Compliance Standard Presentation

The Siemens Compliance
System
Seminario internacional - 24/08/2016
“Escándalos Empresariales en Primera Persona:
Volver a ponerse de pie”
Unrestricted © Siemens AG 2016
siemens.com
The Past
The Siemens Compliance System
The disaster struck
November 2006 headlines
Possible scenarios
• Debarment from
public tenders
• Penalties up to
€10 billion
• Long-term damage to
reputation and business
• Break-up of the
company
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The success story
What we did
 More than 5,000 consulting agreements evaluated
 40 million bank account statements, 100 million documents
and 127 million transactions reviewed
 One in five employees pitched in at some point
What we achieved
 Conclusion of legal proceedings in Germany and US in
record time (less than two years)
 First Compliance Monitor who is not a U.S. citizen
 First ever reduction of fines because of outstanding cooperation
 Internal control mechanisms 'set a new standard'
Two Years Later: Out of the line of fire and a new company
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Substantial Change was necessary...
'Wink & nod' culture
Unclear decision-making processes
Inadequate internal control mechanisms
Complex company structures
Culture of hiding problems
Determination to cling to myths
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Rapid reaction and implementation of our
Compliance System, plus further development
Immediate actions
Implementation
Support sustainable business
2006-2007
2008
2009
• Exchange of Leadership Team
• Settlement with authorities
in Germany and in the U.S.
• Settlement with World Bank
• Independent investigation
• Compliance program
• Values & integrity
• Centralization of bank accounts
• Compliance organization
• Collective Action
• Tone from the top
• Continuous improvement
• Compliance training
• Compliance tools
Active development of Compliance System/ external recognition
2010-2012
2013- Present
• First funding round Integrity
Initiative
• Start “Integrity Dialog
• End of monitorship
(Dec. 15, 2012);
full implementation of
all recommendations
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• Second funding round
Integrity Initiative
• Dow Jones Sustainability Index:
highest rating in the category
Compliance for 5th time in a row
• External Compliance review and
certification by law firm “Gibson
Dunn” (2015)
Siemens Today
The Siemens Compliance System
The lived ownership culture of our
company makes the difference
“The lived ownership
culture of our company
makes the difference.
People rightly associate
Siemens with reliability,
fairness and integrity.”
Joe Kaeser,
President and CEO of Siemens AG
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Our Compliance System –
Management responsibility is the focus
We continuously develop the Compliance System further in order to adapt it to changing
requirements according to our global business.
Effective preventive measures
such as risk management, policies &
procedures, training & communication
enable systematic misconduct to
be avoided
Management
responsibility
Explicit consequences
and clear reactions support
the prevention of misconduct, for
example to punish wrongdoing and to
eliminate deficiencies
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Effective Compliance work
requires complete clarification:
whistle-blowing channels “Tell
us” and ombudsman, as well as
professional and fair
investigations
The Siemens Compliance Organization –
Clear roles & responsibilities
Direct connection to the CEO
Roles of Compliance Officers
President and CEO
Joe Kaeser
Situation
General Counsel
Andreas C. Hoffmann
Main tasks
Chief Compliance Officer
1)
Klaus Moosmayer
Company-wide Compliance
organization in Headquarters,
Divisions and Regions
Anti-Corruption
The prevention of the abuse
of entrusted power for
private gain
Antitrust
The preservation of market
competition
1 Direct reporting line to Board of Management and Supervisory Board re compliance risks and measures.
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Data Privacy
The protection of
personal data
Anti-Money Laundering
The protection of Siemens
from being abused for
laundering money or
financing terrorism
Our employees
in dialog on Compliance with their line manager
Integrity dialog in team meetings
• Objectives
• to maintain awareness of Compliance
• to provide a practical demonstration of
management responsibility
• Managers discuss Compliance-related
topics with their teams
• Contents: Risk-based selection of topics
with central and local relevance
• Supported by Compliance Officer
• Global rollout during Fiscal Year 2013
• Repeated on annual basis
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Compliance Training
Three Corridors
Onboarding
Life-Long Learning
Ownership Culture
Introduce the Siemens
Compliance System
Advanced and Refresher
Training Courses
Reinforce a Culture of
Integrity
Set expectations for
integrity and compliance
Builds on concepts presented
in onboarding training
Mixture of communication
and informal training
Initial policy/tool/process
training (function specific)
Focus on ‘real world’
application (e.g. identifying
risk, tools & processes, etc.)
Frequent involvement of top
and mid level management
Overview of Siemens
Compliance history
Examples
Significantly reduced
administration and tracking
Examples
 Modules (advanced tutorials,
refreshers, etc.)
Examples
 New Employee Basic IPT
 Topic specific WBT (e.g. AML)
 Integrity Dialogs
 Siemens Compliance WBT
 Embed compliance aspects
into leadership courses
 Short videos (e.g. scribble,
management interviews)
 Data Privacy WBT
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Compliance Communications
Key Messages & Platforms
Integrity
is the basis of
sustainable business
Compliance stands for
integrity
Compliance supports
profitable growth
Intranet
Hot Topics & Newsletters
• Internal & External news updates
• Policies, processes, tools & links
• Posters, flyers & downloads
• Articles aligned to policies & law
• Short, simple reads
Posters & Flyers
Compliance Week
• Best factory worker communication channel
• Important method for sharing Tell Us hotline
details
• Communicate a “Tone from the Top”
• Highlight Siemens Values
• Reinforce compliance messaging
Meetings & Townhalls
Siemens Social Network
• Excellent platform for showcasing case studies
• Educate business on policies & processes
• Reinforce tone from the top
• Engages younger workers
• Enables global discussion of
compliance topics
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Compliance enables
responsible behavior
of the company
Business partner-related Compliance risks –
uniform risk-assessment of all relationships
The Compliance Due Diligence process
for Business Partners
• All business partners with an intermediary
function between Siemens and the customer
must undergo a risk assessment (uniform across
the company and supported by a tool).
• Based on certain risk indicators – such as, for
example, the risk of corruption in the country of
deployment – a risk class (higher, medium or
lower risk) is defined for the business
relationship, which subsequently determines
further procedure (Due Diligence, requirement
for approval and mandatory contract clauses).
• Lifecycle management: daily learning and
adaption if needed – continuous development
of risk management .
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Business Partners
uniform risk-assessment of all relationships
The Compliance
Due Diligence
process for
Business Partners

All business partners with an intermediary function between Siemens and the customer must
undergo a risk assessment (uniform across the company and supported by a tool)

Based on certain risk indicators – such as, for example, the risk of corruption in the country of
deployment – a risk class (higher, medium or lower risk) is defined for the business relationship

Management is responsible for ongoing business partner monitoring throughout the course of the
relationship. Documentation of monitoring is required for highest risk business partners

Business partner contracts include mandatory compliance provisions, including audit rights

Siemens regularly audits business partners (~400 since 2012)
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Compliance in Project Sales and
Project Execution
Project Sales
Project Execution
Compliance risks in
the project sales
phase are covered
by the Limits of
Authority (LoA)1)
process.
Compliance risks in
project execution
Subcontractors
Inappropriate payments to
subcontractors
Scrap/ excess/ surplus Material
Scrap/ excess/ surplus material is
misused for inappropriate purposes
Customer decisions
(e.g. change orders, acceptance,
licenses permits)
Inappropriate payments
1 *: The LoA process is the internal approval procedure for external projects of Siemens.
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Identification and mitigation of
Compliance risks
In projects that indicate possible
compliance risks, the Project
Manager
• has to regularly identify and
mitigate such risks in the
project execution according to
a specified „Red Flag
systematic and
• actively involves the respective
Compliance Officer in the
preparation of the acceptance
of the project.
Collective Action is building alliances against
corruption in order to support fair market conditions
Background
 Collective Action enables
corruption to be fought
collectively
Goals
 Create fair and equal market
conditions for all market players
 Eliminate the temptations of
corruption
Content/ Priorities
 Global implementation of legal
and regulatory frameworks such
as the UN Convention against
Corruption (UNCAC) or the
OECD Anti-Bribery convention
 Increase cooperation and
encourage partnerships between
public and private sector, and
other stakeholders
 Increase transparency in
government procurement
*: The initiative is based on the settlements with the World Bank and the European Investment Bank and supports
organizations and projects that fight corruption and fraud through Collective Action, education and training.
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Position of Siemens
 Promote, extend and implement
regional and long-term based
initiatives
 Drive the Siemens Integrity
Initiative* with a total funding of
more than US$ 100 million.
 Actively engage in international
anti-corruption initiatives such as
G20/B20, OECD/BIAC and World
Economic Forum
 Foster global knowledge sharing
about anti-corruption and
Collective Action
Siemens Integrity Initiative covers all major
growth regions and high-risk countries
CEE
Russia
(6 Projects, 7.0M)
(1 Project and
1 Sub-Project, 2.4M)
2.4M
8.4M
4.6M
12.0M
0.9M
1.5M
0.6M
0.9M
0.8M
4.4M
Global Projects
2.4M
(9 Projects, 20.4M)
1.5M
7.0M
2.9M
1.2M
South
Europe
(3 Projects, 3.0M)
(9 Projects and 1 SubProject, 11.4M)
1.7M
(5 Projects and
3 Sub-Projects, 7.6M)
China
3.0M
1.4M
Americas
(2 Projects, 1.7M)
(3 Projects and
1 Sub-Project, 4.4M)
Middle East
6.4M
South Korea
Asia-Pacific
(3 Projects, 3.0M)
5.2M
4.0M
India
(2 Projects and
Africa
3 Sub-Projects, 3.1M)
(8 Projects and
3 Sub-Projects, 9.2M)
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Region / Country of implementation (number of project proposals)
First Funding Round
Bubble size = Approximate
Second Funding Round
value of funding
We must stay vigilant…
and determinedly pursue all cases that arise…
Compliance investigation process
Compliance case
Allegation
received
Assessment
carried out
by
examining
or
evaluating
the
allegation
before
mandating
an investigation
Mandating
Research
and
planning
Investigation
Preparation of
the investigation
report
Compliance investigation
Stipulated standards
• The presumption of innocence applies, employee rights are safeguarded
• Works Council co-determination rights are protected
• Data privacy is observed
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Disciplinary
measures
and
remediation
Compliance indicators
Compliance Indicators1
Fiscal year
2015
2014
Compliance cases reports
568
653
Disciplinary sanctions
208
195
therein warnings
116
114
therein dismissals
79
50
Therein others2
13
31
1 Continuing and discontinued operations.
2 Includes loss of variable and voluntary compensation elements, transfer and suspension.
Source: Siemens Sustainability Information 2015
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… and continue with the constant development
of the Compliance System
• Compliance has top priority
• Compliance System to support
sustainable growth and create a
competitive advantage
• Risk-based further development of the
Compliance System, in order to maintain
high standards
• High rating and recognition of our
Compliance System in the annual
assessments for the Dow Jones
Sustainability Index: highest rating in the
Compliance category for the 5th time
in a row
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Further Information
Business Conduct Code of Conduct
Guidelines
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Compliance
Internet
Compliance
System Brochure
Siemens Integrity
Initiative
Sustainability
Information 2015