shell Petroleum Group, the Dutch agricultural multinational Unilever, and Capital Lease Plan, which leases cars.

A large number of Clearstream exchanges are of cash, not financial paper. With their own accounts, companies can avoid passing through banks or exchange agents — or Swift, for cash transfers, which the U.S. monitors.

Ernest Backes, manager of Cedel customer services until 1983, told IPS, Siemens tried to have direct accounts with us. Gerard Soisson [Cedel general manager] and I always refused based on rules that allowed only banks and other financial institutions.

Clearstream was called Cedel before its 2000 merger with Deutsche Börse, owner of Frankfurt’s stock exchange.

Backes said, It is only after [CEO] André Lussi came to power in 1990 that he gave way to the opening of Siemens accounts. Backes said management told employees that Siemens’ admission was negotiated at the highest level.

Backes said, Please note that in the interview Lussi gave [journalist] Denis Robert in May 2000, shown in the film ‘Les Dissimulateurs’ [The Deceivers], Lussi insists that ‘Siemens-type industrial or commercial companies’ cannot have accounts in the system.

The film was shown on French television in 2001, the year of the Paris publication of Révélation$ by Backes and Robert.

That book charged Clearstream with running a system of unpublished accounts that didn’t appear in the public books. Backes said, There were more unpublished than published accounts, and a [large] proportion were not sub-accounts of a principal account, which is what the system was supposedly for. The owners of these accounts were not inscribed on the official list of the clients of the firm.

Some of the Siemens accounts were unpublished.

After Révélation$ came out, six prominent European judges called Clearstream the black box of illicit international financial flows. The scandal made headlines in European newspapers. The French National Assembly’s financial crimes committee held a hearing.

Lussi was suspended two months after publication and did not return to his job. André Roelants, named CEO on Lussi’s departure and now honourary chairman, told this writer that Lussi did not leave because of Révélation$, but because of anomalies such as improper personal use of credit cards and unauthorised commitment of company resources.

The Luxembourg prosecutor conducted an investigation which reported no finding of money-laundering by Clearstream. However, the book had not accused the clearing house of laundering money, but of setting up a system that facilitated laundering by members or customers. Clearstream auditor KPMG also pronounced its client clean. Clearstream commissioned a special audit by Arthur Andersen, which found no illicit cash flows.

Florian Bourges, a young French business school graduate, worked as an intern in the Arthur Andersen investigation. In 2004, he provided information secretly to a French investigating judge.

In Paris in July, he told IPS, in remarks not published before, that the audit had been a whitewash. He said that a Luxembourg member of the Arthur Andersen team had asked him to erase some of his findings. He said, He told me they didn‘t want to annoy Clearstream. There were many anomalies. I can’t discuss it because of judicial problems.

Bourges, who kept audit documents, provided account lists to Robert and to Imad Lahoud, a French security services asset he met through Robert. Lahoud gave the lists to then Foreign Minister Dominique de Villepin, a conservative party rival of Economy Minister Nicolas Sarkozy, now the French president.

Somewhere between Lahoud and de Villepin, the files were doctored to implicate Sarkozy and others as holding personal Clearstream accounts. After the story exploded in the French press, Bourges’s role was revealed, and he was charged by Clearstream with violation of bank secrecy and other civil infractions and by French magistrates with stealing and abuse of trust. De Villepin, ally of former President Jacques Chirac, is also being investigated.

Bourges said law enforcement agents could see unpublished transactions if they plugged into the system. They are just not in the public directory. If the FBI or European justice want to investigate a transfer, they have just to plug into the Clearstream system, and they will find all the transactions. I found them, he said.

Detailed information is listed on daily security statements — stored on microfiche to prove that financial paper or cash has been sent. These statements are kept 10 years for companies and 15 for banks.

A curious connection between Siemens and Clearstream is Andrew Wang, wanted in Taiwan for having managed and laundered payoffs for the French company, Thomson (now Thal¨s) for sale of six frigates to Taipei in the early 1990s.

Jo«l B»cher, who had been deputy director of the Taipei branch of the French bank, Société Générale, told IPS that SocGen sent frigates kickbacks to French influentials through Clearstream. Wang is charged with corruption, money laundering, fraud and the murder of a Taiwan Navy captain who reported the bribe scheme and was found floating in the China Sea. Wang fled Taiwan after the death. Swiss authorities froze 12 Wang accounts with $800 million.

Wang also worked for Siemens, becoming an agent of the firm in 1967. Cedel was founded in 1971. If he used Clearstream to move the frigates money, that might suggest a familiarity with the system which he could have employed for Siemens.

Wang is now living comfortably in London, the exile home of choice for many international financial criminals, with easy access to their money via The City (financial centre) of London through secret accounts in British offshore dependencies such as the British Virgin Islands.

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  Crime & Corruption, World