Saturday, November 17, 2007
The continuing investigation of overseas bribery by industrial giant Siemens A.G. seems to bring to light even more suspect payments throughout the world, with the total now pegged at nearly $2 billion in questionable transactions. The amounts involved are staggering compared to other foreign bribery investigations, which are often in the hudreds of thousands of dollars and rarely exceed $10 million. A BusinessWeek article (here) speculates that the likely fines the company will pay in the United States to resolve criminal and civil investigations will easily exceed the prior record of $44 million for Foreign Corrupt Practices Act violations. Siemens' more recent public disclosure on Form 6-K (here) states:
The Company remains subject to corruption-related investigations in the U.S. and other jurisdictions around the world. As a result, additional criminal or civil sanctions could be brought against the Company itself or against certain of its employees in connection with possible violations of law, including the FCPA. In addition, the scope of pending investigations may be expanded and new investigations commenced in connection with allegations of bribery and other illegal acts. The Company’s operating activities and reputation may also be negatively affected, particularly due to imposed penalties, disgorgements, compensatory damages, the formal or informal exclusion from public procurement contracts or the loss of business licenses or permits.
That's not very reassuring for a quick resolution of the investigations, particularly in the U.S. With the ever-expanding internal and governmental investigations comes the cost of paying for all those lawyers and accountants. According to the most recent disclosure, in fiscal 2007 the company had "€347 million in expenses for outside advisors engaged by Siemens in connection with the investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities." No word yet on the estimated cost of any fines, and in all likelihood one or more outside monitors will be required as part of a settlement, which will drive up the expenses from the overseas bribery even more. (ph)