Siemens 2014 Annual Report Download - page 237

247 D. Consolidated Financial Statements
337 E. Additional Information
213 C. Overall assessment of the economic position
214 C. Subsequent events
215 C. Sustainability and citizenship
225 C. Report on expected developments and
associated material opportunities and risks
242 C. Compensation Report and legal disclosures
242 C. Siemens AG (Discussion on basis
of German Commercial Code)

countries in which we do business may result in a curtailment
of our existing business in such countries or indirectly in other
countries and in amendments to our policies. We are also aware
of initiatives by institutional investors, such as pension funds or
other companies, to adopt or consider adopting policies prohib-
iting investment in and transactions with, or requiring divest-
ment of interests in entities doing business with, Iran and other
countries identified as state sponsors of terrorism by the U.S.
Secretary of State. It is possible that such initiatives may result
in us being unable to gain or retain investors, customers or sup-
pliers. In addition, the termination of our activities in sanctioned
countries may expose us to customer claims and other actions.
Our reputation could also suffer due to our activities with coun-
terparties in or affiliated with these countries. As previously
disclosed, Siemens has decided that, subject to certain limited
exceptions, it will not enter into new contracts with customers
in Iran and has issued group-wide policies establishing the
details of its general decision.
We expect that sales to emerging markets will account for an
increasing portion of our total revenue, as our business natu-
rally evolves and as developing nations and regions around the
world increase their demand for our offering. Emerging market
operations involve various risks, including civil unrest, health
concerns, cultural differences such as employment and busi-
ness practices, volatility in gross domestic product, economic
and governmental instability, the potential for nationalization
of private assets and the imposition of exchange controls. The
Asian markets, in particular, are important for our long-term
growth strategy, and our sizeable operations in China are influ-
enced by a legal system that is still developing and is subject
to change. Our growth strategy could be limited by govern-
ments supporting local industries. Our former Sectors, partic-
ularly those that derive their revenue from large projects,
could be adversely affected if future demand, prices and gross
domestic product in the markets in which those former Sectors
operate do not develop as favorably as expected due to such
regulatory measures. If any of these risks or similar risks asso-
ciated with our international operations were to materialize,
our business, financial condition and results of operations
could be adversely affected.
Current and future investigations regarding allegations of
public corruption, antitrust violations and other illegal acts
could have an adverse effect on our business, financial
condition and results of operations and on our reputation:
We engage in a substantial amount of business with govern-
ments and government-owned enterprises around the world.
We also participate in a number of projects funded by govern-
ment agencies and intergovernmental and supranational orga-
nizations such as multilateral development banks. If we are
found to have been engaged in public corruption, antitrust
violations and other illegal acts, such activities may impair our
ability to do business with these or other organizations. Cor-
ruption, antitrust and related proceedings may lead to criminal
and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of busi-
ness, the loss of business licenses or permits or other restric-
tions. Accordingly, we may be required to record material pro-
visions to cover potential liabilities arising in connection with
such investigations and proceedings, including potential tax
penalties. Moreover, any findings related to public corruption
that are not covered by the  and  corruption charge
settlements, which were concluded with American and German
authorities, may endanger our business with government
agencies and intergovernmental and supranational organiza-
tions, further monitors could be appointed to review future
business practices and we may otherwise be required to further
modify our business practices and our compliance 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 business,
this may impair our ability to participate in business with gov-
ernments or intergovernmental organizations and may result
in our formal exclusion from such business. Even if we are not
formally excluded from participating in government business,
government agencies or intergovernmental or supranational
organizations 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
NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ,
we and certain of our subsidiaries have in the past been ex-
cluded or currently are excluded from some contracting, in-
cluding with governments, development banks and multilat-
eral financial institutions, as a result of findings of corruption
or other misconduct. Ongoing or potential future investiga-
tions into allegations of corruption or antitrust violations could
also impair existing relationships with, and our ability to ac-
quire new private sector business partners. For instance, such
investigations may adversely affect our ability to pursue poten-
tially important strategic projects and transactions, such as
strategic alliances, joint ventures or other business combina-
tions, or could result in the cancellation of certain of our exist-
ing contracts and third parties, including our competitors,
could initiate significant third-party litigation.