Siemens 2007 Annual Report Download - page 178

178 Management’s discussion and analysis
amounts for such penalties, damages, profi t disgorgement or other possible
actions that may be taken by various governmental authorities. Any of the forego-
ing could have a material adverse effect on our business, fi nancial results and
condition, the price of our shares and our reputation.
Additionally, we engage in a substantial amount of business with governments
and government-owned enterprises around the world. We also participate in a
number of projects funded by government agencies and non-governmental orga-
nizations such as the World Bank. If we or our subsidiaries are found to have
engaged in illegal acts or not to have taken effective steps to address the allega-
tions or fi ndings of corruption in our business, this may impair our ability to par-
ticipate in business with governments or non-governmental organizations and
may result in formal exclusions from such business, which may have a material
adverse effect on our business. As described more fully in “Notes to Consolidated
Financial Statements,” we or our subsidiaries have in the past been excluded from
government contracting as a result of fi ndings of corruption or other misconduct.
Debarment from participating in contracting with governments or non-govern-
mental organizations in one jurisdiction may also lead to debarment in other
jurisdictions or by other non-governmental organizations. Even if we are not for-
mally excluded from participating in government business, government agencies
or non-governmental organizations may informally exclude us from tendering for
or participating in certain contracts. From time to time, we have received requests
for information from government customers and non-governmental organiza-
tions regarding the investigations described above and our response to those
investigations. We expect such requests to continue.
In addition, our involvement in existing and potential corruption proceedings
could also damage our reputation generally and have an adverse impact on our
ability to compete for business from both public and private sector customers. The
investigations could also impair our relationship with business partners on whom
we depend and our ability to obtain new business partners and could also
adversely affect our ability to pursue strategic projects and transactions which
could be important to our business, such as alliances, joint ventures or other com-
binations. Current or future investigations could result in the cancellation of cer-
tain of our existing contracts, and the commencement of signifi cant third-party
litigation, including by our competitors.
The governmental investigations as well as the investigation conducted by
Debevoise & Plimpton LLP, the independent law fi rm mandated by the Company,
are at this time incomplete and we cannot predict when they will be completed or
what their outcome will be, including the potential effect that their results or the
reactions of third parties thereto, may have on our business. Future developments
in these investigations, responding to the requests of governmental authorities
and cooperating with these investigations, especially if we are not able to resolve
the investigations in a timely manner, could divert management’s attention and
resources from other issues facing our business. Management is in the process of
implementing a remediation plan to address corruption and compliance risk in
our business. If this remediation plan is unsuccessful or if we cannot implement it
in a timely manner, there could be an increased risk that one or more of the risks
described above could materialize.