Nokia 2007 Annual Report Download - page 20

employees. These actions could include criminal and civil fines, in addition to the EUR 201 million fine
already imposed on Siemens by German authorities for irregularities in the Siemens’ former Com
business group, as well as penalties, sanctions, injunctions against future conduct, profit
disgorgement, disqualifications from engaging in certain types of business, the loss of business
licenses or permits, the appointment of a monitor to review future business and ensure compliance
or other restrictions. To date, none of the fines imposed on Siemens has applied to Nokia Siemens
Networks or Nokia. It is not possible at this time to predict whether these or other government
authorities will take further actions and if they do what they might be and the extent to which such
actions might apply to or affect Nokia Siemens Networks or Nokia.
The government investigations and Siemens’ own investigation are ongoing. Also, certain aspects of
the internal review by Nokia Siemens Networks and Nokia are ongoing. Accordingly, it is not possible
to ensure that Siemens employees who may have been involved in the alleged violations of law were
not transferred to Nokia Siemens Networks. Nor is it possible to predict the extent to which there
may be undetected additional violations of law that may have occurred prior to the transfer that
could result in additional actions by government authorities. It is also not possible to predict whether
there have been any ongoing violations of law after the formation of Nokia Siemens Networks
involving the assets and employees of the Siemens carrierrelated operations that could result in
additional actions by government authorities. The development of any of these situations could have
a material adverse effect on Nokia Siemens Networks and our reputation, business, results of
operations and financial condition. In addition, detecting, investigating and resolving such situations
have been and may continue to be expensive and consume significant time, attention and resources
of Nokia Siemens Networks and our management, which could harm our business and that of Nokia
Siemens Networks.
The government investigations may also harm Nokia Siemens Networks’ relationships with existing
customers, impair its ability to obtain new customers, business partners and public procurement
contracts, affect its ability to pursue strategic projects and transactions or result in the cancellation or
renegotiation of existing contracts on terms less favorable than currently exist or affect its reputation.
Nokia Siemens Networks has terminated relationships, originated in the Siemens carrierrelated
operations, with certain business consultants and other third party intermediaries in some countries
as their business terms and practices were contrary to Nokia Siemens Networks’ Code of Conduct,
thus foregoing business opportunities. It is not possible to predict the extent to which other
customer relationships and potential business will be affected by Nokia Siemens Networks legally
compliant business terms and practices. Thirdparty civil litigation may also be instigated against the
Siemens carrierrelated operations and/or employees transferred to Nokia Siemens Networks.
Siemens has agreed to indemnify Nokia and Nokia Siemens Networks for any government fines or
penalties and damages from civil law suits incurred by either, as well as in certain instances for loss
of business through terminated or renegotiated contracts, based on violations of law in the Siemens
carrierrelated operations that occurred prior to the transfer to Nokia Siemens Networks.
We cannot predict with any certainty the final outcome of the ongoing investigations related to this
matter, when and the terms upon which such investigations will be resolved, which could be a
number of years, or the consequences of the actual or alleged violations of law on the business of
Nokia Siemens Networks, including its relationships with customers.
Any actual or even alleged defects or other quality issues in our products, services and
solutions could materially adversely affect our sales, results of operations, reputation and the
value of the Nokia brand.
Our products are highly complex and defects in their design and manufacture have occurred and may
occur in the future. Quality issues are emphasized in our device business due to very high production
volumes of many of our devices, as a result of which even a single defect in their design or
manufacture may have material adverse effect on our business. In the network infrastructure
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