But in January, while investigating the country's chronic corruption problems [I spent a year reporting in Bangladesh in 2005], I noticed something unusual and potentially alarming about the Siemens bribe.

According to court documents [PDF] filed by prosecutors at the U.S. Department of Justice, Siemens had bribed the former telecommunications minister in Bangladesh.

The documents didn't name the minister, but further investigation revealed that he was Aminul Haque. I also discovered that during the time Haque was receiving bribes from Siemens, he was also patronizing Jamat'ul Mujahadeen Bangladesh, or JMB, an Islamic militant group in Bangladesh.

The revelation was surprising enough to get me on a plane back to Dhaka, Bangladesh's capital. The day after I arrived, a national tragedy erupted that would have profound implications for my story: In events that made headlines around the world, soldiers in the Bangladesh Rifles, or BDR, the country's border security forces, staged a bloody mutiny killing scores of their own senior officers and burying bodies in shallow graves inside their military headquarters. It soon emerged that some of the mutineers had belonged to JMB and that logistics of the attack further suggested the imprint of the extremist group.

David Montero (left) with the Daily Star's Julfikar Ali Manik reporting in the district of Rajshahi in northwest Bangladesh.

As investigators probed links between the soldiers and JMB, I headed to Rajshahi, a district in northwest Bangladesh where Haque was born and where the JMB first emerged as a militant threat. When I asked residents about Haque's involvement with extremists, local prosecutor Ekramul Haque told me that the former minister and barrister had formed a deadly alliance with the JMB, which has been charged with a wave of abductions and killings in the region.

Haque was a powerful politician in the Bangladesh Nationalist Party (BNP), one of the country's two political parties. Its main rival is the Awami League. According to victims, Haque allegedly used JMB militants to kill Awami League members to ensure his party's supremacy in the area. In return, Haque provided the group with political cover to continue its Islamist agenda.

A newspaper clip of the former telecommunications minister Aminul Haque, currently at large.

Breaking down in tears, one villager told me that his son was tortured and beheaded by JMB for no other reason than that his son belonged to Awami League. The boy's body was later left as a warning.

The JMB has become a nationwide menace in Bangladesh. Although six of its leaders were arrested and hanged in 2007, it continues to operate underground. Every week the police arrest new cells and seize weapons stockpiles. The mutiny in Dhaka that shocked Bangladeshis may prove to be JMB's most devastating attack to date.

Although Haque was sentenced to 31 years in prison in 2007 for supporting JMB, he fled Bangladesh before he could be apprehended. At the time of sentencing, Public Prosecutor Ekramul Haque said, "The JMB came into being, flourished and continued criminal activities with the finance and assistance of barrister Aminul Islam [Haque], Shish Muhammad [a BNP party official in Rajshahi] and other ruling party men of the BNP-Jamaat alliance."

Today, Haque's whereabouts is unknown. Although, this week, through his lawyers, Haque petitioned the government to withdraw five cases filed against him.

Although there is no evidence that money paid to Haque by Siemens made its way to JMB, it underscores how bribe money can easily fall into the wrong hands.

Sun Microsystems Discloses Possible FCPA Violation
In its most recent SEC filing, Silicon Valley software company Sun Microsystems revealed that it may have violated the Foreign Corrupt Practices Act, a suspicion it has reported to the U.S. Department of Justice and the SEC. While Sun hasn't disclosed the amount of the suspected bribe or where it took place, the company has warned shareholders that fines, criminal sanctions and debarment from doing business with the U.S. government could follow.

The revelation comes at a sensitive time for Sun as the company announced a merger in April with another software giant, Oracle. Under the terms, Oracle has agreed to buy Sun for $7.4 billion.

Does the United Nations' Corruption Convention Have Teeth?
A number of leading CEOs, among them GE's Jeffrey Immelt, Shell's Jeroen van der Veer and Chinese industrialist Tianwen Huan, sent a joint letter to U.N. Secretary Ban Ki-moon this month voicing their support for the United Nations Convention against Corruption (UNCAC). However, the business leaders urged a more effective review of how the convention is implemented. Otherwise, they say, there is no clear way to measure the success of anti-corruption efforts around the world. The group put forward a number of proposals in the letter.

So far,140 countries have signed on to the convention and 136 have ratified. But with countries like Afghanistan and Zimbabwe among the signatories, some member states face an uphill battle.

The letter comes in advance of the next UNCAC meeting in Dohar, Qatar, in November when business leaders hope these issues will be hashed out among delegates. Although there are a number of global initiatives already working to fight corruption, the CEOs said these efforts will be "greatly strengthened by working under the umbrella of an effective U.N. Convention."

Germany May Face Its Next Big Bribery Scandal
Just a few months after German engineering giant Siemens agreed to pay a record $1.3 billion fine to U.S. and German authorities, one of Germany's leading truck manufacturers MAN is also under investigation for bribery. Reported by Deutsche Welle, the company is suspected of paying millions in bribes to sell and lease its vehicles around the world. German prosecutors have searched MAN's Munich headquarters and 39 other offices across Germany. According to press reports, prosecutors are looking at $15 million in bribes paid in Europe and Africa and dispersed in a style similar to the scheme unveiled in the Siemens case -- using a complex network of front companies and consultants to make the payments. MAN has launched its own internal inquiry. Meanwhile, the investigation has extended to more than 100 people, according to an AP report in The Wall Street Journal.

KBR Caught Bribing. But Who Got the Cash?
The recent U.S. Department of Justice case against Halliburton subsidiary Kellogg Brown and Root (KBR) revealed that the company spent more than a decade bribing Nigerian officials to win a massive natural gas contract. KBR was fined $579 million by the DOJ and its former CEO Albert "Jack" Stanley was sentenced to seven years in prison.

Yet, the saga is far from over. While $150 million of the $180 million KBR admitted to paying officials has reportedly surfaced in a Swiss bank account, prosecutors have not revealed who received the payments or who made the deposits. There is gowing speculation that a number of bribe recipients may soon be named. The UK Guardian reports that Nigerian President Umaru Yar'Adua has set up a special panel to investigate the scandal and reveal who pocketed the cash.

Britons Face Possible Extradition to U.S. in KBR's Corruption Case
In further fallout from KBR's corrupt dealings in Nigeria, extradition hearings began this week in London against British attorney Jeffrey Tesler, thought to be a key figure in the case. Facing possible extradition to the U.S. and years in prison, Tesler is accused of being KBR's "bagman," ensuring the delivery of millions in bribe payments to Nigerian officials on behalf of the U.S. consortium over a number of years.

The allegations against the 60-year-old attorney, a dual Israeli-British citizen, are outlined in an indictment published in The Guardian. A second Briton, 71-year-old Wojciech Chodan, also faces extradition. The London Evening Standard reports that the proceedings against the two men, whose alleged violations date back to the mid-1990s, "demonstrate the long arm of U.S. anti-corruption laws."

Hong Kong Toy Manufacturer Sentenced for Bribing Mattel Execs
The director of a Hong Kong toy company was sentenced to 18 months in prison this month for offering $10 million in bribes to two directors of Mattel Asia. According to Hong Kong's Independent Commission Against Corruption (ICAC), 71-year-old Wong Hong-Leung set up a front company and issued fake invoices to bribe the two Mattel employers. Mattel Asia is a subsidiary of the U.S. toy giant. Between1998 and 2003, the payments received by the executives ranged from several thousand dollars to several hundred thousand dollars a month. The commission also reported that Wong Hong-Leung took part of the bribe money himself.

Corrupt U.S. Military Contract in South Korea
Between 2003 and 2007, Henry Lee Holloway worked for the U.S. Army and Air Force Exchange Service (AAFES) in South Korea. Holloway was responsible for a $206 million contract with the Samsung Rental Company (SSRT) that provided telecommunication services to U.S. armed forces based there. When Holloway arrived at his post, he considered canceling the contract because the services seemed substandard. But after meetings with the contractor CEO, Gi-Hwan Jeong, Holloway approved the deal. His about-face came at a price.

According to court documents released by the U.S. Justice Department in April, Holloway collected about $70,000 in bribes over a two-year period. He received the payments as stock offerings, travel expenses, entertainment and cash, none of which he declared on his tax returns. In addition to five years in prison and a $250,000 fine for accepting bribes, Holloway also faces up to three years in prison and a $100,000 fine for filing a false tax return. The Army officer has pleaded guilty but a sentencing date has not yet been set.

Meanwhile, his co-conspirator, Gi-Hwan Jeong, has also been indicted in a U.S. court after he was arrested in Texas in November 2008. His trial is scheduled to start on June 24, 2009.

PHOTO: ED KASHI

The Curse of the Black Gold
After shooting with National Geographic in the Niger Delta in 2007, award-winning photographer Ed Kashi said Nigeria was the toughest place he had ever worked. Kashi returned with striking images of ecological destruction, omnipresent energy companies, and many Nigerians grinding out an impoverished existence. More of Kashi's photographs are on view in "The Curse of the Black Gold," a powerful slideshow co-produced by MediaStorm and Talking Eyes Media. The project is part of a book by the same name edited by UC Berkeley professor and Nigeria expert Michael Watts.

Spotlight: Nigerian Corruption
In this video, Professor Watts, along with Nigerian prosecutor Nuhu Ribadu and former Nigerian President Olusegun Obasanjo, discuss how corruption has undermined Nigeria's progress.

Oil War: Nigeria
This 2005 feature from Journeyman Pictures explores Nigeria's resource curse. The reporter hears from various stakeholders in the Delta, including rebel leaders, state governors, and Royal Dutch Shell [a major funder of FRONTLINE/World], the energy company with one of the longest and most controversial histories in the region.

Rebels in the Pipeline
Current TV's Mariana Van Zeller and Darren Foster travel across the Delta to investigate a rise in kidnappings, pipeline sabotage, and militancy, and their destabilizing effects on Africa's most populous country.

Seattle-based filmmaker Sandra Cioffi recounts her arrest in the Niger Delta last year while making the documentary "Sweet Crude." She was held for several days before a blitz of media coverage helped secure her release. The segment from Democracy Now! also reports on the militant group MEND (the Movement for the Emancipation of the Niger Delta) and its recent demands for international mediation in the troubled region.

Aerial view of Total's Amenam Kpono oil platform, 25 miles off the coast of Nigeria in the Atlantic Ocean. PHOTO: Ed KASHI.

Reforming Nigeria's Oil Industry [Subscribers only]
Known for corruption and inept management for decades, the Nigerian National Petroleum Corporation (NNPC) appeared high on Nigeria's reform agenda in 2007 when president Umaru Yar'Adua took office. For years, transnational energy companies have operated in the Delta under a joint agreement with the NNPC, in a roughly 60-40 percent revenue split between national and oil company interests. This Economist article reports on how Nigeria's oil industry has been mismanaged for years on all sides, and the chances for economic reform while corruption greases every wheel.

Oil Companies on Trial
In a lawsuit filed by the Center for Constitutional Rights and EarthRights International, Shell is to appear in a Federal District Court in New York on May 26 to answer charges of complicity in human rights abuses in Nigeria, including the death of environmental activist and author Ken Saro-Wiwa.

During the 1990s, Saro-Wiwa began a peaceful campaign in his home state of Ogoniland in the Niger Delta claiming that the region had suffered from years of ecological damage, poverty and human rights violations due to oil exploration. Shell began drilling in Ogoniland in the late 1950s. Saro-Wiwa was also a vocal opponent of President Sani Abacha, whose military regime marked one of the darkest chapters in Nigeria's history.

After a cursory military trial on trumped-up murder charges, Abacha ordered Saro-Wiwa's execution along with several other activists in1995. Since then, Saro-Wiwa's death has become a decades long international human rights campaign for justice.

The suit against Shell, which has survived more than 10 years of legal challenges, claims the energy company collaborated with the Nigerian authorities and attempted to bribe two witnesses to testify against Saro-Wiwa during his trial. More of the allegations against Shell are outlined on the plaintiff's website, Wiwa v. Shell.

Shell has consistently denied any involvement in Saro-Wiwa's death and accusations that it operated in Nigeria behind a military shield. In a statement on its website, the company contends that during Saro-Wiwa's trial, it pressed publicly for a fair and legal hearing, and appealed against the death penalty warning that the decision would "damage the process of reconciliation" between the Nigerian government and the Ogoni people.

The suit has been filed under the Alien Tort Claims Act, a law that has been used in a number of cases against transnational companies in recent years, allowing non-citizens to seek damages in U.S. courts for alleged human rights abuses, regardless of where in the world they took place.

In another human rights case against Chevron in Nigeria, involving the shooting deaths of two activists at an offshore oil platform in 1998, the company was cleared last year in a federal court in San Francisco. The outcome of the trial is now on appeal.

Separately, Shell is under investigation by the U.S. Department of Justice and the Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act. The oil company first disclosed it was under investigation in its 2007 Annual Report. The ongoing probe involves Shell's dealings in Nigeria with a freight forwarding company called Panalpina. In March 2009, Dow Jones reported that Shell's Chief Financial Officer Peter Voser told reporters at a press conference, "We have started an internal investigation, looking at potential payments made by Panalpina on our behalf to customs [officials] in Nigeria." Shell is one of 11 companies contacted by the DOJ about its relationship with Panalpina and allegations of bribery at Nigeria's ports.

Corporate Social Responsibility
Social responsibility has become a corporate byword in recent years as leading energy companies have developed social, educational and environmental programs as part of doing business in the developing world. These efforts, along with greater transparency, internal reviews, whistleblower helplines, and unofficial websites tracking oil company activity have helped improve the industry's image and practices.

In this video interview with Shell's Nigeria Chair Basil Omiyi, he answers questions about Shell's environmental record in the region and how it operates in a country plagued by violence and corruption. Omiyi calls Shell "a corporate citizen of Nigeria," adding, "We do more good by being present and being part of that solution than to walk away."

Chevron's New Approach to Development
2006 Corporate Responsibility Report
Addressing what it says are "long-standing and complex development issues in the region," Chevron signed a Global Memoranda of Understanding (GMOUs) in 2006 with eight community groups and state governments in the Niger Delta. It is part of Chevron's long-term aim to cede control of community development projects to local governance through a network of Regional Development Councils.

Another view of the slaughter house in the Delta's capital, Port Harcourt. Animals are killed in the open, where blood is spilled into waterways and skins burned by the flames of old tires. The burning produces a constant cloud of thick black smoke.

Delta Suffering from Neglect, Abject Poverty
UNDP Human Development Report on the Niger Delta
This bleak assessment by the United Nations Development Programme (UNDP) describes the Delta as a region in crisis, "suffering from administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict." The 2006 report also examines the practices of oil companies and the ecological effects of oil spills, gas flaring and the dredging of mangrove forests.

Delta Spills Equivalent of 50 Exxon Valdez Disasters
Niger Delta Natural Resource Damage Assessment and Restoration Project
Up to 13 million barrels of oil have spilled in the Niger Delta ecosystem over the past 50 years, representing about 50 times the estimated volume spilled in the Exxon Valdez disaster in Alaska in 1989, according to this 2006 report assembled by an independent team of experts from Nigeria, the United States and Britain.

This environmental damage has occurred in a place the report describes as "one of the 10 most important wetlands and marine ecosystems in the world." The study also examines the threatened livelihoods of millions of people who depend on the region's natural resources for survival. These are not only Nigerians, but also many living in surrounding West African countries, who rely on migratory fish from the Delta for food and support.

Oil on the Brain: Adventures from the Pump to the Pipeline
In her entertaining book Oil on the Brain, journalist Lisa Margonelli follows the trail of the petro-dollar from her local gas station in Oakland, California, to the oil fields of Texas, Africa and South America. Currently a Fellow at the New America Foundation, Margonelli engages U.S. consumers, pumping an average of 10,000 gallons of gas every second, to pause and consider, "Where does it all come from and at what cost?"

Arafat "Koko" Rahman, the son of former Prime Minister Khaleda Zia and a prominent businessman, was formally charged with laundering nearly $2 million in kickbacks, including $180,000 from Siemens Corporation, the German electronics giant.

Arafat and his brother Tarique, although allegedly at the center of many corrupt deals in Bangladesh, were considered untouchable between 2001 and 2006, when their mother held office. The charges against Arafat Rahman are the first involving foreign bribery and could result in a jail sentence of seven years if he is found guilty.

The case highlights a determined move by Bangladesh's government to root out corruption at the highest levels, while tracing its sources through financial institutions and multinational companies abroad. In so doing, it also sheds light on the little studied dark-side of international business: the practice of foreign bribery, whereby some of the world's richest companies directly contribute to instability in the developing world by paying off corrupt governments.

"This issue of foreign companies using bribery to get contracts has been a kind of public knowledge," says Iftekhar Zaman, Executive Director of Transparency International Bangladesh, the Bangladesh chapter of the Berlin based anti-corruption watchdog. "It's a failure of the companies to oblige the rules and regulations, but it's also incumbent on the government to be able to prevent those avenues of corruption."

Siemens and its dealings with Arafat Rahman show how bribery can typically play out in Bangladesh. Between 2004 and 2006, as mobile phone use soared in Bangladesh, Siemens was pushing for a $40 million telecom contract with the Bangladeshi government, according to a case filed by U.S. investigators against Siemens.

To outbid its competitors, it hired a Bangladeshi consultant with links to the prime minister's son, as well as a government minister and at least four others. A payment of $180,000 was arranged and sent to Arafat Rahman's Singapore bank account, according to public statements made by Siemens as well as the case filed by Bangladesh's Anti-Corruption Commission (ACC), which is tasked with investigating bribery and preparing charges.

"Over a period of time, as we were investigating some of our cases, we could see that, yes, Siemens ... was paying money to some of our people here. This was all put into a bank account in Singapore, so we had to get the cooperation of that government," says Hasan Mashhud Chowdhury, the chairman of the ACC.

Hasan Mashhud Chowdhury, chairman of Bangladesh's Anti-Corruption Commission (ACC).

It is not a problem specific to Bangladesh. Corporate foreign bribery is a thriving global business, according to studies by the World Bank, which estimates that foreign companies annually pay $1 trillion in kickbacks to corrupt government officials. Last month, as Bangladesh brought charges against Arafat Rahman, Royal Dutch Shell Corporation reported that it was under investigation by U.S. authorities over allegations that it bribed officials in Nigeria.

There is growing awareness that bribery can have a direct, destabilizing impact on countries in the developing world. In the case of Siemens, court documents revealed that the company admitted to paying bribes not only to Arafat Rahman, but to Bangladesh's former telecommunications minister.

That minister was Aminul Haque, who served in the government between 2001 and 2006. Haque, in turn, was sentenced in 2007 to 31 years in prison for patronizing the Islamic terrorist group, Jama'tul Mujahideen Bangladesh (JMB).

According to cases filed by the government against Haque, the court ruled that he used JMB as a political tool to eliminate members of political opposition groups beginning in 2004. By 2005, JMB had evolved from a political group and launched a national campaign of violence that left dozens dead.

Although Haque was sentenced, he was never apprehended and remains at large. JMB, the group he supported, continues to operate underground, and is suspected of involvement in the bloody mutiny that rocked Bangladesh last month.

While there is no direct evidence showing that Siemens' bribe money went to JMB, observers in Bangladesh contend that the possibility of a link underscores the dangers of foreign corporate bribery.

"Many of the [multinational companies] don't care who they're giving money to. They don't try to find out what effect it will have on the life of ordinary people," contends Sultana Kamal, the director of Ain O Salish Kendra, a leading human rights group based in Dhaka. "They should be very careful about it."

Thanks to growing public awareness and public outrage, Bangladesh's government has finally acted with force. In the last two years, the ACC has launched hundreds of investigations into some of the most prominent ministers and businessmen in the country -- including the sons of Khaleda Zia. Both brothers were arrested in 2007, and are currently on bail as more charges are framed against them.

"To have Khaleda Zia's two sons and powerful higher ministers accused ... was really the first major cleansing process that started," says Mahfuz Anam, the editor of The Daily Star, Bangladesh's most influential English language newspaper. "Now, we are far from the end of it, but it's gotten started."

The reporters' investigation culminated in the documentary series, "Gripen: The Secret Deals," which uncovered a massive network of alleged bribes, shell corporations and secret contracts around the marketing of the Gripen aircraft. Using hidden cameras, the reporters posed as business intelligence agents and were able to capture what seems to be an on-air confirmation from Jan Kavan, a prominent Czech politician and former president of the United Nations General Assembly, describing how Czech politicians across the political spectrum had accepted bribes to approve the Gripen deal. The reporters also tracked down an array of contracts signed by the then-marketing director of Saab, which detailed multimillion dollar commissions promised to agents if the deal was successful.

When it aired in 2007, the documentary caused an international outcry and prompted prosecutors in at least seven countries to open investigations into the suspected bribery. Investigations are ongoing in Sweden, the Czech Republic, Britain, South Africa, Switzerland, Austria and the United States. Last week, the international investigations yielded its first arrest. Count Alfons Mensdorff-Pouilly, a BAE lobbyist profiled in the film, was arrested in Austria for alleged money laundering and bribery in the Gripen deals.

Both SAAB and BAE Systems have denied any wrongdoing and say that they continue to cooperate with investigators. Kavan, the Czech politician who described the bribery that allegedly occurred in his country, has said that he was just passing on his personal speculations and that he has no evidence any corruption took place.

Reporters Joachim Dyfvermark, Sven Bergman and Fredrik Laurin (Laurin is interviewed in the accompanying video) won the "Stora Journalistpriset," Sweden's most prestigious journalism award, for their work on "Gripen: The Secret Deals."

PHOTO CREDIT: Peter Karlsson, Photo Copyright Gripen International

Indictments against two key players in a massive bribery scheme that resulted in Kellogg Brown & Root (KBR) securing a $6 billion contract in Nigeria were unsealed Thursday in Federal District Court in Houston, Texas. The indictments are the first to be announced by the Justice Department since Albert "Jack" Stanley, the mastermind of $182 million in payments, pleaded guilty last September and agreed to cooperate with authorities.

One of those charged, Jeffrey Tesler, a British attorney, was taken into custody by the London Metropolitan Police at the request of the Department of Justice, which has asked for him to be extradited to the United States to stand trial. Tesler is identified in court documents and press reports as the agent used by Stanley to carry out the delivery of millions to Nigeria's late President Sani Abacha and other senior Nigerian officials.

Jeffrey Tesler in his London office, September 2008.

The other defendant is Wojciech Chodan, also known as William Chaudan. He worked as a salesman and consultant to KBR when Stanley was the CEO and the company was a subsidiary of the Halliburton Corporation. Like Tesler, Chodan's name has also been linked in the past to the scheme. A resident of Maidenhead, west of London, Chodan is believed to be still at large.

According to the unsealed indictment, Tesler and Chodan are charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and 10 counts of violating the FCPA, the 1970s'-era law that forbids paying anything of value to retain or obtain business overseas.

Included in the indictment are allegations that Telser, using a subcontractor, delivered a briefcase containing $1 million in cash to a Nigerian National Petroleum Corporation official.

Both have been implicated for their alleged participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts in the construction of the Bonny Island liquefied natural gas facility beginning in the 1990s.

Included in the indictment are allegations that Telser, using a subcontractor, delivered a pilot's briefcase containing $1 million worth of one-hundred dollar bills to a Nigerian National Petroleum Corporation official.

Less than a year later, a vehicle containing $500,000 in Nigerian currency was left in the parking lot of a hotel in Abuja, Nigeria, for a government official to "remove."

If convicted on all charges, each defendant faces a maximum prison sentence of 55 years and the forfeiture of $130 million plus interest.

Related Story

KBR Hit With Record Bribery Fine
Former Halliburton subsidiary agrees to pay $579 million
Read more about the KBR case, the culmination of a five year multi-jurisdictional investigation that resulted in KBR paying a record fine of $579 million.

Others reasons are surfacing as to why this happened, says Montero, who describes a nation shocked and perplexed by the attack.

This story was published by The New York Times on Sunday, Dec. 21, 2008.

MUNICH - Reinhard Siekaczek was half asleep in bed when his doorbell rang here early one morning two years ago.

Still in his pajamas, he peeked out his bedroom window, hurried downstairs and flung open the front door. Standing before him in the cool, crisp dark were six German police officers and a prosecutor. They held a warrant for his arrest.

At that moment, Mr. Siekaczek, a stout, graying former accountant for Siemens A.G., the German engineering giant, knew that his secret life had ended.

"I know what this is about," Mr. Siekaczek told the officers crowded around his door. "I have been expecting you."

To understand how Siemens, one of the world's biggest companies, last week ended up paying $1.6 billion in the largest fine for bribery in modern corporate history, it's worth delving into Mr. Siekaczek's unusual journey.

A former midlevel executive at Siemens, he was one of several people who arranged a torrent of payments that eventually streamed to well-placed officials around the globe, from Vietnam to Venezuela and from Italy to Israel, according to interviews with Mr. Siekaczek and court records in Germany and the United States.

What is striking about Mr. Siekaczek's and prosecutors' accounts of those dealings, which flowed through a web of secret bank accounts and shadowy consultants, is how entrenched corruption had become at a sprawling, sophisticated corporation that externally embraced the nostrums of a transparent global marketplace built on legitimate transactions.

Mr. Siekaczek (pronounced SEE-kah-chek) says that from 2002 to 2006 he oversaw an annual bribery budget of about $40 million to $50 million at Siemens. Company managers and sales staff used the slush fund to cozy up to corrupt government officials worldwide.

Reinhard Siekaczek was interviewed by PBS FRONTLINE in Munich in September 2008.

German prosecutors initially opened the Siemens case in 2005. American authorities became involved in 2006 because the company's shares are traded on the New York Stock Exchange.

In its settlement last week with the Justice Department and the Securities and Exchange Commission, Siemens pleaded guilty to violating accounting provisions of the Foreign Corrupt Practices Act, which outlaws bribery abroad.

Although court documents are salted throughout with the word "bribes," the Justice Department allowed Siemens to plead to accounting violations because it cooperated with the investigation and because pleading to bribery violations would have barred Siemens from bidding on government contracts in the United States. Siemens doesn't dispute the government's account of its actions.

Matthew W. Friedrich, the acting chief of the Justice Department's criminal division, called corruption at Siemens "systematic and widespread." Linda C. Thomsen, the S.E.C.'s enforcement director, said it was "egregious and brazen." Joseph Persichini Jr., the director of the F.B.I.'s Washington field office, which led the investigation, called it "massive, willful and carefully orchestrated."

Mr. Siekaczek's telecommunications unit was awash in easy money. It paid $5 million in bribes to win a mobile phone contract in Bangladesh, to the son of the prime minister at the time and other senior officials, according to court documents. Mr. Siekaczek's group also made $12.7 million in payments to senior officials in Nigeria for government contracts.

In Argentina, a different Siemens subsidiary paid at least $40 million in bribes to win a $1 billion contract to produce national identity cards. In Israel, the company provided $20 million to senior government officials to build power plants. In Venezuela, it was $16 million for urban rail lines. In China, $14 million for medical equipment. And in Iraq, $1.7 million to Saddam Hussein and his cronies.

The bribes left behind angry competitors who were shut out of contracts and local residents in poor countries who, because of rigged deals, paid too much for necessities like roads, power plants and hospitals, prosecutors said.

Because government contracting is an opaque process and losers don't typically file formal protests, it's difficult to know the identity of competitors who lost out to Siemens. Companies in the United States have long complained, however, that they face an uneven playing field competing overseas.

Ben W. Heineman Jr., a former general counsel at General Electric and a member of the American chapter of Transparency International, a nonprofit group that tracks corruption, says the enforcement of some antibribery conventions still remains scattershot. "Until you have energetic enforcement by the developed-world nations, you won't get strong antibribery programs or high-integrity corporate culture," he said.

Afghanistan, Haiti, Iraq, Myanmar and Somalia are the five countries where corporate bribery is most common, according to Transparency International. The S.E.C. complaint said Siemens paid its heftiest bribes in China, Russia, Argentina, Israel and Venezuela.

"Crimes of official corruption threaten the integrity of the global marketplace and undermine the rule of law in the host countries," said Lori Weinstein, the Justice Department prosecutor who oversaw the Siemens case.

All told, Siemens will pay more than $2.6 billion to clear its name: $1.6 billion in fines and fees in Germany and the United States and more than $1 billion for internal investigations and reforms.

Siemens's general counsel, Peter Y. Solmssen, in an interview outside a marble-lined courtroom in Washington, said the company acknowledged that bribes were at the heart of the case. "This is the end of a difficult chapter in the company's history," he said. "We're glad to get it behind us."

Mr. Siekaczek, who cooperated with German authorities after his arrest in 2006, has already been sentenced in Germany to two years' probation and a $150,000 fine. During a lengthy interview in Munich, a few blocks from the Siemens world headquarters, he provided an insider's account of corruption at the company. The interview was his first with English-language news outlets.

"I would never have thought I'd go to jail for my company," Mr. Siekaczek said. "Sure, we joked about it, but we thought if our actions ever came to light, we'd all go together and there would be enough people to play a game of cards."

Mr. Siekaczek isn't a stereotype of a white-collar villain. There are no Ferraris in his driveway, or villas in Monaco. He dresses in jeans, loafers and leather jackets. With white hair and gold-rimmed glasses, he passes for a kindly grandfather -- albeit one who can discuss the advantages of offshore bank accounts as easily as last night's soccer match.

Siemens began bribing long before Mr. Siekaczek applied his accounting skills to the task of organizing the payments.

World War II left the company shattered, its factories bombed and its trademark patents confiscated, according to American prosecutors. The company turned to markets in less developed countries to compete, and bribery became a reliable and ubiquitous sales technique.

"Bribery was Siemens's business model," said Uwe Dolata, the spokesman for the association of federal criminal investigators in Germany. "Siemens had institutionalized corruption."

Before 1999, bribes were deductible as business expenses under the German tax code, and paying off a foreign official was not a criminal offense. In such an environment, Siemens officials subscribed to a straightforward rule in pursuing business abroad, according to one former executive. They played by local rules.

Inside Siemens, bribes were referred to as "NA" -- a German abbreviation for the phrase "nutzliche Aufwendungen," which means "useful money." Siemens bribed wherever executives felt the money was needed, paying off officials not only in countries known for government corruption, like Nigeria, but also in countries with reputations for transparency, like Norway, according to court records.

In February 1999, Germany joined the international convention banning foreign bribery, a pact signed by most of the world's industrial nations. By 2000, authorities in Austria and Switzerland were suspicious of millions of dollars of Siemens payments flowing to offshore bank accounts, according to court records.

Rather than comply with the law, Siemens managers created a "paper program," a toothless internal system that did little to punish wrongdoers, according to court documents.

Mr. Siekaczek's business unit was one of the most egregious offenders. Court documents show that the telecommunications unit paid more than $800 million of the $1.4 billion in illegal payments that Siemens made from 2001 to 2007. Managers in the telecommunications group decided to deal with the possibility of a crackdown by making its bribery procedures more difficult to detect.

So, on one winter evening in late 2002, five executives from the telecommunications group met for dinner at a traditional Bavarian restaurant in a Munich suburb. Surrounded by dark wood panels and posters celebrating German engineering, the group discussed how to better disguise its payments, while making sure that employees didn't pocket the money, Mr. Siekaczek said.

To handle the business side of bribery, the executives turned to Mr. Siekaczek, a man renowned within the company for his personal honesty, his deep company loyalty -- and his experiences in the shadowy world of illegal bribery.

"It had nothing to do with being law-abiding, because we all knew what we did was unlawful." Mr. Siekaczek said. "What mattered here was that the person put in charge was stable and wouldn't go astray."

Although Mr. Siekaczek was reluctant to take the job offered that night, he justified it as economic necessity. If Siemens didn't pay bribes, it would lose contracts and its employees might lose their jobs.

"We thought we had to do it," Mr. Siekaczek said. "Otherwise, we'd ruin the company."

Indeed, he considers his personal probity a point of honor. He describes himself as "the man in the middle," "the banker" or, with tongue in cheek, "the master of disaster." But, he said, he never set up a bribe. Nor did he directly hand over money to a corrupt official.

German prosecutors say they have no evidence that he personally enriched himself, though German documents show that Mr. Siekaczek oversaw the transfer of some $65 million through hard-to-trace offshore bank accounts.

"I was not the man responsible for bribery," he said. "I organized the cash."

Mr. Siekaczek set things in motion by moving money out of accounts in Austria to Liechtenstein and Switzerland, where bank secrecy laws provided greater cover and anonymity. He said he also reached out to a trustee in Switzerland who set up front companies to conceal money trails from Siemens to offshore bank accounts in Dubai and the British Virgin Islands.

Each year, Mr. Siekaczek said, managers in his unit set aside a budget of about $40 million to $50 million for the payment of bribes. For Greece alone, Siemens budgeted $10 million to $15 million a year. Bribes were as high as 40 percent of the contract cost in especially corrupt countries. Typically, amounts ranged from 5 percent to 6 percent of a contract's value.

The most common method of bribery involved hiring an outside consultant to help "win" a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient.

Siemens has acknowledged having more than 2,700 business consultant agreements, so-called B.C.A.'s, worldwide. Those consultants were at the heart of the bribery scheme, sending millions to government officials.

Mr. Siekaczek was painfully aware that he was acting illegally. To protect evidence that he didn't act alone, he and a colleague began copying documents stored in a basement at Siemens's headquarters in Munich that detailed the payments. He eventually stashed about three dozen folders in a secret hiding spot.

In 2004, Siemens executives told him that he had to sign a document stating he had followed the company's compliance rules. Reluctantly, he signed, but he quit soon after. He continued to work for Siemens as a consultant before finally resigning in 2006. As legal pressure mounted, he heard rumors that Siemens was setting him up for a fall.

"On the inside, I was deeply disappointed. But I told myself that people were going to be surprised when their plan failed," Mr. Siekaczek recalled. "It wasn't going to be possible to make me the only one guilty because dozens of people in the business unit were involved. Nobody was going to believe that one person did this on his own."

The Siemens scheme began to collapse when investigators in several countries began examining suspicious transactions. Prosecutors in Italy, Liechtenstein and Switzerland sent requests for help to counterparts in Germany, providing lists of suspect Siemens employees.

German officials then decided to act in one simultaneous raid.
The police knocked on Mr. Siekaczek's door on the morning of Nov. 15, 2006. Some 200 other officers were also sweeping across Germany, into Siemens's headquarters in Munich and the homes of several executives.

In addition to Mr. Siekaczek's detailed payment records, investigators secured five terabytes of data from Siemens's offices -- a mother lode of information equivalent to five million books. Mr. Siekaczek turned out to be one of the biggest prizes. After calling his lawyer, he immediately announced that he would cooperate.

Officials in the United States began investigating the case shortly after the raids became public. Knowing that it faced steep fines unless it cooperated, Siemens hired an American law firm, Debevoise & Plimpton, to conduct an internal investigation and to work with federal investigators.

As German and American investigators worked together to develop leads, Debevoise and its partners dedicated more than 300 lawyers, forensic analysts and staff members to untangle thousands of payments across the globe, according to the court records. American investigators and the Debevoise lawyers conducted more than 1,700 interviews in 34 countries. They collected more than 100 million documents, creating special facilities in China and Germany to house records from that single investigation. Debevoise and an outside auditor racked up 1.5 million billable hours, according to court documents. Siemens has said that the internal inquiry and related restructurings have cost it more than $1 billion.

Siemens officials "made it crystal clear that they wanted us to get to the bottom of this and follow it wherever the evidence led," said Bruce E. Yannett, a Debevoise partner.

At the same time, Siemens worked hard to purge the company of some senior managers and to reform company policies. Several senior managers have been arrested. Klaus Kleinfeld, the company's C.E.O., resigned in April 2007. He has denied wrongdoing and is now head of Alcoa, the aluminum giant. Alcoa said that the company fully supports Mr. Kleinfeld and declined to comment further.

Last year, Siemens said in S.E.C. filings that it had discovered evidence that former officials had misappropriated funds and abused their authority. In August, Siemens said it seeks to recover monetary damages from 11 former board members for activities related to the bribery scheme. Negotiations on that matter are continuing.

Earlier this year, Siemens's current chief executive, Peter Loscher, vowed to make Siemens "state of the art" in anticorruption measures.

"Operational excellence and ethical behavior are not a contradiction of terms," the company said in a statement. "We must get the best business -- and the clean business."

Siemens still faces legal uncertainties. The Justice Department and German officials said that investigations were continuing and that current and former company officials might face prosecution.

Legal experts say Siemens is the latest in a string of high-profile cases that are changing attitudes about corruption. Still, they said, much work remains.

"I am not saying the fight against bribing foreign public officials is a fight full of roses and victories," said Nicola Bonucci, the director of legal affairs for the Organization for Economic Cooperation and Development, which is based in Paris and monitors the global economy. "But I am convinced that it is something more and more people are taking seriously."

For his part, Mr. Siekaczek is uncertain about the impact of the Siemens case. After all, he said, bribery and corruption are still widespread.

"People will only say about Siemens that they were unlucky and that they broke the 11th Commandment," he said. "The 11th Commandment is: 'Dont get caught.'"

This article is a joint report by ProPublica, PBS FRONTLINE and The New York Times.

The fine is the largest ever for a U.S. company under the Foreign Corrupt Practices Act (FCPA), which forbids the bribing of foreign government officials to obtain or retain business overseas. It is in fact more than ten times the previous record bribery fine for a U.S. corporation -- $44 million paid by Baker Hughes in 2007.

KBR entered guilty pleas to a five-count criminal information in federal court in Houston, Texas, and agreed to pay $402 million in criminal fines.

KBR entered guilty pleas to a five-count criminal information in federal court in Houston, Texas, and agreed to pay $402 million in criminal fines. (KBR Inc. and Halliburton jointly agreed to pay $177 million in forfeited profits to the SEC in a concurrent civil action without admitting wrongdoing.) According to the Justice Department, KBR also agreed to cooperate with the Department in its ongoing investigations.

The plea is the partial culmination of no less than five international investigations, including French, American, Swiss, Nigerian and British authorities who have spent years unwrapping what happened behind the scenes of one of the most expensive construction projects in African history.

The guilty pleas come two weeks after Halliburton first announced in a press release that it expected to pay a settlement of more than half a billion dollars.

PBS FRONTLINE reporter Lowell Bergman spoke with NPR's All Things Considered the day of Halliburton's initial statement to discuss the settlement, an interview available online.

The settlement stems from a $180 million bribery scheme orchestrated by Albert "Jack" Stanley, the former CEO and Chairman of KBR, as first revealed in a joint PBS FRONTLINE/ProPublica report last year. Mr. Stanley's sentencing is scheduled for May 6, 2009.

The bribes were paid to well-placed officials in the Nigerian government from 1995 until 2004, and resulted in KBR and its partners winning contracts to build liquefied natural gas facilities on Bonny Island, Nigeria - contracts valued at more than $6 billion.

Former Nigerian president Olusegun Obasanjo, who was in power from 1999 until 2007, acknowledges that corruption is endemic in his country, but denies receiving any bribe money himself. Obasangjo told FRONTLINE he welcomes the Justice Department's investigations. "The fact a country like the United States of America is investigating the corruption deals that took place in Nigeria gives confidence to Nigerians who want to fight corruption that they are not doing it alone," he said.

Obasanjo believes the Nigerian people are the real victims of corporate corruption and objects to the Halliburton settlement being collected by the U.S. Treasury. "I believe it should go to Nigeria. We have a saying in my part of the world: if you lose property and cry out and somebody chases the robber and gets the property, he doesn't appropriate that property to himself."

Editor's Note: This report is part of a year-long investigation of international bribery by PBS FRONTLINE and the Investigative Reporting Program at the UC Berkeley Graduate School of Journalism. A documentary will air on FRONTLINE on April 7, 2009 at 9 P.M. ET on PBS.

Monsen detected an extra $6 million on the bills for the contract that didn't correspond to any of the services provided. He alerted his superiors in Norway but was told not to worry. Frustrated by their lack of interest in what appeared to be fraud, Monsen sent the documents anonymously to Siemens' headquarters in Germany.

Rather than correct the error, the company allegedly intimidated Monsen and eventually dismissed him. But Monsen's disclosures ultimately led Norwegian prosecutors to investigate Siemens and their Norwegian Defense Department contacts. In 2005, Siemens was prosecuted in Norway and ordered to pay Monsen approximately $240,000 for wrongful termination, in addition to a $1.6 million fine to the government and $19.5 million back to the Norwegian Army.

For Siemens, the Monsen case was only one in a series of allegations of bribery and corrupt practices around the world. By December 2008, Siemens agreed to pay a record total of $1.6 billion in fines in the U.S. and Germany after law enforcement agencies in both countries uncovered a network of illegal payments to officials in Italy, Venezuela, Bangladesh and Nigeria, among others.

To read the verdict from Per Monsen's suit against Siemens, as translated from Norwegian by Elisabeth Undall Styren, click here (PDF).

RELATED STORY

At Siemens, Bribery Was Just a Line Item
The unusual journey of Reinhard Siekaczek, a former midlevel executive at the German engineering giant Siemens, helps explain how the company ended up paying $1.6 billion in the largest fine for bribery in modern corporate history.

Albert "Jack" Stanley

In the wake of his admission in a guilty plea (PDF) last September that he resorted to bribes, kickbacks and high-level corruption to secure deals in Nigeria, however, Stanley now lies at the center of a widening scandal in the oil industry that has implications for corporations and governments across the globe.

Stanley's case is the first in what federal officials believe will be a string of indictments in coming months against U.S. corporate executives who have participated in bribing foreign officials in recent years.

For the full story, produced in partnership with FRONTLINE, visit ProPublica online. The story first appeared on MSN Money.