Siemens 2008 Annual Report Download - page 281

Notes to Consolidated Financial Statements 185
(in millions of €, except where otherwise stated and per share amounts)
In June 2007, the Turkish Antitrust Agency conrmed its earlier decision to impose a ne of approximately €6
on Siemens A.Ş. Turkey based on alleged antitrust violations in the trafc lights market. Siemens Turkey has
appealed this decision and this appeal is still pending. It is possible that as a result of this decision, Siemens
could be debarred from participating in public sector tender offers in Turkey for a one- to two-year period.
In December 2007, a suit and motion for approval of a class action was led in Israel to commence a class action
based on the nes imposed by the European Commission for alleged antitrust violations in the high-voltage
gas-insulated switchgear market. Thirteen companies have been named as defendants in the suit and motion,
among them Siemens AG Germany, Siemens AG Austria and Siemens Israel Ltd. The class action alleges dam-
ages to electricity consumers in Israel in the amount of approximately €575 related to higher electricity prices
claimed to have been paid because of the alleged antitrust violations. The court has not yet ruled on the motion
for approval of the class action.
Other proceedings
In February 2007, the Company announced that public prosecutors in Nuremberg are conducting an investiga-
tion of certain current and former employees of the Company on suspicion of criminal breach of duciary duties
against Siemens, tax evasion and a violation of the German Works Council Constitution Act (Betriebsverfas-
sungs gesetz). The investigation related to an agreement entered into by Siemens with an entity controlled by
the former head of the independent employee association AUB (Arbeitsgemeinschaft Unabhängiger Betriebs-
angehöriger) and payments made during the period 2001 to 2006 for which Siemens may not have received
commensurate services in return. In April 2007, the labor union IG Metall lodged a criminal complaint against
unknown individuals on suspicion that the Company breached the provisions of Section 119 of the Works Coun-
cil Constitution Act by providing undue preferential support to AUB in connection with elections of the members
of the Company’s works councils. In July 2008, the Nürnberg-Fürth prosecutor brought charges against a former
member of the Managing Board on several counts of criminal breach of duciary duty and tax evasion. In Sep-
tember 2008, the trial against this former member started before the Regional Court of Nürnberg-Fürth. Fur-
thermore, the Nürnberg-Fürth prosecutor has initiated an investigation against two other former members of
the Managing Board on suspicion of abetting breach of duciary duty.
As previously reported, Siemens requested arbitration against the Republic of Argentina before the Interna-
tional Center for Settlement of Investment Disputes (ICSID) of the World Bank. Siemens claimed that Argentina
unlawfully terminated its contract with Siemens for the development and operation of a system for the produc-
tion of identity cards, border control, collection of data and voters’ registers and thereby violated the Bilateral
Investment Protection Treaty between Argentina and Germany (BIT). Siemens sought damages for expropriation
and violation of the BIT of approximately U.S.$500 million. Argentina disputed jurisdiction of the ICSID arbitra-
tion tribunal and argued in favor of jurisdiction of the Argentine administrative courts. The arbitration tribunal
rendered a decision on August 4, 2004, nding that it had jurisdiction over Siemens’ claims and that Siemens
was entitled to present its claims. A hearing on the merits of the case took place before the ICSID arbitration tri-
bunal in Washington in October 2005. An unanimous decision on the merits was rendered by the ICSID arbitra-
tion tribunal on February 6, 2007, awarding Siemens compensation in the amount of U.S.$217.8 million on
account of the value of its investment and consequential damages, plus compound interest thereon at a rate of
2.66% since May 18, 2001. The tribunal also ruled that Argentina is obligated to indemnify Siemens against any
claims of subcontractors in relation to the project (amounting to approximately U.S.$44 million) and, further-
more, that Argentina would be obligated to pay Siemens the full amount of the contract performance bond
(U.S.$20 million) in the event this bond was not returned within the time period set by the tribunal (which
period subsequently elapsed without delivery). On June 4, 2007, Argentina led with ICSID an application for