Siemens appeals against 5-year ban on bidding for Brazil federal contracts

Tuesday, March 4, 2014

German engineering and IT company Siemens has launched a new appeal against a five-year ban on bidding for federal contracts which was issued by the Brazilian government due to a bribery probe, according to press reports.

The ruling is related to auctions in which the company participated in 1999 and 2004 and internal administrative processes by the Brazilian Post and Telegraph Corp (ECT).

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A German bribery probe into Siemens' business began in 2006, prompting the resignation of CEO Klaus Kleinfield and the replacement of the head of the Brazilian subsidiary.

Siemens adopted a "zero tolerance" policy on bribery payments in 2008. After several years of the company's appeals against the ban, a Brazilian court confirmed the ruling in January this year, saying it would take immediate effect.

In Brazil, Siemens has 7,910 employees and annual sales of 2bn euros (US$2.76bn), according to its website.

Siemens said last year in a statement that it has about 1bn euros in infrastructure project orders related to Brazil's 2014 soccer World Cup and 2016 Olympic Games. They include safety and building systems for the Mane Garrincha National Stadium in Brasilia and energy management systems for the national grid operator.

Siemens was also reportedly involved in forming a cartel for 10 metro contracts signed with state metro company CMSP. The contracts, signed in 2008 and 2009 for metro lines 1 (blue) and 3 (red), have a total value of 2.5bn reais (US$1.04bn). However, Siemens was awarded immunity from prosecution as it was the whistle blower on the supposed cartel.

Siemens operates seven research, development and engineering centers, 14 manufacturing facilities and 13 sales and service offices in Brazil. Its equipment generates 50% of Brazil's electricity and 30% of digital diagnostics imaging in Brazil, according to its website.

Siemens also supplied smart metering solutions and 1.5mn switches and sockets for the federal government housing program Minha Casa, Minha Vida (My home, my life).

The company's solutions and services offering in Brazil covers the energy, healthcare, industry and infrastructure and cities sectors.