Fit4 2010: Corporate Responsibility
Compliance is the cornerstone of corporate responsibility at Siemens. In fiscal 2007, we worked intensively to raise employee awareness of compliance-related issues and anchor this awareness even more firmly in our management culture and Company values. But as the current investigations show, whe didn't succeed in making the importance of our compliance rules clear to all our employees. Now, we’re doing everything in our power to uncover any irregularities. By rigorously implementing our Compliance Program, we’re ensuring that all our business practices fully adhere to the law.
We provided comprehensive information about compliance-related violations at the Company in our Annual Report 2006 and in subsequent interim reports. Public prosecutors in several countries, the U.S. Department of Justice (DOJ), the U.S. Securities and Exchange Commissison (SEC) and other authorities are now investigating allegations of wrongdoing by Siemens and Siemens employees. Our compliance organization is intent on clarifying all related matters and penalizing all misconduct, and we’re cooperating fully with the authorities.
We consider it our duty to ensure that these issues are completely cleared up. For this reason, we’ve retained the U.S. law firm Debevoise & Plimpton LLP as an independent agent to conduct comprehensive independent investigations into alleged violations of anticorruption regulations. The firm reports at regular intervals to the DOJ and the SEC. In addition, we’re continuing the internal investigations begun in November 2006. On October 4, 2007, Munich District Court I imposed a fine of €201 million on the Company, concluding part of the investigations into irregularities at Siemens AG. At the same time, the German tax authorities determined that payments of approximately €450 million at the former Com Group were non-deductible, resulting in a tax charge of €179 million. Of this total, €168 million had already been recorded in the Company’s financial statements for fiscal 2006. These actions mark the end of the investigation of the former Communications Group by the public prosecutors and tax authorities in Germany insofar as it relates to Siemens AG. The comprehensive independent investigations being conducted by Debevoise & Plimpton are continuing. For more information, see the Compliance Report and Management’s Discussion and analysis.
Ensuring ethical conduct
We’ve launched a new program to systematically anchor our compliance regulations throughout the Company. While we already had strict guidelines which were being continuously optimized, they were not always adhered to. Our new Compliance Program is an effective system based on three pillars – Prevent, Detect and Respond – for ensuring that all business at Siemens is conducted in compliance with the law and our internal regulations. The majority of the new measures are designed to prevent compliance-related violations. That’s why it’ s been essential to establish clear regulations defining what is and is not allowed, and to communicate these regulations throughout the Company. We’ve also spelled out the penalties for misconduct. Our second focus is the detection of unethical practices. This will allow us to intervene at an early stage while making it clear that misconduct will always come to light. We provide employees, customers and business partners with easily accessible channels for reporting irregularities. In addition, we respond vigorously to violations, thereby reinforcing the deterrent effect of rapid detection. All cases of wrongdoing at the Company will be penalized in accordance with our clearly defined rules and processes.
Key points of the Siemens compliance program
To ensure that behavior throughout Siemens adheres to the law and our own regulations, CEO Peter Löscher and the members of the Managing Board have made compliance a top priority. The commitment of all our managers worldwide is an integral part of our management culture and our Company culture as a whole – a culture in which adherence to the Business Conduct Guidelines, our Company-wide code of behavior, is the basis of all our actions.
For us, compliance means adherence to the law as well as to the Company’s binding regulations and guidelines, which are the basis of our business activities. We expect our managers and employees to behave ethically and in full compliance with the law. Misconduct will not be tolerated under any circumstances.
Clear rules for all employees, extensive training, confidential reporting channels for suspected irregularities and a helpdesk for compliance-related questions are key elements our Compliance Program. For our suppliers worldwide, we’ve also introduced mandatory minimum compliance requirements, comprising ethical, social and environmental standards. To ensure that our suppliers adhere to these standards, we’ve established a system of self-assessments and on-site audits. Our new and revised guidelines as well as the measures we’ve already introduced are a signal to our shareholders and customers, the general public and our employees that we take compliance and the allegations against our Company very seriously. That’s why one of the aims of our Company-wide Fit4 2010 program is to be a world leader in transparency and compliance. We’re doing everything we can to restore trust in Siemens.