Siemens 2013 Annual Report Download - page 241

253 D. Consolidated Financial Statements
357 E. Additional Information
245 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report
246 C. Siemens AG ( Discussion on basis of
German Commercial Code)
250 C. Notes and forward-looking statements
41
associated with our international operations were to material-
ize, our business, financial condition and results of operations
could be materially adversely affected.
Current and future investigations regarding allegations of
public corruption, antitrust violations and other illegal
acts could have a material adverse effect on our business,
financial condition and results of operations and on our
reputation: 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 intergovernmental and suprana-
tional organizations such as multilateral development banks.
If we are found to have been engaged in public corruption, an-
titrust violations and other illegal acts, such activities may im-
pair our ability to do business with these or other organiza-
tions. Corruption, antitrust and related proceedings may lead
to criminal and civil fines as well as penalties, sanctions, in-
junctions 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  and  cor-
ruption charge settlements, which were concluded with Amer-
ican and German authorities, may endanger our business with
government agencies and intergovernmental and suprana-
tional organizations, further monitors could be appointed to
review future business practices and we may otherwise be re-
quired to further modify our business practices and our com-
pliance program.
Our involvement in ongoing and potential future corruption or
antitrust proceedings could damage our reputation and have
an adverse impact on our ability to compete for business from
public 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 or antitrust violations in our busi-
ness, this may impair our ability to participate in business with
governments or intergovernmental organizations and may re-
sult in our formal exclusion from such business. Even if we are
not formally excluded from participating in government busi-
ness, government agencies or intergovernmental or suprana-
tional organizations may informally exclude us from tendering
for or participating in certain contracts. For example, legisla-
tion 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 NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATE-
MENTS, we and certain of our subsidiaries have in the past been
excluded or currently are excluded from some contracting, in-
cluding with governments, development banks and multilater-
al financial institutions, as a result of findings of corruption or
other misconduct. Ongoing or potential future investigations
into allegations of corruption or antitrust violations could also
impair existing relationships with, and our ability to acquire
new private sector business partners. For instance, such inves-
tigations may adversely affect our ability to pursue potentially
important strategic projects and transactions, such as strategic
alliances, joint ventures or other business combinations, or
could result in the cancellation of certain of our existing con-
tracts and third parties, including our competitors, could initi-
ate significant third-party litigation.
In addition, future developments in ongoing and potential fu-
ture investigations, such as responding to the requests of gov-
ernmental authorities and cooperating with them, could di-
vert management’s attention and resources from other issues
facing our business. The materialization of any of these risks
could have a material adverse effect on our business, financial
condition and results of operations and on our reputation.
Our business, financial condition and results of operations
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 future. We routinely
become subject to legal, governmental and regulatory investi-
gations and proceedings involving, among other things, re-
quests for arbitration, allegations of improper delivery of
goods or services, product liability, product defects, quality
problems, intellectual property infringement, non-compliance
with tax regulations and / or alleged or suspected violations of
applicable laws. In addition, we may face further claims in con-
nection with the circumstances that led to the corruption
charges. For additional information with respect to specific
proceedings, see NOTE  in D. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS. There can be no assurance that the re-
sults of these or any other proceedings will not materially
harm our business, financial condition and results of opera-
tions. Moreover, even if we ultimately prevail on the merits in
any such proceedings, we may have to incur substantial legal
fees and other costs defending ourselves against the underly-
ing allegations. Under certain circumstances we record a provi-
sion for risks arising from legal disputes and proceedings. In
addition, we maintain liability insurance for certain legal risks