| The bribery scandal that rocked Siemens from | | | | cooperation and carried out such extensive |
| 2006-2008 was a lesson for other companies to | | | | remediation." |
| learn from and also set the stage for increased | | | | Ethical Recovery |
| inforcement for those violating anti-bribery policies. | | | | An investigation was launched into the bribery |
| Prior to the bribery scandal, Siemens had an | | | | scandal in 2006 and was completed in 2008. The |
| ethics and compliance program in place, however, | | | | cooperation exhibited by employees at |
| there was a missing link between leadership and | | | | Siemens allowed the investigation to be |
| the enforcement of the program. The company's | | | | conducted in less time than |
| cooperation during the SEC investigation assisted | | | | originally predicted. Rather than replacing former |
| the company in receiving a reduced penalty, but | | | | executives with individuals from inside the |
| also gave way to a complete re-design of the | | | | company, Siemens filled the roles of major |
| company's internal ethics and compliance controls. | | | | positions with outsiders- which was probably for |
| There are many lessons learned from the | | | | the best. In 2007, Peter Solmssen was brought |
| Siemens charges, the reaction to the investigation | | | | into to clean up the ethics and compliance disaster |
| and the actions taken by Siemens to position the | | | | at Siemens. Also in 2007, Siemens named Peter |
| company as an ethics and compliance leader in | | | | Löscher as the company's new CEO. |
| the post-scandal era. | | | | Siemens has worked to improve their corporate |
| Bribery Investigation | | | | reputation by ensuring that compliance is |
| An amnesty plan had been worked out with | | | | integrated into the furthest reaching corners of |
| Siemens, as employees willing to come forward | | | | their business. Siemens hired Michael Hershman, of |
| with information pertaining to the bribery scandal | | | | Transparency International, to help build a |
| and identifying key players, would be free from | | | | compliance and anti-corruption policy and training |
| prosecution. In a report from the Wall Street | | | | program. Similar to the actions taken by Ed |
| Journal, the amnesty program was offered to all | | | | Breen at Tyco, Löscher replaced many of the |
| Siemens employees (110 of which came forward | | | | company's top executives to start fresh. In most |
| with information), with the exception of the 300 | | | | companies the ethics and compliance department |
| employees who made up the company's top | | | | remains fairly small, however, Siemens was |
| executive team. One particular employee who | | | | determined to put their words into actions and |
| provided inside information was indicted employee | | | | created an ethics and compliance department |
| Reinhard Siekaczek. He reported that he managed | | | | consisting of 600 employees- one of the largest |
| an annual budget worth $40-50 million, which was | | | | to date. |
| considered to be a "bribery budget". As reported | | | | Since the Settlement, Siemens has divided the |
| in the New York Times article "At Siemens, | | | | company into three divisions in order to clarify |
| Bribery Was Just a Line Item," salepersons and | | | | reporting lines and increase responsibility. In the |
| managers within the company used this money- | | | | New York Times article "Siemens's Prosperity |
| "slush fund", to maintain relations with corrupt | | | | Doesn't Obscure Bribery Scandal," they discuss |
| government officials. | | | | the reasoning behind the division: |
| The level of cooperation in the investigation | | | | "Mr. Löscher also put the leaders of those three |
| significantly reduced the cost of the settlement | | | | sectors onto the central managing board in Munich. |
| with the SEC. In comparison to other companies | | | | That puts an end to a system in which a leader |
| hit with scandals, Siemens responded quickly to | | | | of a major business, like power generating, had |
| put measures in place to detect and prevent | | | | his own managing board and reported to Munich |
| future acts of bribery within the company. In the | | | | headquarters without being based there. Siemens |
| New York Times article "At Siemens, Bribery | | | | officials say the old way allowed corruption to |
| Was Just a Line Item," they state Siemens was | | | | spread and inhibited accountability." |
| provided with additional leniency, only having to | | | | Siemens has developed a training program, with |
| plead to accounting violations, "because pleading to | | | | employees at various levels receiving training in |
| bribery violations would have barred Siemens | | | | regards to issues faced based on employee role. |
| from bidding on government contracts in the | | | | The format and frequency of training also varies |
| United States." | | | | depending on level within the organization. On the |
| In the Ethisphere article "Prepared Remarks to | | | | Siemens corporate website, they communicate |
| Compliance Week 2010- 5th Annual Conference | | | | that training includes topics such as foreign laws |
| for Corporate Financial, Legal, Risk, Audit & | | | | and corruption risks. Employees are now required |
| Compliance Officers," Assistant Attorney General | | | | to sign a statement after reviewing the |
| Lanny A. Breuer states: | | | | company's code of conduct, in order to |
| "In the end, the benefits Siemens received | | | | communicate their commitment and understanding |
| through its cooperation, even in the absence of a | | | | of the code. |
| voluntary disclosure, were plain – the $450 | | | | Here is a link to a slide deck I came across from |
| million fine that was paid to the Justice | | | | a presentation prepared by Siemens titled |
| Department, although quite substantial, was a far | | | | "Compliance Program at Siemens," presented |
| cry from the advisory range of $1.35 billion to | | | | at Strengthening Integrity In Private Sector |
| $2.7 billion called for in the Sentencing Guidelines. | | | | Organized by UNDP, MENA-OECD. The slides |
| Put another way, Siemens received a penalty that | | | | contain specific information related to the ethics |
| was 67 to 84% less than what it otherwise could | | | | and compliance program currently in place at |
| have faced had it not provided extraordinary | | | | Siemens. |