Siemens 2007 Annual Report Download - page 164

164 Management’s discussion and analysis
As previously reported, the U.S. Department of Justice (DOJ) is conducting an
investigation of possible criminal violations of U.S. law by Siemens in connection
with the matters described above and other allegations of corruption. During the
second quarter of fi scal 2007, Siemens was advised that the U.S. Securities and
Exchange Commission’s (SEC) enforcement division had converted its informal
inquiry into these matters into a formal investigation. The Company is cooperat-
ing with these investigations.
The SEC and the DOJ are also investigating possible violations of U.S. law by
Siemens in connection with the Oil-for-Food Program. The Company is cooperat-
ing with the SEC and DOJ. A French investigating magistrate commenced a prelim-
inary investigation regarding the participation of French companies, including
Siemens France S.A.S., in the Oil-for-Food Program. German prosecutors also
began an investigation in this matter and conducted searches of Company prem-
ises and private homes in Erlangen and Berlin in August 2007. Siemens is cooper-
ating with the authorities in France and Germany.
As a result of the above described matters and as a part of its policy of coopera-
tion, Siemens contacted the World Bank and offered to assist the World Bank in
any matter that might be of interest to the World Bank. Since that time, Siemens
has been in contact with the World Bank Department of Institutional Integrity and
intends to continue its policy of cooperation.
In February 2007, the Company announced that public prosecutors in Nurem-
berg are conducting an investigation of certain current and former employees of
the Company on suspicion of criminal breach of fi duciary duties against Siemens,
tax evasion and a violation of the German Works Council Constitution Act
(Betriebs verfassungsgesetz). The investigation relates to an agreement entered
into by Siemens with an entity controlled by the former head of the independent
employee association AUB (Arbeitsgemeinschaft Unabhängiger Betriebsangehöri ger).
The prosecutors are investigating payments made during the period 2001 to 2006
for which Siemens may not have received commensurate services in return. The
former head of AUB was arrested in February 2007. Since February, searches have
been conducted at several Siemens AG premises and private homes and an arrest
warrant was issued for a member of the Managing Board, in connection with this
investigation, who was taken into custody. This executive’s term has expired and
he therefore is no longer a member of the Managing Board. In addition to this for-
mer member of the Managing Board, other current and former members of the
Company’s senior management have been named as suspects in this matter. In
April 2007, the former member of the Managing Board posted bail in the amount
of €5 million and was released from custody. In this connection, a bank issued a
bond (Bankbürgschaft) in the amount of €5 million, €4.5 million of which was
guaranteed by the Company pursuant to provisions of German law. The former
member of the Managing Board has provided the Company a personal undertak-
ing to cooperate with and fully support the independent investigation conducted
by Debevoise & Plimpton LLP (Debevoise), as described below, and to repay all
costs incurred and payments made by the Company in connection with the bank
guarantee in the event he is found to have violated his obligations to the Company