Siemens Rotten Score Breakdown

Siemens became the subject of one of the largest international corporate corruption cases ever prosecuted after U.S. and German authorities uncovered a widespread system of illicit payments, false accounting and inadequate internal controls used across the company's global operations. In December 2008, Siemens AG and three subsidiaries pleaded guilty to criminal violations and charges related to the U.S. Foreign Corrupt Practices Act (FCPA). Siemens AG pleaded guilty to criminal violations of the FCPA's internal-controls and books-and-records provisions, while subsidiaries in Argentina, Bangladesh and Venezuela pleaded guilty to conspiracy charges involving FCPA provisions. U.S. Department of Justice – Siemens AG and three subsidiaries plead guilty: https://www.justice.gov/archive/opa/pr/2008/December/08-crm-1105.html According to the U.S. Securities and Exchange Commission, between March 2001 and September 2007, Siemens engaged in a widespread and systematic practice of making corrupt payments to foreign government officials in order to obtain and retain business. The SEC alleged that Siemens made at least 4,283 payments totaling approximately $1.4 billion to bribe government officials around the world. The agency described elaborate mechanisms designed to conceal the payments, including business consultants, intermediaries, slush funds and other payment structures that obscured the true recipients and purposes of the money. U.S. SEC – Siemens worldwide bribery enforcement case: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-20829 The corruption was not confined to one rogue subsidiary or one country. The SEC said the misconduct occurred across Asia, Africa, Europe, the Middle East and the Americas and involved Siemens employees at multiple levels of the organization, including former senior management. The SEC described Siemens' internal controls as seriously deficient and said the company's corporate culture had allowed corrupt practices to flourish. Thousands of payments were routed through third parties in ways designed to disguise their actual purpose and ultimate recipients. Authorities documented corrupt-payment schemes connected with major government and infrastructure contracts around the world. These included approximately $40 million in bribes to Argentine government officials connected with a $1 billion national identity-card project; approximately $20 million in corrupt payments involving a mobile telephone project in Bangladesh; approximately $16.7 million in Venezuela connected with metropolitan rail projects; and other schemes involving telecommunications, power generation, medical equipment and infrastructure projects. In later criminal proceedings involving the Argentina scheme, a former Siemens executive admitted that conspirators used shell companies and intermediaries to disguise and launder illicit payments. One $27 million purported consulting contract was used to conceal bribes to Argentine officials. U.S. Department of Justice – Former Siemens executive admits role in $100 million Argentina bribery scheme: https://www.justice.gov/archives/opa/pr/former-siemens-executive-pleads-guilty-role-100-million-foreign-bribery-scheme The SEC calculated that Siemens obtained more than $1.1 billion in profits from transactions associated with the misconduct and related corrupt schemes. The financial consequences were enormous. Siemens agreed to pay $350 million in disgorgement to the SEC and $450 million in criminal fines to the U.S. Department of Justice. German authorities simultaneously imposed approximately €395 million ($569 million at the time) in fines and disgorgement. This followed another approximately €201 million ($285 million) resolution with Munich prosecutors in 2007 concerning corrupt payments associated with Siemens' telecommunications operations. Together, the coordinated U.S. and German proceedings resulted in more than $1.6 billion in fines, penalties and disgorgement, which at the time represented the largest corruption-related corporate resolution ever imposed. SEC – Siemens $1.6 billion worldwide bribery resolution: https://www.sec.gov/news/press/2008/2008-294.htm The U.S. portion alone amounted to approximately $800 million, consisting of the $450 million criminal fine and $350 million SEC disgorgement. At the time, this represented the largest combined U.S. monetary sanction ever imposed in an FCPA case. Siemens was also required to retain an independent compliance monitor for four years and undertake extensive reforms to its internal controls and global compliance systems. Company response: Siemens accepted responsibility for serious historical compliance failures and undertook extensive restructuring and remediation following the investigations. The company replaced senior personnel, strengthened its compliance organization and internal controls, conducted a large internal investigation and cooperated extensively with authorities. The U.S. Department of Justice described Siemens' cooperation with investigators as exceptional, noting that the company had faced the facts, accepted responsibility, conducted extensive internal investigations and implemented substantial reforms. The cooperation and remediation were taken into account when authorities determined the final penalties. Key facts: Siemens AG and three subsidiaries pleaded guilty to FCPA-related criminal charges in December 2008; the SEC alleged at least 4,283 corrupt payments totaling approximately $1.4 billion; the misconduct extended across multiple continents and business divisions; corrupt payments were concealed through consultants, intermediaries and other mechanisms; employees at multiple organizational levels were involved; Siemens earned more than $1.1 billion in profits from transactions associated with the misconduct and related schemes; Siemens paid $450 million in U.S. criminal fines, $350 million in SEC disgorgement, approximately $569 million in a 2008 German resolution, and approximately $285 million in an earlier German resolution; and the coordinated enforcement actions resulted in more than $1.6 billion in penalties and disgorgement. The case is particularly serious because authorities did not describe an isolated bribe committed by a rogue employee. The SEC characterized the conduct as a widespread and systematic practice, involving thousands of payments, numerous countries and employees at multiple levels of Siemens. The elaborate mechanisms used to conceal payments and the scale and geographic reach of the misconduct made the Siemens case one of the landmark international corporate corruption prosecutions of its er