Siemens 2011 Annual Report Download - page 232

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C. Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

ernment-owned enterprises around the world. We also partic-
ipate in a number of projects funded by government agencies
and intergovernmental and supranational organizations such
as multilateral development banks. If we are found to have
been engaged in public corruption and other illegal acts, such
activities may impair our ability to do business with these or
other organizations. Starting in , public prosecutors and
other government authorities in certain jurisdictions around
the world investigated allegations of corruption at a number
of our former business groups and regional companies. Our
evaluation of the allegations led our management to identify
a material weakness in our internal controls over financial re-
porting as of September ,  and . We were able to
settle most of the governmental cases, including proceedings
initiated by the Munich public prosecutor, the U.S. Depart-
ment of Justice and the U.S. Securities and Exchange Com-
mission. In connection with these settlements and other legal
proceedings in Germany, we paid a total of €. billion to au-
thorities in the U.S. and Germany in fiscal  and fiscal
. In addition, we engaged a compliance monitor to evalu-
ate and report, for a period of up to four years, on the Compa-
ny’s progress in implementing and operating its new compli-
ance program.
A number of governmental investigations are pending and
additional investigations may be launched from time to time
by governmental authorities around the world. Based on our
past experience, there is also a risk of ongoing investigations
being expanded. Corruption and related proceedings may
lead to criminal and civil fines as well as penalties, sanctions,
injunctions against future conduct, profit disgorgements, dis-
qualifications from directly and indirectly engaging in certain
types of business, the loss of business licenses or permits or
other restrictions. Accordingly, we may be required to record
material provisions to cover potential liabilities arising in con-
nection with such investigations and proceedings, including
potential tax penalties. Moreover, any findings related to pub-
lic corruption that are not covered by the settlements de-
scribed above may endanger these, further monitors could be
appointed to review future business practices and we may
otherwise be required to further modify our business practic-
es and our compliance program.
Our involvement in ongoing and potential future corruption
proceedings could damage our reputation and have an ad-
verse impact on our ability to compete for business from pub-
lic and private sector customers around the world. If we or our
subsidiaries are found to have engaged in certain illegal acts
or not to have taken effective steps to address allegations or
findings of corruption in our business, this may impair our
ability to participate in business with governments or inter-
governmental organizations and may result in our formal ex-
clusion from such business. Even if we are not formally ex-
cluded from participating in government business, govern-
ment agencies or intergovernmental or supranational organi-
zations may informally exclude us from tendering for or
participating in certain contracts. For example, legislation of
member states of the European Union could in certain cases
result in our mandatory or discretionary exclusion from public
contracts in case of a conviction for bribery and certain other
offences or for other reasons. As described in more detail in
D. Notes to Consolidated Financial Statements, we or our
subsidiaries have in the past been excluded or currently are
excluded from some contracting, including with govern-
ments, development banks and multilateral financial institu-
tions, as a result of findings of corruption or other miscon-
duct. Ongoing or potential future investigations into allega-
tions of corruption could also impair existing relationships
with, and our ability to acquire new, private sector business
partners. For instance, such investigations may adversely af-
fect our ability to pursue potentially important strategic proj-
ects and transactions, such as strategic alliances, joint ven-
tures or other business combinations, or could result in the
cancellation of certain of our existing contracts and the com-
mencement of significant third-party litigation, including by
our competitors.
In addition, developments in ongoing and potential future in-
vestigations, such as responding to the requests of govern-
mental authorities and cooperating with them, could divert
management’s attention and resources from other issues fac-
ing our business. The materialization of any of these risks
could have a material adverse effect on the development of
future business opportunities, our net assets, financial condi-
tion and results of operations, the price of our shares and ADS
and on our reputation.
Our business could suffer as a result of current or future
litigation: We are subject to numerous risks relating to legal,
governmental and regulatory proceedings to which we are
currently a party or to which we may become a party in the fu-
ture. We routinely become subject to legal, governmental and
regulatory investigations and proceedings involving, among
other things, requests for arbitration, allegations of improper
delivery of goods or services, product liability, product de-
fects, quality problems, intellectual property infringement,
non-compliance with tax regulations and / or alleged or sus-
pected violations of applicable laws. In addition, we may face