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Anti-Corruption Compliance Standards in the Aftermath of the Siemens Scandal

Published online by Cambridge University Press:  06 March 2019

Karl Sidhu

Extract

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Legal proceedings against Siemens AG arising from allegations of bribery were concluded on 15 December 2008 in Munich, Germany, as well as in Washington, DC. The Siemens case has been the largest of its kind. It has changed the compliance landscape and has brought criminal law out of its dark corner and to the attention of the corporate community. Board directors and other managers have painfully become aware that noncompliance with criminal law may not only threaten the existence of a company, but also may lead directly to personal criminal liability. The subject of compliance has also raised the attention of legal advisors and accountants that naturally must recommend the “best standard,” especially if the sensitive subject of corruption is concerned. Last but not least, prosecutors now have a deeper inside knowledge of corruption structures than ever before. Thus, compliance standards tend to rise expeditiously even without regulators taking any action. Siemens thereby smartly has lifted compliance to the “cornerstone” of its business and generally - in particular when it comes to anti-corruption programs -presents its improved and expanded compliance organization as a leading example.

Type
Developments
Information
German Law Journal , Volume 10 , Issue 8 , 01 August 2009 , pp. 1343 - 1354
Copyright
Copyright © 2009 by German Law Journal GbR 

References

1 The bribe payments and other facts leading to the allegations and proceedings against Siemens are referred to hereinafter as the “Siemens case”. Reference to “Siemens” means Siemens AG together with its subsidiaries.Google Scholar

2 See Press Release, Dept. of Justice, Siemens AG and Three Subsidiaries Plead Guilty to Foreign Corrupt Practices Act Violations and Agree to Pay $450 Million in Combined Criminal Fines (Dec. 15, 2008), available at http://www.usdoj.gov/criminal/pr/press_releases/2008/12/12-15-08siemans-guilty.pdf (discussing the U.S. Department of Justice (DOJ) terming the Siemens case as “unprecedented in scale and geographic scope”).Google Scholar

3 See Blomberg, Peter von, Siemens Gnadenlos, Die Welt Online, Jan. 6, 2009, http://www.welt.de/die-welt/article1854420/Siemens_gnadenlos.html. (explaining “a new era” and a “revolution” that the Siemens scandal has opened).Google Scholar

4 In the context of this article the notion of compliance shall refer to so called criminal compliance. Anticorruption programs form the essential part of criminal compliance.Google Scholar

5 On 8 December 2008, the first conference on corruption of over 40 German prosecutors took place. The conference was organized by Transparency International. Overall, no company presumably acted under comparable pressure and invested more in compliance than Siemens. For the time being, the leading role of Siemens in the setting of compliance standards is therefore generally accepted.6 A decisive question is whether bribery at Siemens has been peculiar to a degree that excludes a sensitive comparison with other companies. If this is true, the development of compliance standards could - at least partly - generally be regarded as excessive if not ill-driven. The author argues that 1) the Siemens case cannot be regarded as exceptional to an extent that would justify incomparability with other companies and 2) though it had particularities the compliance organisation of Siemens will establish footprints that many German corporations will have to follow. Based on the assumption that German corporations will implement “best practice” compliance standards step-by-step, they may have to face difficult times in international competition. In that respect the last section of this article deals with the challenge of “unfair” competitors and alternative mechanisms against corruption initiated by private corporations and supported by international organizations, in particular, the World Bank.Google Scholar

6 See Press Release, supra note 2 (praising Siemens’ outstanding new compliance structures).Google Scholar

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25 This poses a new challenge for Siemens. See Section VII of this article.Google Scholar

26 The main features are described in Statement of Siemens Aktiengesellschaft (note 16), 20. The following description of Siemens’ compliance system is based on this statement.Google Scholar

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33 U.S.S.G. § 8B2.1 b (2).Google Scholar

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40 Dr. Gerhart Kromme has become chairman of the Siemens supervisory board in April 2007. He resigned from the Commission of the German Corporate Governance in 2008.Google Scholar

41 See Hüffer, Uwe, Aktiengesetz, § 161.1, available at http://beck-online.beck.de/?vpath=bibdata/komm/HuefKoAktG_8/AktG/cont/HuefKoAktG.AktG.P161.T6.htm (discussing the regulatory nature of the German Corporate Governance Code).Google Scholar

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48 The agreement of competitors upon certain anticorruption principles must be implemented under consideration of antitrust laws. Strategies, measures and meetings shall therefore at all times be coordinated with legal counsel to prevent violations of these laws.Google Scholar