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Management’s discussion and analysis 167

Management’s discussion and analysis

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The Company has adopted a global amnesty program. Pursuant to this program,

if employees, by January 31, 2008, voluntarily provide the Company with infor-

mation regarding possible violations of anti-public-corruption laws, including

any related accounting irregularities, the Company will not make any claims for

damages and will not unilaterally terminate such employees’ employment rela-

tionship. The Company reserves the right to impose lesser disciplinary measures

or additional compliance training. Senior management is not eligible for the

amnesty, subject to certain exceptions for certain functions.

As previously reported, the Company engaged an independent compliance

advisor in order to consult the Managing Board and the Compliance Committee

with regard to the future structure of the compliance organization, the execution

of compliance reviews, the review of related guidelines and controls including

potential improvement measures, and the associated communication and train-

ing. The independent compliance advisor provided periodic status reports to the

Managing Board and the Compliance Committee. With the implementation of the

changes enumerated above, the external compliance advisor has been directed by

the Compliance Committee to report to and to support the activities of the Compa-

ny’s Chief Compliance Ofﬁ cer.

In addition to the proceedings described above, we are also involved in a num-

ber of anti-trust and other legal proceedings:

A Mexican governmental control authority barred Siemens Mexico from bid-

ding on public contracts for a period of three years and nine months beginning

November 30, 2005. This proceeding arose from allegations that Siemens Mexico

did not disclose alleged minor tax discrepancies when it was signing a public con-

tract in 2002. Upon appeal by Siemens Mexico, the execution of the debarment was

stayed on December 13, 2005 and subsequently reduced to a period of four

months. Upon further appeal, the execution of the reduced debarment was stayed

by the competent Mexican court in April 2006. A ﬁ nal decision on the appeal has

not yet been announced.

In February 2007, Siemens Medical Solutions USA, Inc. (SMS) announced that it

had reached an agreement with the U.S. Attorney’s Ofﬁ ce for the Northern District

of Illinois to settle allegations made in an indictment ﬁ led in January 2006. The

agreement resolves all allegations made against SMS in the indictment. Under the

agreement, SMS has pled guilty to a single federal criminal charge of obstruction

of justice in connection with civil litigation that followed a bid to provide radiol-

ogy equipment to Cook County Hospital in 2001. In addition, SMS has agreed to

pay a ﬁ ne of $1 million and restitution of approximately $1.5 million.

In December 2006, the Japanese Fair Trade Commission (FTC) searched the

ofﬁ ces of more than ten producers and dealers of healthcare equipment, including

Siemens Asahi Medical Technologies Ltd., in connection with an investigation into

possible anti-trust violations. Siemens Asahi Medical Technologies is cooperating

with the FTC in the ongoing investigation.