Siemens 2007 Annual Report Download - page 283

Notes to Consolidated Financial Statements 283
(in millions of €, except where otherwise stated and per share amounts)
Notes to Consolidated Financial Statements
In fi scal 2007, the Company substantially completed its analysis of the tax
deductibility of payments under the BCAs and other sales-related agreements
with third-party intermediaries identifi ed at the former Com Group, the remain-
ing Groups and in regional companies. In fi scal 2007, the Company also substan-
tially completed its risk-based analysis of cash and check payments at the former
Com Group, the Company’s other Groups and in regional companies, for which
limited documentation was available, and which may also raise concerns under
the FCPA and anti-corruption legislation in Germany and other countries.
The Company has accounted for income tax-related charges with respect to
fi scal 2000-2006 and adjusted comparative amounts for fi scal 2005 and 2006 as
reported under Note 2.
The Company remains subject to corruption-related investigations in the U.S.
and other jurisdictions around the world. As a result, additional criminal or civil
sanctions could be brought against the Company itself or against certain of its
employees in connection with possible violations of law, including the FCPA. In
addition, the scope of pending investigations may be expanded and new investiga-
tions commenced in connection with allegations of bribery and other illegal acts.
The Company’s operating activities, fi nancial results and reputation may also be
negatively affected, particularly due to imposed penalties, disgorgements, com-
pensatory damages, the formal or informal exclusion from public procurement
contracts or the loss of business licenses or permits. In addition to the fi ne
imposed by the Munich district court mentioned above and certain immaterial
non-German tax penalties, no material expenses or provisions for any such penal-
ties or damages have been recorded as management does not yet have enough
information to reliably estimate such amounts. We expect that we will need to
record expenses and provisions in the future for fi nes, penalties or other charges,
which could be material, in connection with the investigations. We will also have
to bear the costs of continuing investigations and related legal proceedings, as
well as the costs of on-going compliance remediation efforts. Furthermore,
changes affecting the Company’s course of business or changes to its compliance
programs beyond those already taken may turn out to be required.
In addition to the proceedings described above, the Company is also involved
in a number 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.