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(AP) — An American subsidiary of the German industrial giant Siemens A.G. pleaded guilty Thursday to obstruction of justice and admitted it misled officials to land a $49-million contract to supply equipment to John H. Stroger Hospital.
Siemens Medical Solutions USA Inc. agreed to pay a $1 million fine and restitution of more than $1.5 million to Cook County in connection with a contract to supply radiology and other equipment to the hospital.
Siemens attorney Vincent J. Connelly entered the plea before U.S. District Judge John W. Darrah, who set sentencing for May 22.
The plea follows a report in the Wall Street Journal in January that an investigation was under way in Germany into the possibility that the company used slush funds and illegal payments to win contracts overseas.
Connelly declined to comment on the guilty plea as he left the courthouse in Chicago. In New York, Siemens spokesman Jack Bergen said Thursday the plea "resolves all of the allegations against Siemens in this indictment."
Siemens Medical Solutions, based in Hoffman Estates, had been charged with mail fraud and wire fraud. But prosecutors dropped those charges in return for the company's plea to a single obstruction count.
In bidding on the contract, Siemens claimed to have entered into a partnership with Faustech Industries Inc., a minority-owned company. Without a minority-owned partner sharing in at least 30% of the profits, Siemens would not have been eligible to bid.
But Siemens admitted in its signed plea agreement that "it knew in the spring of 2000 that Faustech did not have the capacity to perform substantial work on the contract specified."
Siemens acknowledged that its managers agreed in May or June 2000 to pay Faustech a flat fee of $500,000 "to be booked as a sales commission."
Problems for Siemens arose in October 2000 when GE Medical Systems filed suit against Cook County, alleging the contract was awarded contrary to state and county laws and the terms of the bidding.
At the trial that followed, Siemens official Daniel Desmond falsely testified that the $500,000 payment to Faustech owner Faust Villazan was "an advance of profits," suggesting that the company was a full partner in the venture, according to the plea agreement.
A number of other misleading statements were made to federal Magistrate Judge Geraldine Soat Brown, who presided over the trial, the agreement said.
Awaiting trial in the case are Villazan, 45, of Western Springs; Desmond, 44, of Arlington Heights; attorney Ellen Roth, 61, of Ridgewood, N.J.; and Faustech Industries. All have pleaded not guilty.