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Siemens Energy pleads guilty to stealing confidential competitor information

The incident stems from a competitive bid process in 2019. The employees involved were terminated after the misconduct was discovered in 2020, the company says.
Siemens Energy pleads guilty to stealing confidential competitor information
(Source: Department of Justice.)

Siemens Energy has pleaded guilty to violations of stealing confidential competitor information and agreed to pay $104 million to resolve the Justice Department’s criminal investigation.

The investigation stems from a bid process in 2019, when Dominion Energy sought to build a combustion turbine peaking plant in the greater Richmond, Virginia area. The project had projected cost of upwards of $500 million.

Dominion opened a competitive, closed bid process, and received proposals from GE, Mitsubishi Heavy Industries (MHI) and Siemens (NOTE: Siemens Energy became a standalone company in 2020). All the companies executed non-disclosure agreements restricting the disclosure of confidential information provided to Dominion during the bid.

After GE and MHI submitted their closed bids to Dominion in May 2019, Siemens Account Manager Michael P. Hillen coordinated with a Dominion insider, Director of Generation System Planning Theodore S. Fasca, who used his sensitive position to improperly obtain the competitors’ confidential information, according to a Sept. 30 release from the U.S. Attorney’s Office, Eastern District of Virginia.

Hillen and Fasca funneled the GE and MHI bid information through private email accounts, including Hillen’s wife’s Hotmail email address, before sending the confidential information to Hillen’s work email address, according to court documents.

Hillen then disseminated the confidential bid information to Siemens Account Manager Mehran Sharifi, who analyzed the information with other employees. Realizing that Siemens had a less competitive bid than GE by some metrics, Sharifi recommended to company Executive Vice President and Head of Sales for North America, John Gibson, that Siemens resubmit a lowered bid to undercut GE’s bid price.

“Gibson, Sharifi, Hillen and Fasca all knew the GE and MHI bid information was improperly obtained and that Siemens should not have had access to this information,” according to the DOJ release.

Gibson also shared the confidential information with other Siemens senior executives, leaders within the company’s business intelligence unit and representatives of the company’s then-parent company in Germany.

“Gibson’s dissemination of the information was calculated to provide Siemens with a competitive advantage in the bid for the Dominion project, improve Siemens’ business intelligence, and provide Siemens with a competitive advantage in future bids, all to the detriment of GE and MHI,” reads the DOJ release.

Siemens ended up winning the bid with Dominion.

“Even after submitting the lowered bid, Siemens continued misappropriating GE and MHI confidential information on numerous occasions throughout June 2019,” the release said.

Siemens Energy is scheduled to be sentenced on Dec. 5. The company has also agreed to a three-year term of organizational probation.

Gibson, Hillen, Fasca, and Sharifi entered guilty pleas for their roles in the scheme. Actual sentences for federal crimes are typically less than the maximum penalties.

In a statement sent to Power Engineering, a Siemens Energy spokesperson said this of the guilty plea:

“The agreement between Siemens Energy Inc. (SEI) and the U.S. Department of Justice (DOJ), which is subject to final approval by the Court, resolves a matter related to the misconduct of former employees which took place more than five years ago. The company proactively discovered the conduct in 2020 and voluntarily disclosed it to its customer and two affected competitors whose claims it subsequently settled.

SEI also investigated the matter extensively with the assistance of a prominent law firm and has cooperated fully with the U.S. government investigation. It took disciplinary action against several individuals, including separation, and has further enhanced the company’s already-strong compliance program.

SEI is committed to the highest standards of integrity and compliance and the aberrant conduct that occurred in this case does not reflect who we are as a company.”

Siemens Energy is responsible for one sixth of electricity production worldwide. 

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