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Siemens | First Public Statements on Bid-Rigging Confession


Source: Brasilianas.Org.

Siemens executive speaks out about cartel formation

By:  MARIO CESAR CARVALHO (Folha de S. Paulo)

American attorney Peter Solmssen has a hot potato on his hands. He is responsible for avoiding the payment of bribes and the formation of cartels at Siemens — two crimes that became so common at the German multinational in the last decade that it had to create a global task force to clean up its reputation.

The company’s self-reporting in Brazil, in which Siemens admitted that it rigged bids with 18 other companies, is part of this process.

Accused by Siemens, a series of deals with the  São Paulo Metrô  and the Brasília subway are under investigation on suspicion that companies colluded to elevate the price in public auctions.

Solmnssen, 58, a former vice-president at General Electric, says the confession was not mere marketing. In an interview with the Folha, by telephone from Munich, he said: “Those who tried to rig bids will discover that we are going to call the police.”

This is the first time a Siemens executive has spoken to the press about the Brazilian episode.

Since 2007,  Solmnssen has been the global compliance director) and argues that ethical companies are more profitable than others.  According to him, Siemens enjoyed its largest profits in 2007, when the group was fined US$ 1.3 billion for cartel formation and bribery.

The interview follows:

Folha – Do you believe cartel formation is a crime?

Peter Solmssen – Yes, it is a crime in a number of countries.

So then, are Siemens executives in Brazil criminals?

Yes, although the law provides incentives to conscientious individuals to blow the whistle on illegal acts.

Does the fact that executives revealed the bribery scheme erase the crime?

The intent behind the confession is not to erase the crime. It is to resolve the criminal aspect, the criminal behavior.

In 2007,  Siemens was fined US$ 1.3 billion in the wake of a major bribery scandal . Why should we now believe that compliance was not merely a marketing strategy to clean up the company’s public image?

I don’t see things that way. We confronted the same integrity issue in the 1950s. We believe that a clean business is a good business. In  2007 [after a series of scandals in 2006], our market share grew, and profits increased.

In 2008, a Siemens executive in Brasil sent an anonymous letter to the group in Germany describing the the same problems that are now part of the plea deal. Why did Siemens not act when it received this letter?

We receive this sort of information from all over the world and we investigate it. It is not easy to investigate these matters because we are not a police force. We cannot open bank accounts. We found no evidence of corruption in that letter.

Some of the Brazilian cases took place in 2007, after the company said it had created a more proactive compliance system. Do you think that compliance is working well in light of these new cases?

Our system does not have the capacity to eliminate executive misconduct. We have 370,000 employees around the world.

The deal with Brazil has to do exclusively with public transport. Are you certain that Siemens plays no role in cartels in the gas, electricity and medical equipment markets?

I don’t know the answer. We have a very good compliance program, we investigate worldwide and this is what we discovered. After 2007, it became difficult to evade our system or violate our rules. 

Investigators in the Siemens case in Brazil say that no cartel exists without the payment of bribes to politicians and civil servants. Why does Siemens not mention bribery in the confession it signed as part of the plea deal?

We only reported to Brazilian authorities what we had evidence and information to support.

Some experts say that Siemens negotiated the confession to avoid future criminal charges. 

I hear this from everyone. But it isn’t true. We made significant information available to authorities in the U.S., U.K. and, as it happens, in your country as well. .

Confession is not just a way to avoid the worst-case scenario? 

Self-reporting is very important to  compliance, from both an external and internal point of view. If you find something wrong going on internally, you can change the behavior of your employees. Don’t forget that companies are run by people, who on occasion do stupid things, commit errors. It may be painful but we have to know the truth in order to resolve such cases.

I watched a conference of yours in October, when you told young leaders that it is “very easy” to combat corruption: All you have to do is say no. If it is that easy, why did Siemens fail in its compliance program in Brazil?

We may be confusing two different things  [“compliance” and a psychological approach]. To say no is to do the right thing. It is a psychological matter. The company must offer help and training so that its people do the right thing . If someone tries to do the wrong thing, we must help him or her. We try to do this with all our employees: do not give in to temptation or other pressure, don’t be weak, just say no.

Just saying  no is simplistic. It reminds one of the slogan conservative Americans use to convince adolescents to avoid sexual relations: Just say no.

[Laughter] No. Just saying no does not send a strong enough message. The question is why people do not do the right thing? We had a case of bribery two years ago in the Middle East. I asked those same questions. Why did this guy do what he did? He was trained. He know the risks, but he did it anyway, which was illegal and stupid.

Do you still think combating corruption is a simple matter?

What is simple is deepening the effects [of an anticorruption environment]. Company leaders are like the leaders of a country: they must remind people of the obvious. People are very upset at such a time as this [when the company is self-reporting]. We think all of this should happen. The process. will soon return to normal, but our employuees and partners who attempted to rig bids will know that we will call the police.