Siemens 2010 Annual Report Download - page 278

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis

commencing the commissioning phase of the overall plant. This
testing phase will last several months. As of today, completion
is expected to occur by the end of the  calendar year.
In early  Siemens AG terminated its joint venture with
Areva S.A. (Areva). Thereafter Siemens AG entered into nego-
tiations with the State Atomic Energy Corporation Rosatom
(Rosatom) with a view to forming a new partnership active in
the construction of nuclear power plants, in which it would be
a minority shareholder. In April , Areva filed a request for
arbitration with the ICC against Siemens AG. Areva seeks an
order enjoining Siemens AG from pursuing such negotiations
with Rosatom, a declaration that Siemens AG is in material
breach of its contractual obligations, a reduction of the price
payable to Siemens AG for its stake in the Areva NP S.A.S. joint
venture and damages in an amount to be ascertained. Siemens
AG filed its answer in June , primarily seeking a dismissal
of Areva’s claims and a price increase. The arbitral tribunal has
been constituted and the main proceedings have commenced.
On November , , the arbitral tribunal issued an interim
order which imposes certain provisional restrictions on
Siemens AG with respect to the negotiation process and the
planned partnership with Rosatom; the order does not pre-
clude Siemens AG from continuing its discussions with Ro-
satom during the arbitration. In its last submissions Areva did
not uphold its request for damages. In September  the
hearing on the merits was held. The outcome of the main
proceedings remains open.
As previously reported, a Mexican governmental control au-
thority had barred Siemens S.A. de C.V. Mexico (Siemens
Mexico) from bidding on public contracts for a period of three
years and nine months beginning November , . This
proceeding arose from allegations that Siemens Mexico did not
disclose alleged minor tax discrepancies when it was signing a
public contract in . Upon several appeals by Siemens
Mexico, the execution of the debarment was stayed, the de-
barment subsequently reduced to a period of four months, and
in June  the Company was finally informed by the relevant
administrative court that the debarment was completely an-
nulled.
In July , Mr. Abolfath Mahvi filed a request for arbitration
with the ICC seeking an award of damages against Siemens AG
in the amount of DM million (or the equivalent in euro,
which is approximately €) plus interest. Mr. Mahvi’s claim is
based on a contract concluded in  between a company that
was then a subsidiary of Siemens and two other companies,
one domiciled in the Bermudas and the other in Liberia.
Mr. Mahvi alleged that he is the successor in interest to the
Bermudan and Liberian companies and that the companies
assisted Siemens AG in the acquisition of a power plant project
in Bushehr, Iran. On August , , the arbitration award
was served upon Siemens AG. All claims of Mr. Mahvi were
rejected. The plaintiff must bear the costs of the arbitration
proceeding.
In July , Hellenic Telecommunications Organization So-
ciété Anonyme (OTE) filed a lawsuit against Siemens AG with
the district court of Munich, Germany, seeking to compel
Siemens AG to disclose the outcome of its internal investiga-
tions with respect to OTE. OTE seeks to obtain information
with respect to allegations of undue influence and / or acts of
bribery in connection with contracts concluded between
Siemens AG and OTE from  to . In May , OTE was
granted access to the public prosecutor’s files in Greece. At the
end of July , OTE expanded its claim and requested pay-
ment of damages by Siemens AG of at least €. to OTE for
alleged bribery payments to OTE-employees. Siemens AG is
currently preparing its written statement of defense relating to
the expansion of the claim. The oral hearing has been sched-
uled for February .
Siemens A.E. entered into a subcontract agreement with Sci-
ence Applications International Corporation, Delaware, USA,
(SAIC) in May of  to deliver and install a significant portion
of a security surveillance system (the “CI” project) in advance
of the Olympic Games in Athens, Greece. Siemens A.E. fulfilled
its obligations pursuant to the subcontract agreement. None-
theless, the Greek government claimed errors related to the
CI-System and withheld amounts for abatement in the dou-
ble-digit million euro range. Furthermore the Greek govern-
ment withheld final payment in the double-digit million euro
range, only recently claiming that the system has not been fi-
nally accepted. Although Siemens A.E. is not a contractual
party of the Greek government, under Siemens A.E’s subcon-
tract agreement with SAIC non-payment by the Greek govern-
ment economically affects Siemens A.E. as well. SAIC has filed
for arbitration contesting all the Greek government’s claims
and ability to withhold payments. The Greek State filed inter
alia a motion to stay the arbitration pursuant to the ongoing
criminal investigations conducted by the Greek public prosecu-
tor. Resolution of this dispute has been complicated by bribery
and fraud allegations against Siemens A.E. in Greece, which
have resulted in extensive negative media coverage concern-
ing the CI system.