After SWR-Research shows that Siemens is selling high-speed trains to Turkey – despite an associated declaration of commitment to a boycott of Israel. A legal trick makes the trade legal.
A consortium formed by Siemens AG and its Turkish subsidiary Siemens AŞ in 2018 won the tender from the Turkish state railway TCDD. It signed a contract for the delivery of ten high-speed trains in April 2018. Order volume: 341 million euros. The order was later expanded and the number of trains increased from ten to twelve.
For Siemens, this was an important success in the highly competitive international market for high-speed trains in Turkey. But the deal had a catch: the deal was conditional on Siemens signing a declaration of boycott of Israel, otherwise the sale threatened not to go through. This emerges from internal company documents that dem SWR present.
Anti-Israel Statement Demanded
Accordingly, the Turkish state railway TCDD applied for a loan from the Saudi Islamic Development Bank (IsDB) for eight of the ten trains. According to its principles, it requires “that the tender shall unequivocally state that the goods, works and/or related services to be supplied by the contractor and its partners and subcontractors are in strict accordance with the boycott provisions of the Organization for Islamic Cooperation, the League of Arab States and the African Union (boycott provisions) must stand.”
The bidder has to submit a corresponding “affidavit.” With this, Siemens would have committed itself not to do any business with Israel. The aim of such boycott declarations is to put Israel under economic pressure from the state, explains Volker Beck, President of the German-Israeli Society.
Boycott sanctions punishable in Germany
Paragraph 7 of the German Foreign Trade Ordinance prohibits German companies and citizens from signing such a boycott declaration. A violation counts as an administrative offense and can result in fines of up to 500,000 euros for a company.
From the SWR Confidential company documents available show that the Siemens management was aware of the problem with the Israel boycott declaration. In presentation PM040, which is classified as confidential, the risks are explained to the Executive Board and three options for action are discussed.
On page 69, under the heading “Mitigation measures (still in the ‘grey area’)”, the strategists propose three options. You can add a “reservation clause” to the boycott statements in your own offer, or use a “positive list of countries of origin”.
The last suggestion is: Sign the “final contract in the name of a joint project under Turkish law.” Not making a statement and refusing to sign the IsDB boycott requirements would “most likely result in disqualification,” warn Siemens strategists.
Formally, the daughter signs
The company chose the last option and decided that some employees of the Siemens subsidiary Siemens AŞ Turkey should travel to Germany to obtain a power of attorney on behalf of Siemens AG and sign the offer and the contract on behalf of Siemens AG under Turkish law. Because according to Turkish law, signing such a declaration is not punishable.
“Probably very knowledgeable Siemens employees who are familiar with the intricacies of criminal law were involved in solving the problem,” explained Arnold Wallraff in an interview with the SWR. Until 2017 he was President of the Federal Office of Economics and Export Control. According to the foreign trade law expert, there is nothing criminally lawful, because the subsidiary companies are formally sent forward, which are also not based in the EU area.
Siemens delivers to Israel
Confronted with the research, the company shares the SWR with: “Siemens adheres to all national and international compliance standards. We show no tolerance whatsoever towards corruption, violations of the principles of fair competition or other violations of applicable laws and internal guidelines.”
It goes on to say: “We have long-standing business relationships with Israel. We have supplied regional trains to Israel Railways and are responsible for their maintenance over the long term.” The company does not want to comment on the boycott itself: “Please understand that we cannot provide any information on ongoing proceedings. This also includes your questions about the Islamic Development Bank.” The “proceedings” are not about the boycott regulations, but rather a legal dispute between former Turkish Siemens employees against Siemens AŞ.
Beck: “moral disclosure oath”
Even if Siemens’ actions may not be objectionable under criminal law, Volker Beck sharply criticizes: “I think that’s a moral disclosure oath for a German company.” He announces that he will file a complaint in order to have Siemens’ actions legally reviewed.
Volker Beck wants to file a complaint against Siemens.
Image: picture alliance / ZB
Paragraph 7 has the task of making precisely such boycott declarations directed against Israel impossible, explains Beck. Both he and Arnold Wallraff are calling on the Federal Minister of Economics to tighten up the Foreign Trade and Payments Ordinance in order to prevent attempts to circumvent it by transferring matters that are actually prohibited or that require approval to third countries.
Probably no consequences
On a SWR-A spokesman for the Federal Ministry for Economic Affairs and Climate explained to the inquiry that one could not comment on the content of private-law contracts. Nor can any information be given about violations of foreign trade law, this is only possible for “organs of the administration of justice”.
In its own estimation, Siemens did not need to fear any serious consequences anyway. Neither an “enforcement by German authorities” nor a “court decision in this context is known”, although such boycott clauses are standard in Arab states, according to the confidential analysis by Siemens.