a change management process - corporatecompliance.org€¦ · a change management process ......

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© Siemens AG 2008. All rights reserved.

The Siemens Compliance Program: A Change Management Process

Society of Corporate Compliance & Ethics 8th Annual Compliance & Ethics Institute

Deanna SlocumCorporate Compliance OfficerSiemens Corporation

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© Siemens AG 2008. All rights reserved

The Independent Investigation

�Staffing

�Scope

�Accounting Analysis

�Reporting to US Authorities

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2008 Resolution of US and German Proceedings

US Proceedings

Department of Justice

� Siemens AG pled guilty to violations of the internal controls and books and records provisions of the FCPA.

� Three Siemens foreign subsidiaries pled guilty to individual counts of conspiracy to violate the FCPA.

� Aggregate fine $450 million

Securities and Exchange Commission

� Siemens AG disgorgement of profits $350 million.

Compliance Monitor for Four Year Term

Dr. Theo Waigel, Former German Federal Minister of Finance

German Proceedings

� Siemens AG fine €395 million

� Previously paid fine €201 million.

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Immediate Response

� Selection of external experts to conduct independent investigation

� Appointment of ombudsman in Germany

� "Tone from the top": town hall meetings; letters of CEO; etc.

� Use of business consultants restricted

� Payments and bank accounts centralized

ImplementationOf Enhanced Program

Efforts to become a "recognized leader"

� Elimination of material weakness in financial controls

� Compliance tools and simplification of processes

� Compliance in employee incentive system

� Collective action efforts with third parties

� Extend the scope of compliance and create a culture of integrity

� Defined and created a comprehensive compliance program: Prevent – Detect –Respond

� Expanded global compliance organization and processes

� Conducted anti-corruption training for managers and sensitive functions

Compliance Efforts that Began in November 2006

Prevent Detect RespondPrevent Detect Respond

§ Training

§ Policies & Procedures

§ Programcommunication

§ Centralization

§ Complianceinvestigations

§ Compliance reviews

§ Compliance controls

§ Consequences for misconduct

§ Global case tracking

§ Monitoring effectiveness

§ Integration with personnel processes

§ Compliance helpdesk (incl. Global Ombudsman function) § Compliance helpdesk (incl. Global Ombudsman function)

§ Compliance Organization§ Compliance Organization

§ "Tone from the Top"§ "Tone from the Top"

Continuou s improve-

ment

Continuou s improve-

ment

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Key Leadership Changes

Gerhard Cromme – Chairman of Supervisory Board and Compliance Committee

� Chairman of the Government Commission on the Germany Governance Code

� Chairman of the Supervisory Board of Thyssen-Krupp AG

� Member of the Supervisory Boards of Allianz SE, Axel Springer AG and Compagnie de Saint-Gobain SA

Peter Y. Solmssen – General Counsel

� Former Executive Vice President and General Counsel at GE Healthcare based in the UK

Hans Winters – Chief Audit Officer

� Former Partner at PwC, specializing in projects for international compliance and internal controls systems

� Has supported international companies in compliance-related matters before U.S. regulatory authorities

Peter Löscher – Chief Executive Officer

� Former President of Global Health at Merck & Co., Inc. in USA

� Former President and CEO of GE Healthcare Pro-Sciences in the UK

Andreas Pohlmann –Chief Compliance Officer

� Former Executive Vice President and Chief Administrative Officer at Celanese Corp. in USA

� Previously responsible for legal matters, corporate governance, compliance and risk management at Celanese AG

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Corporate Restructuring: Three Sectors

Key Benefits

Industry

Businesses from� Automation & Drives� Industrial Services & Solutions� Transportation Systems� Building Technologies� Osram

Healthcare

Businesses from� Medical Solutions

Sectors

Sie

mens IT

Solu

tions a

nd S

erv

ice

sS

iem

ens F

inancia

l S

erv

ices

Cross-functional

Three Sectors

� Clear Accountability

� Reduction in Complexity

� Synergies

Energy

Businesses from� Power Generation� Power Transmission & Distribution

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Expanded Global Compliance Organization

Chief

Compliance Officer

A. Pohlmann

Corporate Units

Compliance

Officer

Th.Luethi

Sector

Compliance

Officers

Industry: C.AugstenEnergy: G.Brey

Health: W.D.Guhl

Compliance

Global Coordinators

AM: I.GarciaASA: F.Schmidt

EU: M.ThunMEAC: T.Mark

Compliance

Policies,

Communication

& Training

J.Meran

Compliance

Program, Projects

& Reporting

M. Vierengel

Compliance

Operating Officer

K.Moosmayer

Disciplinary

Sanctions

Y.Hamm-Dueppe

Compliance

Helpdesk &

Monitoring

J.Neumann

Compliance

Investigation

R.-D.Buehrer

Regional

Compliance

Officers

(RCOs)

Compliance Legal

U.Hommel

Division Officers

(DCOs)

Division

Compliance

Officers

(DCOs)

Member of the

Managing Board

General Counsel

P.Solmssen� Compliance represented in

Managing Board

� Strong corporate governance

� Embedded in Business units and Regions

Joel KirschVice President &

Chief Compliance Officer,Associate General Counsel

Fred Kile

(SWT)Doug Doty

(SBT)

Dan Garen

(Healthcare)

BarbaraGreenberg(SIS/STS)

Steve Shoop(SFS/ SSL/

SRE/ SCR/

SO)

David Taft

(SEA)

DeannaSlocum(PLM)

Dave Dickerson

(Energy)

Compliance Officers

Laura GoodmanExecutiveAssistant

Ann Florkowski

ComplianceProfessional

Bob Jordan

(OSRAM)

Ginny MurphyCounsel,

Compliance

Expanded US Compliance Organization

George NolenPresident & CEO

E. Robert LuponeSr. Vice PresidentGeneral Counsel &

Secretary

Andreas PohlmannCCO

George NolenPresident & CEO

E. Robert LuponeSr. Vice PresidentGeneral Counsel &

Secretary

Andreas PohlmannCCO

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Key Elements of Compliance Program:

Prevent – Detect – Respond

Prevent Detect Respond

� Training

� Policies &Procedures

� Programcommunication

� Centralization

� Compliance investigations

� Compliance reviews

� Compliance controls

� Consequences for misconduct

� Global case tracking

� Monitoring effectiveness

� Integration with personnel processes

� Compliance helpdesk

� Compliance Organization

� "Tone from the Top"

Conti-nuous

improve-ment

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Implementation of Anti-Corruption Toolkit

'Tone from the Top'

Compliance

Case

Monitoring Effectiveness

Organization

10

1

3

2

Tracking

Training &

ProgramCommun-

ication

4

Implementation of Policies and Procedures

3rd parties

Tender & Contracts

Gifts & Hospitality

Finance & Accounting

Integration with Personnel Processes9

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7

6

5

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Anti-Corruption Toolkit Controls

Prevent

Anti-Corruption Toolkit Controls require that we -

� Communicate commitment to compliance from highest levels of management – both internally and externally

� Maintain a Compliance Review Board to centralize information and provide direction

� Maintain compliance infrastructure through appropriate staffing selection, training, assessment of competencies and adequate budget?

� Continuously Assess Compliance Risks

� Communicate and train on policies and expectations

� Conduct due diligence in advance of engaging with Business Partners, conducting a merger or acquisition or entering a joint venture

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Peter Loescher, CEO, clearly established the tone

from the top

"Only Clean Business is Siemens business.

Everywhere – everybody – every time!"

"Compliance as part of Corporate Responsibility is 1st priority!“

Source: P. Löscher; Compliance Officer Conference October 2007

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Compliance Communications Distributed through

Variety of Media

Siemens Communicators

Intranet Platform

Siemens Employee Magazine(reports frequently, three articles in ed. 08/2008)Management letter

(to Siemens management)

Corp. Compliance Intranet(to all employees)

Compliance Update(newsletter for glob. Compliance organiz.)

Siemens TV(to all employees)

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Targeted Anti-Public-Corruption

Policy

� Siemens Values and Vision (Sept. 2007)

� Business Conduct Guidelines (July 2005; revised in January 2009)

� Anti-Public-Corruption Circular (May 2007)

Enhancement of Policies & Procedures

Appli-cation

to Specific Risks

� Business Consultant

Moratorium (Feb. 2007)

� Additional Business Consultant

Guidance (May 2007)

� Guidelines for Retention of

Intermediaries (Aug. 2007)

� Gifts and Hospitality (Aug.

2007, March 2008)

� Anti-Corruption Considerations

in M&A Transactions, Joint

Ventures and Minority

Investments (Aug. 2007)

� Company Donations (Oct. 2006)

� Sponsoring (May 2007)

� Business Partner Policy (Due

Diligence) (July 2008)

Fundamental Ethical Standards

and Principles

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Enhanced Compliance Training

Target Groups Type of Training

Senior Management

� Supervisory Board, Board of Management

� CEOs / CFOs of Divisions, sub-divisions, regional companies

� Members of Group Boards

Employees with signing authority

� Employees in management positions

� All customer-facing and controller functions (e.g., sales, sales commercials)

Manager / staff who interact with govt. officials

� Personnel involved in sales, project management

� Regular interactions with government (such as Tax, Customs)

� Boards of legal entities (if applicable)

New Compliance Officers

� From Regions, Sectors / Divisions / Business Units

In-person 4h training delivered by Compliance and Outside Counsel

~1h Web-based training available in 15 languages

In-person4h-8h training delivered by local COs and In House Counsel

4 day Introduction Program

52,200 employees trained in FY 2008

123,000 employees

85 Compliance

officers from Jan -

Sept 08

As hired

~10,000 employees from lower-risk entities

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Business Partner Review and Approval Process

During the Due Diligence phase, the first 3 steps are performed by the Business Unit. The fourth step (Approval Process) is conducted by management and the Compliance Organization

Higher

Medium

Lower

Business Unit

Pre-workDue Diligence Questionnaire

Front-end Risk Assessment1 2 3

Entrypoint

BP key data Collection

Integrity Check (Internet Search)

Risk classifiers(A-H)

Doubtfulintegrity

Positiveintegrity

Higher

Medium

Lower

a

b

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Detect

Anti-Corruption Toolkit Controls require that we –

� Facilitate reports of, and investigate, allegations of non-compliance

� Monitor bank accounts

� Open accounts with appropriate approvals

� Compare internal and external transaction records

� Sample payments and confirm appropriate approvals for payments to Business Partners and potentially high risk entities and payments for gifts, hospitality, sponsorship and donations

� Sample changes to Master Data and confirm appropriate approvals

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Compliance Helpdesk

"Tell Us" “Find It"

“Approve It" “Improve It"

"Ask Us"

The Compliance HelpDesk “Tell Us”function provides global, round-the-clock intake for allegations of actual or potential non-compliance.

Do you have any questions about compliance? You can ask them at any time via the Compliance HelpDesk“Ask Us.”

With “Improve It” you can help to improve the Compliance program by adding your ideas and suggestions.

Use “Find It” to search for compliance related information, such as FAQs, policies & guidelines or training material.

Compliance Helpdesk&

Monitoring

“Approve It” is the platform for approval requests regarding gifts and hospitality

Now available

Partlyavailable

Pilot started

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Respond

Anti-Corruption Toolkit Controls require that we –

� Impose appropriate penalties for substantiated non-compliance

� Integrate compliance and Human Resources files and objectives

� Reward management support for compliance initiatives

� Conduct background checks prior to appointing senior leaders

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Corporate Disciplinary Committee ("CDC") was established in 2007

CDC Responsibilities are to:

� Evaluate allegations of misconduct

� Determine appropriate disciplinary sanction, consistent with local labor laws

CDC actions establish precedent for sectors and regional companies

Role of Siemens AG Corporate Disciplinary Committee

General Counsel, Member of the Management Board of Siemens AG

Labor Director, Member of the Management Board of Siemens AG

Chief Compliance Officer

Head of Corporate Human Resources

Compliance Operating Officer

Head of the relevant Business Unit where the violation took place

CDC(Corporate Disciplinary Committee)

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Compliance Element of Senior

Management Compensation

Objectives:

� Establish compliance as a central managerial responsibility and anchor of corporate culture

� Provide senior managers with further incentive to take active part in implementing and living compliance program

� Communicate message that compliance is not rewarded, but expected

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Survey Overview Survey Results

Survey

sent to

89,000

employees worldwide

� Evaluate effectiveness of tone from the top

� Company-wide feedback on compliance perception and identification of ‘cultural’ key drivers of compliance performance

� Measure effectiveness of compliance activities

� Uncover best practices and problem areas

Management culture and actions have important impact on employees

Compliance communications understood and well-regarded

Further work needed on training

Further need to fully imbed compliance in day-to-day business

Positive perception of compliance program

Monitoring Our Progress – Employee Survey

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Siemens Will Go Beyond Internal Programs and become a Recognized Leader in Compliance Externally

Become a recognized

leader in transparency

and compliance

Collective Action

External

Internal

Siemens Compliance

Program

� Prevent

� Detect

� Respond

Share internal policies,

experiences, best practices

and success stories

Reach out to industry peers

via neutral facilitators

(such as Transparency International)

and initiate joint activities

to fight corruption

Collective Action will play a critical role in establishing high compliance standards for all market players and reducing the risk of corruption.

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Siemens AG Compliance Objectives for 2009

Create a culture of integrity

Move towards a value based culture

Act as change agents (“tone from the middle”)

Make compliance become a competitive advantage

Look beyond Siemens

Benchmark with the best

Participate in Collective Action Projects. Show our commitment

Support the Compliance Monitor

Become more efficient

Improve and simplify policies and control processes to minimize business disruption while continuing to accomplish compliance objectives

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