____ This story was provided to the Associated Press by 100Reporters, a nonprofit news organization based in Washington, D.C.
The warnings involved the company’s use of third-party resellers, who have often served as conduits for bribing foreign officials, according to former company insiders and company internal assessments. Evidence from public records in China suggests that problems with resellers have continued during the pandemic, and resulted in the sale of medical equipment to Chinese state-owned hospitals at vastly inflated prices. The monitoring reports, which Siemens was obliged to commission from 2009 to 2012, stem from a $1.6 billion landmark settlement of bribery charges by the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) in 2008. During their investigation, US and German authorities found over $1 billion of bribes paid to foreign government officials in return for business, in what the SEC called a “systematic practice” spanning decades and virtually every region in which Siemens operated, violating the Foreign Corrupt Practices Act (FCPA). Siemens admitted to failures of internal controls and record-keeping. ____
The nonprofit news organization 100Reporters, represented by the law firm Davis Wright Tremaine, sued the Justice Department for the release of the monitoring reports under the Freedom of Information Act. The DOJ, Siemens, and its independent monitor, former German Finance Minister Theo Waigel, all fought to keep the contents of the monitoring reports secret, and despite the court-ordered release, much of the material remains cloaked behind heavy redactions Waigel declined comment, saying he did not remember details of his monitorship. Nevertheless, Waigel has since gained a reputation in Germany as a compliance troubleshooter for major international corporations, partly as a result of his oversight at Siemens.
In a statement, Siemens said that the company has “an extensive global compliance program designed to prevent, identify, and eliminate corruption,” and that it was “making extensive efforts to identify and eliminate business practices that promote corruption (in China). This includes ending the use of sales partners and consultants in the event of misconduct.” The appointment of Waigel, a highly-regarded figure in German government and business circles, reflected the importance of Siemens’ reputation and worldwide business to Germany’s political establishment. RED FLAGS: ATTENTION OPTIONAL
Evidence from one lucrative sector, the sale of healthcare equipment in China, suggests that even during the four years of Waigel’s monitorship and the rebuilding of the company’s reputation, Siemens was intentionally relaxing rules where it could. In his initial report, Waigel made 114 recommendations for changes in Siemens’ compliance practices to prevent bribery. The court permitted the Justice Department to redact all of those recommendations in the current release, but a former Siemens employee, Meng-Lin Liu, disclosed one key issue: a review of the company’s internal controls for scrutinizing business partners, particularly the use of resellers or distributors in contracts that would otherwise be handled directly between Siemens and the purchaser. The alleged bribery by third-party resellers to advance Siemens’ business interests represented a main plank of the SEC’s criminal complaint against Siemens in 2008, and a problem that would continue to dog Siemens, prompting subsequent investigations in Brazil and China. The problem was not unique to Siemens. According to a 2014 briefing by the law firm Clifford Chance, over 90 percent of all FCPA prosecutions in China involve such third-party agents.
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