There is much talk about the Siemens settlement, which we need not repeat. The FCPA Blog has a great summary here.
Many commentators are focused on how large the settlement is…….we touch here on 2 things that are important for us folk in Europe.
The first is that the fine was against a European company, not a US one. Siemens is a corporation organized under the laws of Germany with its principal offices in Berlin and Munich. It fell however within the ambit of the FCPA because it was listed on the NYSE and was therefore an ‘issuer’ within the meaning of the FCPA.
The second is the comparative modest size (much less than 1% of turnover) and structure of the penalty.
Siemens paid a criminal fine of $448.5million to the DOJ and $350 million in disgorgement of profits to the SEC. In German cases against it, it agreed to pay €596million.
The plea agreements sets out that the base fine was $843.5million, which was the total amount of corporate assets known to have been distributed for unauthorized purposes, plus the profits from defendant’s Oil for Food Program contracts. A culpability score of 8 gave a fine in the range $ l.35-2.7billion. In fact the final fine was well below the bottom end of this, at $448.5million. This was as a result of the extraordinary efforts taken by Siemens to remediate, described by the DOJ as “represent mitigating circumstances of a kind, or to a degree, not adequately taken into consideration by the United States Sentencing Commission.“
Under the terms of the plea agreement, Siemens AG pleaded guilty to one count of failure to maintain internal controls and a one-count books and records violation. In addition, three Siemens subsidiaries, those located in Bangladesh, Venezuela and Argentina, pleaded guilty to the DOJ’s bribery offences. This was explained by the White Collar Crime Prof Blog here. Siemens therefore avoided either a guilty plea or a conviction for bribery, allowing it to maintain its status as a “responsible contractor” with the U.S. Defense Logistics Agency.
The DOJ agrees to Siemens having a European monitor
As was seen as inevitable, Siemens had compliance monitor (for 4 years) imposed as part of its settlement. For the first time however, the DOJ agreed that a non-American could act as monitor. The monitor is an experienced businessman, the former German finance minister Theo Waigel, and what he lacks in hard-core FCPA experience will be provided by Gibson, Dunn & Crutcher who will be assisting him.
In common with other commentators, we agree that this appointment should encourage European conglomerates to take the lead in investigating commercial bribery. Knowing that they can suggest a local monitor, experienced in local laws and practices should be a distinct advantage. US law firms can of course be retained by the local monitor to provide the corridor credibility in Washington with the DOJ and SEC.