Siemens 2007 Annual Report Download - page 162

162 Management’s discussion and analysis
Legal Proceedings
Public prosecutors and other government authorities in jurisdictions around the
world are conducting investigations of Siemens and certain of our current and
former employees regarding allegations of public corruption, including criminal
breaches of fi duciary duty including embezzlement, as well as bribery, money
laundering and tax evasion, among others. These investigations involve allega-
tions of corruption at a number of Siemens’ business Groups.
The Munich public prosecutor continues to conduct an investigation of certain
current and former employees of the Company on suspicion of criminal breaches
of fi duciary duty including embezzlement, as well as bribery and tax evasion.
To date, the Munich prosecutor has conducted searches of Company premises
and private homes and several arrest warrants have been issued for current and
former employees, including former members of senior management, who are
or were associated with the former Com Group and the Company. In addition,
the Munich prosecutor has recently sought and received information from two
German subsidiaries of the Company in connection with an investigation of
allegations of criminal breach of fi duciary duty against a former employee and
unnamed others.
On October 4, 2007, pursuant to the application of the Munich prosecutor, the
Munich district court imposed a fi ne of €201 million on Siemens. According to the
court’s decision, a former manager of the former Com Group committed bribery of
foreign public offi cials in Russia, Nigeria and Libya in 77 cases during the period
from 2001 to 2004 for the purpose of obtaining contracts on behalf of the Com-
pany, whereby he acted in concert with others. In determining the fi ne, the court
based its decision on unlawfully obtained economic advantages in the amount of
at least €200 million which the court determined the Company had derived from
illegal acts of the former employee, to which an additional fi ne in the amount of
€1 million was added.
The decision of the Munich district court and the settlement (tatsächliche Ver-
ständigung) entered into the same day with the German tax authorities, which is
described below under “Financial Impact of Compliance Matters”, conclude the
German investigations into illegal conduct and tax violations only as they relate to
Siemens AG and only as to the former Com Group.
As previously reported, there are ongoing investigations in Switzerland, Italy,
and Greece. These investigations relate to allegations that certain current and for-
mer employees of the former Com Group opened slush fund accounts abroad and
operated a system to misappropriate funds from the Company and, specifi cally,
that these individuals siphoned off money from Com via off-shore companies and
their own accounts in Switzerland and Liechtenstein. The Company has learned
that Liechtenstein prosecutors have transferred their investigation to Swiss and
Munich prosecutors.
As previously reported, Milan and Darmstadt prosecutors have been investi-
gating allegations that former Siemens employees provided improper benefi ts to
former employees of Enel in connection with Enel contracts. In Italy, legal pro-