BERLIN – Engineering multinational Siemens, which has touted its system for self-policing as “best-in-class” after it paid one of the largest corporate bribery fines in history, received more than 3,000 new internal complaints of wrongdoing since the case was settled in 2008,­ including reports of corruption, bribery, fraud, anti-trust violations, embezzlement and conflict of interest.

While the number of complaints substantiated has been rising, the share of employees sanctioned for wrongdoing has gone down, to 63 percent in 2012 from 86 percent in the immediate aftermath of Siemens’ landmark guilty plea and settlement with US and German authorities. Recent public statements by Siemens officials and internal company data obtained by 100Reporters raise a number of questions about the Munich-based company’s commitment to rooting out corruption from within:

  • Disparities exist between what the company has reported publicly about its anti-corruption efforts and what it reports at industry conferences. These include the specific types of alleged wrongdoing reported by company whistleblowers and data indicating that while the number of credible complaints has gone up in recent years, disciplinary actions have declined.
  • Company documents suggest Siemens still does not consistently track reports of bribery, even though this was at the heart of the massive 2006 scandal.
  • Whistleblower reporting websites that Siemens’ created after the scandal did not function for more than six months, and were only repaired after reporters contacted the company.
  • A wide range of alleged misconduct continues to be reported, and retaliation against whistleblowers persists. Yet Siemens repeatedly has refused to discuss how cases of misconduct and retaliation have been handled, and which cases have been referred to outside authorities.
  • Siemens’ officials have repeatedly opposed national whistleblower protection laws before the German parliament.

Officials at Siemens defended the company’s record, but declined to address questions in detail. They said that privacy laws prevented them from discussing specific cases, and that the company reported wrongdoing to law enforcement authorities when required by law to do so.

The emerging questions underscore the secrecy that surrounds Justice Department agreements with corporate offenders. Following its guilty plea in 2008, Siemens hired a former finance minister of Germany, Theo Waigel, to monitor its compliance with the terms of its agreement with the US Justice Department. But the content of those monitoring reports, for Siemens as for other companies that run afoul of the law, remain out of public view.

The reliance on self-policing, common in corporate anti-bribery regulations, concerns advocates for whistleblowers, given the company’s record. “Siemens should not be able to decide to keep the information internally if the case concerns the public interest or breaches of laws,” said Guido Strack, chair of Whistleblower Network, based in Cologne, Germany.

The bribery scandal that engulfed Siemens was massive in scale. According to investigators in the US and elsewhere, Siemens channeled some 4,283 bribes totaling $1.4 billion to government officials and other parties worldwide to win lucrative contracts from 2001 to 2007. The bribes, sometimes delivered in suitcases filled with cash, were “standard operating procedures for corporate executives who viewed bribery as a business strategy,” according to US prosecutors.

Bribes and other illicit payments, investigators said, flowed with the help of secret bank accounts, slush funds, fake invoices, sham business deals, middlemen, fictitious companies, doctored accounting records and backdated contracts. Siemens managers reportedly signed their names on “Post-it” notes they could later peel off to hide their complicity.

At the peak of the global probe, Siemens was suspected of bribery or other corrupt acts in at least 25 countries. The “astonishing” scheme was “unprecedented in scale and geographic reach,” according to US investigators. The trail led to Argentina, Bangladesh, China, Egypt, France, Greece, Indonesia, Italy, Jordan, Kuwait, Liechtenstein, Mexico, Nigeria, Norway, Russia, Saudi Arabia, Serbia, Switzerland, Turkey, Venezuela and Vietnam.

In cooperation with prosecutors, Siemens went on to set up a wide-ranging compliance system – including confidential and anonymous whistleblower hotlines and websites – ostensibly to cleanse the company of corruption, bribery and other crimes from the inside. Before lawmakers, prosecutors and the public, Siemens executives repeatedly have praised their own efforts to root out criminals among its some 350,000 employees working in more than 200 countries.

“During a crisis you have to make your company stronger and change the culture. We used the opportunity to make fundamental changes,” said Peter Löscher, then Siemens’ CEO, in 2010. “Siemens has a best-in-class compliance system,” said then-Vice President Frank Schmidt the following year.

But some insiders remain concerned. Norman Lohse, a compliance officer with Siemens’ Wind Power Division in Hamburg, said “the culture has changed,” but could regress due to “frustrated” employees, growing market pressures and an ongoing company reorganization. Some employees, he said, continue to display “certain criminal energy,” and managers have been involved with wrongdoing. Retaliation against whistleblowers, though on the decline, persists, he said.

Bea Edwards, executive director of the Government Accountability Project (GAP), a whistleblower advocacy organization based in Washington, DC, criticized the company for creating a “secret accountability system.” “If Siemens wants to earn any kind of credibility, it has to be more transparent,” she said.

Reporting Disparities

The internal company statistics obtained by 100Reporters, which Siemens disclosed at industry conferences, show that the number of total allegations reported through an internal company portal called “Tell Us” and to Siemens’ external ombudsman rose to 715 allegations in 2012, from 539 in 2008. During this five-year period, a total of 3,188 allegations were reported. The percentage of allegations that were substantiated by the company also rose during this period – to 86 from 63 percent.Despite these rises, the number of disciplinary sanctions taken against employees dropped each year – from 909 in 2008 to 266 in 2012. Siemens would not say whether the company is issuing lighter sanctions to employees who commit wrongdoing, or if the wrongdoing being reported has become less serious. “As a rule,” company spokesperson Wolfram Trost wrote in an email, “no correlation can be made between the number of compliance cases reported or opened for investigation and the figure for disciplinary sanctions.” allege-update From 2008 to 2013 a total of 3,018 disciplinary sanctions were taken against employees, of which 813 – more than a fourth – were dismissals. These figures are from a series of presentations delivered by Siemens executives at conferences and other events in Europe, the Middle East and Canada from 2008 to 2012. 100Reporters obtained some of the figures from a whistleblower activist who attended one of the conferences, and spoke on condition of anonymity. category-matrix (1) Some of the documents are labeled “Confidential” and “For internal use only.” The documents contain categories of wrongdoing reported to the “Tell Us” system that are far more detailed than what is available on the company’s dedicated compliance website. There is, however, a lack of consistency in types of complaints monitored, that makes it difficult to track trends in corporate behavior.In the second quarter of 2010, for example, 11 percent of the disclosures to “Tell Us” related to bribery. Though bribery was the main offense that triggered the 2006 scandal, it does not consistently appear as a distinct category in the Siemens presentations.Siemens’ officials declined to discuss the disparities in the company’s reporting systems.

Opposing Whistleblower Protections

Following the 2008 settlement, Siemens executives have spoken publicly against strengthening legal protections for whistleblowers in Germany.In March 2012 the two executives who oversaw Siemens’ company-wide compliance system at the time – Josef Winter and Klaus Moosmayer – spoke at the German parliament in Berlin on whether the country needed a new law to protect whistleblowers from retaliation.Winter said Siemens was handling anti-corruption issues on its own terms and that Germany, which lacks a national whistleblower law, did not need one. Moosmayer told German lawmakers that he questioned whether a law “would really achieve the aim of keeping a whistleblower in his job.” Continued Moosmayer, “Even with a law, it will be difficult to keep a whistleblower in his position if he has become exposed.”Edwards, of the Government Accountability Project, said the comments reflected a “lack of political will at Siemens to protect whistleblowers,” and “complete ignorance” of the very purpose of whistleblower protection laws.This past March 16, Moosmayer again appeared at the German parliament to deliver Siemens’ opposition to a new whistleblower protection law, which he dismissed as unnecessary and “legally difficult to implement,” according to Siemens’ written statement.Siemens said employees should not be able to report wrongdoing to government authorities if companies are slow to respond to allegations. And, the company says employees should not have the right to disclose information to the public in cases of imminent danger or threat of serious crime.Siemens told the German parliament that it “sees no need for government regulation” and that self-regulation by companies is sufficient. It is the responsibility of the company’s “decision-makers” – not its employees – to deal with internal problems, the company said.“If Siemens is serious about protecting whistleblowers they should be the first in line to ask for a whistleblower law,” said Strack, of the Whistleblower Network.For more than six months, from fall 2014 to spring 2015, several whistleblower websites set up by Siemens to receive reports of wrongdoing were not functioning. Users were directed to an external website, but it was not possible to submit evidence or information from there.Siemens spokespersons did not provide an explanation for the problems, which were corrected only after questions from 100Reporters.

How Transparent?

Following the 2006 scandal, Siemens hired Waigel, a former German finance minister and chair of Bavaria’s conservative Christian Social Union party, to monitor the company’s anti-corruption system from 2008 to 2012. Though Waigel has said that the company has corrected shortcomings in Siemens’ compliance system, his reports have never been made public and he has repeatedly refused to discuss the case.Though such reports are often kept from public view, Strack said that it was up Siemens to raise the bar. “If they want to have the best compliance system in the world, they should set a new standard. There needs to be more than just words. Siemens itself is responsible for the fact that the public is so skeptical.”(100Reporters is currently suing the US Justice Department for release of the Siemens reports on its anti-bribery program, made as part of its landmark settlement with US prosecutors. Both the company and Waigel have filed legal motions in US federal court opposing the release.)A corporate compliance expert said Siemens has significantly improved its anti-corruption efforts, but doubted the company could fully succeed.“It is completely beyond question that Siemens completely restructured its compliance work from 2007, and that it is now seen as relatively effective and even as a model for other companies,” said Hartmut Berghoff of the German Historical Institute in Washington, DC. Berghoff is an economic historian, professor and author who has written extensively about Siemens.“Of course that doesn’t mean that there are no compliance violations at all,” he said in an email. “But the chances of uncovering them and tougher sanctions are incomparably bigger than they were in 2007.”More than 30 Siemens executives in various countries contacted by 100Reporters, including a vice president, compliance officers, investigators and corporate lawyers, refused to discuss Siemens’ efforts to stamp out wrongdoing within the company.Company spokesmen declined to discuss the outcome of corruption allegations, retaliation against whistleblowers, or how many cases or violators the company may have referred to law enforcement.Trost said Siemens’ “legally binding data privacy and disclosure guidelines” prevent him from making “detailed statements concerning individual cases, persons or allegations.” He would only say that “in the event of detected violations,” the company notifies “investigating authorities,” such as prosecutors, police and anti-trust authorities, “if we are legally obligated to do so and/or we see it as necessary and appropriate in order to safeguard the company’s best interests.”Siemens also refuses to say how many whistleblowers have filed claims of retaliation for reporting alleged wrongdoing. Company spokesman Alexander Becker acknowledged that “reported or identified breaches of the non-retaliation policy” have been investigated, but he would not describe the types of retaliation whistleblowers have alleged – such as harassment, demotion or dismissal – or how employees who may have violated the anti-retaliation policy were punished, if at all.Since January 2010, 105 lawsuits have been filed against Siemens with the Labor Court in Munich, court spokesperson Petra Förschner said. But the court will not release any information on these cases, including whether any were filed by Siemens whistleblowers who were retaliated against or treated unfairly.According to Siemens’ public statements and financial reports, bribery, corruption, anti-trust violations and other types of prosecutions and investigations remain open or were recently closed in at least 22 countries. In Greece, for example, judges announced in March that 19 Siemens executives should stand trial over an alleged bribery scandal dating back 17 years. Last year Siemens was banned from bidding on federal contracts in Brazil because of suspected kickback payments.The recurring investigations “suggests there is a systemic problem in the company,” said Edwards of GAP. “It makes sense that they would put up a window-dressing compliance system, perhaps because the problems can’t be fixed by the corporation in its current form.”

Credits: Infographics by Dan Hill for 100Reporters.

Photos from top: Siemens headquarters in Beijing in February 2014, as Chinese regulators investigated allegations that the group’s healthcare unit and its dealers bribed hospitals to buy expensive disposable products used in some of its medical devices. Photo by Imaginechina via AP Images.

Siemens shareholders arrive for the company’s annual general meeting in Munich, southern Germany in January 2008. Photo by Oliver Lang for AFP/Getty Images.

Peter Löscher, Chairman of German engineering conglomerate Siemens, after the 2008 settlement. Photo by Sean Gallup for Getty Images.

Heinrich von Pierer (L), then chief executive of Siemens Germany, and Theo Waigel (R), then Germany’s finance minister, toast at a beer fair in Erlangen in 1998 following a ceremony to lay the foundation stone for a $110 million Siemens medical technic plant. Photo by Reuters.

Mark Worth

Mark Worth

Mark Worth is an American investigative journalist, whistleblower advocate, public interest activist, publisher and author. He is the co-recipient of the 1994 Investigative Reporters and Editors award for magazine writing for an investigation of chemically injured workers at Boeing factories published in the Washington Free Press, which he co-founded.‪
Mark Worth

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Ben Knight
Ben Knight is a radio and print journalist who writes in English for Deutsche Welle, The Local, Exberliner, and Time Out, and in German for Der Freitag, Fluter, Dummy, and Froh. He lives in Berlin.