Beyond Rhetoric – Sustaining Efforts to Combat Corruption

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Beyond Rhetoric Sustaining Efforts to Combat
Corruption
4th ICAC Symposium Deals Under the Table the
Doing or Undoing of Business
Mark Gough Deputy Head of Compliance
Investigations
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Overview

• Siemens History Problems
• Reaction Results
• Investigations at Siemens
• Cooperation Joint investigative activity

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From Werner von Siemens' workshopto global
player active in over 190 countries
1847 Founding of ''Telegraphen-Bauanstalt von
Siemens Halske" in Berlin 1850 First
international sales agency in London 1855
Founding of the Russian company as the first
foreign branch 1904 First permanent
office in China 1905 Founding of Siemens
Brazil 1924 Founding of Siemens India
Ltd. 1961 Exports exceed 1 billion DM for first
time 1968 Siemens passes the 100-country
mark 1970 Founding of Siemens Corporation,
USA 1994 Founding of Siemens Ltd. China in
Beijing
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Problems - Independent Investigations Findings

• After raids by Munich prosecutor
• Appointment of Debevoise as Independent
  investigators
• Report only to chairman of Supervisory Board
• Unrestricted access to all employees and
  records
• Investigatory work in 32 countries
• Over 2,050 interviews 900 informational
  meetings
• Collection of over 100 million documents
• Analysis of 10 million and target searching of
  40 million banking records
• Extended participation by more than 100 lawyers
  and more than 100 support staff from Debevoise
• Debevoise mandate ended March 2009

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From Reaction to Transformation to
Sustainability Outline of the change process
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Importance of the Compliance Efforts for the
Settlement Extracts
The reorganization and remediation efforts of
Siemens have been extraordinary and have seta
high standard for multi-national companies to
follow. These measures, in conjunction with
Siemens agreement to retain a Monitor (with
support from a U.S. law firm with FCPA and
compliance expertise) for a term of four years,
highlight the serious commitment of Siemens to
ensure that itoperates in a transparent, honest,
and responsible manner going forward. (DOJ
Sentencing Memorandum, December 2008)
the Department of Justice advised the Court
that Siemens AG and its subsidiaries
havedemonstrated extraordinary cooperation with
the Department of Justices investigation, and
have engaged what we view as extraordinary
remediation and self-cleaning efforts, including
the replacement of top leadership with
management committed to compliance with
anti-corruption laws, centralization of its
compliance and audit functions, company-wide
training, discipline of wrongdoers,
implementation of due diligence, and other
best-in-class measures to prevent future
violations. (Letter of DOJ, December 2008)
The settlement would not have been possible
without the Compliance efforts of Siemens and
its Global Compliance Organization
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Siemens AG Monitor work plan Year one The four
major activities of the Monitor are


Make on-site observations
Inspect relevant documents
Review reports, minutes etc. that demonstrate how
anti-corruption Compliance policies and
procedures operate
Attend meetings like Supervisory Boards
Compliance Committee, Managing Board, SOA 404
Subcommittee, Corporate Disciplinary Committee
and anti-corruption training sessions, to learn
how Compliance issues are addressed
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2


Informational meeting with relevant stakeholders
Conduct analyses, studies and testing

• Supervisory Board, Managing Board
• Key employees Corporate Departments incl.
  Cross-Sector-Services and Businesses
• Key employees Sector and Division Level CEO and
  CFO, General Counsel, Compliance Officer and
  other functions (e.g. Accounting Controlling,
  Sales, etc.)
• Key employees RC Level CEO and CFO, General
  Counsel, Compliance Officer and selected
  employees from certain functions likely to face
  corruption risk
• RC site visits schedule from May till Sept
  Austria, Mexico, Russia, Brazil, China, South
  Africa, Argentina, India and United States

• Analyze and assess the effectiveness of several
  of primary anti-corruption Compliance controls
  through a series of walkthroughs
• Business Partner toolkit
• LoA and GH tool
• Tools used for approving Donations,
  Memberships and Sponsoring
• Review reports of corruption related
  misconduct
• Enterprise Risk Management and Corruption
  Exposure Assessments

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Video from Peter Löscher is shown in all training
sets the tone from the top
"Only Clean Business is Siemens
business. Everywhere everybody every
time!" "Compliance as part of Corporate
Responsibility is 1st priority!
Source P. Löscher Compliance Officer Conference
October 2007
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Compliance Program Objectives Prevent Detect
Respond
Prevent
Detect
Respond
"Tone from the Top"
Compliance Organization

• Compliance investigations
• Compliance reviews
• Compliance controls

• Consequences for misconduct
• Global case tracking
• Monitoring effectiveness

• Training
• Policies Procedures
• Programcommunication
• Centralization

Contin- uous improve- ment
Compliance helpdesk (incl. Global Ombudsman
function)

• Integration in personnel processes

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Compliance-related Incentive System For Senior
Management Compliance Performance Matters

• Compliance impacts the FY 2008 annual bonus by
  approximately 17

Metrics
Evaluation
Assessment

• Tone from the top training
• Policies implementation
• Compliance organization and transparency

Implemen-tation kit 1) tested quality on time
Corporate Finance Audit (CF A) Re-Testing
report
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Compliance Legal Case tracking and evaluation,
Disci-plinary sanctions

• Evaluation of each division/ country
• Proposal for multipliers prepared in compliance
  round table

Survey team Compliance index and benchmark
Average multiplier in FY08

• Employee perception

Evaluation scheme
0.75
0.9
1.0
1.1
1.25
1) If unit not tested, criteria does not apply in
this fiscal year Source CL CO / CD E
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Global Compliance Organization 2009 Corporate
Functions
Siemens An example how to integrate
Investigations into the Compliance Organization
Member of the Managing BoardGeneral
Counsel P.Solmssen

• Compliance represented in Managing Board
• Strong corporate governance
• Embedded in Business units and Regions

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Compliance Operating Officer Tasks

• Advise on compliance issues
• Responses to "Ask us" questions
• Reporting on "Tell us" cases

Compliance Helpdesk and Monitoring

• Legal guidance and advice for all
  compliance-related matters (defense of cases
  handled outside of Compliance)
• Prepare and review compliance policies

Compliance Legal

• Investigation of compliance cases
• Add to Prevention Remediation

Compliance Investigations

• Legal guidance and advice on disciplinary cases
  and proceedings
• Legal recommendations for Corporate Disciplinary
  Committee

Disciplinary Sanctions
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Compliance Helpdesk Consists of Five Parts
Over 4600 questions since Q1/2008
Over 680 reports (448 actionable) since Q1/2008
"Ask Us"
Partlyavailable
"Tell Us"
Find It"
Do you have any questions about compliance? You
can ask them at any time via the Compliance
HelpDesk Ask Us.
Use Find It to search for compliance related
information, such as FAQs, policies guidelines
or training material.
The Compliance HelpDesk Tell Us function
provides global, round-the-clock facilities for
making statements on compliance-related breaches.
Compliance Helpdesk Monitoring
New Gift Hospitality Policy
Approve It"
Now available
Improve It"
Approve It is the platform for approval
requests regarding gifts and hospitality
With Improve It you can help to improve the
Compliance program by adding your ideas and
suggestions.
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Categories of Compliance Cases
Compliance cases are cases where a legal
requirement or an internal rule based on such
requirements is violated.
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Compliance Investigations Workflow Overview
1) mandate investigation
Compliance Investigation / Forensic Audit
CCO
2) conduct investigation
Compliance Legal
7) report results
3) request collection
6) provide data
4) clear collection
CF A IT Audit
Legal Clearance Office for Data Collections
5) collect prepare user data
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Phases of an Investigation
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Investigation Process
1.1 Clarify Mandate
2.1 Receive Mandate
3.1 Kick off Investigation
4.1 Draft Report
5.1 Archive Case
6.1 Collect Feedback
1.2 Issue Mandate
2.2 Identify Legal Frame.
3.2 Collect Information
4.2 Review Report
5.2 Close Inv. Mandate
6.2 Evaluate Feedback
2.3 Establish Work Plan
3.3 Review Information
4.3 Request Evaluations
6.3 Implement Improvements
2.4 Approve Work Plan
4.4 Distribute Report
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TRACI
TRACI
Global Compliance Case Tracking Tool
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Introduction of Global Case Tracking Tool in FY
20097FY 2010
Old tool
New Tool TRACI
Case tracking tool "PAULA" All cases (resulting
from the reporting from other sources) at
Compliance Legal are entered into a data
recording, tracking and reporting system
("Paula") by the resp. lawyer. Paula was
introduced in October 2007 and has since then
been updated or adjusted to new requirements
several times. From May 2008 to November 2009,
Compliance Investigations used basic excel
spreadsheet to manage all cases under mandate.
Global Case Tracking Tool In FY 2009 a global
case tracking tool was introduced. This tool
includes a global process / progress tracking of
all cases worldwide including creation of a
workflow, a local administration and reporting on
compliance issues for all Compliance delegates.
Tool requirements
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Advantages of TRACI?
Global platform for the recording, management and
documentation of Compliance Cases
supportingcentral and localworkflow
Global casetracking
Supporting the global collaboration of the
Compliance organization
Transparency and reporting functions
according to US requirements.
and reporting on compliance violations,
Supports us in the settlement requirement of an
effective and complete reporting system of
suspected or actual non-compliant behavior of
Siemens employees
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Users and Numbers

• Cluster Compliance Officer
• Regional Compliance Officer

• Compliance Legal
• Investigation
• Disciplinary Sanctions
• Remediation

• Chief Compliance Officer
• Compliance Operating Officer

• Corporate Unit Compliance Officer

• Sector Compliance Officer
• Division Compliance Officer

• Numbers
• 600 Users (globally) already more than 300
  working with the system
• 82 Countries
• Siemens AG and approx. 1030 affiliated companies

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Users and Numbers

• Cluster Compliance Officer
• Regional Compliance Officer

• Compliance Legal
• Investigation
• Disciplinary Sanctions
• Remediation

• Chief Compliance Officer
• Compliance Operating Officer

• Corporate Unit Compliance Officer

• Sector Compliance Officer
• Division Compliance Officer

• Numbers
• 600 Users (globally) already more than 300
  working with the system
• 82 Countries
• Siemens AG and approx. 1030 affiliated companies

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Users and Numbers

• Cluster Compliance Officer
• Regional Compliance Officer

• Compliance Legal
• Investigation
• Disciplinary Sanctions
• Remediation

• Chief Compliance Officer
• Compliance Operating Officer

• Corporate Unit Compliance Officer

• Sector Compliance Officer
• Division Compliance Officer

• Numbers
• 600 Users (globally) already more than 300
  working with the system
• 82 Countries
• Siemens AG and approx. 1030 affiliated companies

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TreuInfo a reporting control system

• TreuInfo is a global electronic system which
  facilitates the reporting of economic loss and
  material damages. TreuInfo has now been
  integrated into the Siemens compliance setup.
• There are three criteria which have to be
  fulfilled to enter a case into the TreuInfo
  System
• Damage to the companys property
• Amount of loss higher than 100 and under
  50,000
• Deliberate act.
• The compliance officer has to ensure that all
  such incidents are reported
• The correct reporting of ALL cases is certified
  by the responsible CEO quarterly.

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Meeting the challenges

• Investigation Manual Circular Process
• Prioritizing of Investigations
• Training investigators compliance
  organization
• Developing Regional Hubs (South-East Asia
  Americas USA and Canada Africa)
• Creation of pool of investigative expertise on
  regional basis
• Launch international forum for private sector
  investigators (collective action)

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Cooperation Joint Activities

• Cooperation the SIEMENS position
• History of Cooperation
• Disclosure Policy Transparency the key to build
  trust
• Company wide agreed investigation process
  encouraging cooperation
• The way forward
• Working with MDBs to define policy on joint
  activities
• Workshop with other investigative offices to
  define best practices
• Use results to define international standards
  (collective action process)

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Siemens needs to go beyond internal programs in
order to become a recognized leader in compliance
Collective Action" can have a key role
fostering equal compliance standards for all
market players and thus reducing the risk of
corruption.
Become a recognized leader in transparency and
compliance
Collective Action
External
Reach out to industry peers via neutral
facilitators (such as Transparency
International) and initiate joint activities to
fight corruption
Internal
Share internal policies, experiences, best
practices and success stories

• Siemens Compliance Program
• Prevent
• Detect
• Respond

Siemens achieved best score in the2009 Dow Jones
Sustainability Index (ElectronicEquipment
industry) regarding categorycode of conduct /
compliance
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Collective Action Joint Forces Against
Corruption

• Three ways to drive Collective Action

Approach competitors to set up long-term industry
initiative against corruption
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Siemens competitor
Approach Public Sector customers directly and
propose project-specific Integrity Pact
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Siemens
Customer
Approach Public Sector customers via independent
3rd party and propose project-specific Integrity
Pact
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Independent3rd party (NGO)
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Building a world class compliance structure is
one process Sustaining the clean business
message to 405,000 staff globally is another
Creating a level playing field for all
stakeholders is the absolute objective
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• Mark Gough
• Compliance Investigations
• Tel. Office 49 (89) 636-32844Tel. Mobile
  49 1522 8874914
• Email mark.gough_at_siemens.com