During its billion-dollar internal investigation, Siemens discovered and documented 4,283 illegal payments related to 332 projects around the world. The total value of bribes paid was at least $1.4 billion, resulting in fines and penalties in the U.S. and Germany of about $1.6 billion.
That was 2008. What has Siemens done since then about compliance?
In FY2007, it had 173 compliance staff worldwide. By FY2009, the number had grown to 598. It has now given in-person compliance training to 1,400 senior managers, 80,000 employees with “sensitive functions,” and 220 compliance officers. Another 140,000 employees have completed on-line compliance training (the company has about 400,000 employees). In FY2009, Siemens fired 244 employees for compliance breaches and disciplined another 473.
A few years ago, Siemens could have received a corporate death sentence. Its crimes were that bad. And its compliance program, if you could call it that, had been subverted. But instead of a death sentence, there was that rather painless settlement with U.S. and German authorities. Some complained that justice wasn’t served.
A year before the settlement, however, new CEO Peter Löscher had said: Siemens endorses clean business. Period. I am not interested in deals that can only be had through corruption.
Compliance first, profit second, he said. People believed him. So the company got a second chance and made it count.
As Peter von Blomberg, the deputy chairman of Transparency International Germany, recently said: “The case of Siemens shows that companies can be successful without corruption. Even with a compliance monitor appointed by the U.S. authorities, a much larger compliance organization, and scrutiny of every transaction, CEO Löscher just announced the best quarterly results ever.“
That’s why we like second chances.
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We’re grateful to i-Sight for its post about the recovery of Siemens, which included a company-prepared presentation about current compliance efforts.
2 Comments
Great example! I had been wondering how Siemens seemed to get away relatively unscathed from what seemed so massive a scandal. Thanks for the post.
Thank you for mentioning our blog post about the ethical transformation at Siemens at the end of your article. So many companies believe that simply having an ethics and compliance program in place protects them from these types of events. The Siemens story should serve as a wake up call for many of those companies. The bribery scandal at Siemens could have ruined the company; instead, its leaders took action to develop an ethics and compliance program that is one of the best in its class.
Thanks again for covering this topic!
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