siemens compliance program – track record and challenges za saradnju sa eu/usaglasavanje... ·...

Confidential / © Siemens AG 2008. All rights reserved

Siemens Compliance Program –Track Record and ChallengesSubtitle Arial 20 point

Protection notice / Copyright notice

Titel of EventLocation and Date, September 2010

Corporate Legal and ComplianceSeptember 2010

The message concerning Compliance is authentic, clear and non-compromising

“Being a responsiblecompany – this is what our foundation was built on, thisis a core element of our values. Highest performance with highest ethics”

Peter Löscher, President andChief Executive Officer of Siemens AG

Source: P. Löscher; September 2010


Compliance is an integral part of our culture of integrity

“Our value ‘responsible’ isbased on integrity. Integrityrequires taking responsibilityand having the courage tomake decisions following ourinner compass.”

Peter Y. Solmssen,Member of the Managing Board andGeneral Counsel of Siemens AG

Source: P. Solmssen. September 2010

July 2010 © Siemens AG 2010

In the change process, several elements were crucial in becoming a recognized leader in terms of integrity

2006 20092007 2008 2010

Immediate Actions ImplementationSupport sustainable

business!

Tone from the Top

Independent

investigation

Compliance Program

Compliance Organization

Compliance Training

Compliance Tools

Continuous Improvement

Values & Integrity

Collective Action

SustainableDevelopment

Conti-nuous

Improve-ment

DoJ/SEC settlement

Centralization of bank accounts

Exchange of Leadership Team

World Bank settlement

© Siemens AG 2010July 2010

A chapter is closed but the fight against corruption is never over

What's next?

A painful chapter is over - settlement with German and US-authorities reached Overall costs ~2 billion Euros

Compliance still has top priority

Siemens has a best-in-class compliance system – and on this basis has started to fight corruption with "Collective action"

DoJ/SEC has appointed a Monitor who is watching our compliance progress


Major Lessons from the Compliance Turnaround

Implement a compliance program which interlocks prevention and sanctions

Establish an independent Compliance Organization with strong governance

2

3 Let people understand why only clean businesses are sustainable

4

Collective Action - Find allies to level the playing field5

Keep always momentum and be never satisfied

Make compliance a rigorous component of the incentive system

1


Top Management

Communication Behavior

Provide strong, clear and sustainable messages

Involve in dialogues with middle management

Show strong presence internationally throughout the entire organization

Act as role models with all attitudes and behaviors

Live and spread Siemens' company values internally and externally

Prove the credibility of messages by putting the talking into actions

Strong communication and exemplary behavior are core tasks of top management to drive Compliance, …

"Only Clean Business is Siemens Business. Everywhere – Everybody – Every Time!"

“Tone from the

Top“


Full commitment towards Compliance and Clean Business

… however, "the tone from the top" has to be lived and communicated throughout all management levels

Anchor compliance in the entire value chain

Engage in regular communication with employees

Explain and demonstrate compliance-

related issues

Show priority of compliance at all times

Promote Siemens'

compliance tools

Motivate and encourage employees


Global Compliance Organization – Corporate Functions

Corporate Compliance

Officer

SectorCompliance

Officers

ComplianceExternal Affairs

& Training

Compliance Program

Management

ComplianceOperating

Officer

RegionalCompliance

Officers(RCOs)

Division Compliance

Officers(DCOs)

Chief Compliance

Officer

Cross SectorCompliance

Officers(DCOs)

Cluster Compliance

Officers

Compliance represented in Managing Board Strong corporate governance

Embedded in business units and regions

Member of the Managing BoardGeneral Counsel

DisciplinarySanctions

Compliance Helpdesk &Monitoring

ComplianceInvestigation

Compliance Legal

Will be redesign

edshortly


Siemens is strengthening its compliance organization by focusing on operations-related tasks.

As the new Chief Compliance Officer, Josef Winter, who headed Siemens’ activities in Germany until end of June, will manage operations-related, sales-related topics. Josef Winter will be responsible for all compliance officers in Siemens’ Regional Companies and Sectors, advise the sales organizations and further improve the efficiency and practicability of the compliance system.

In the newly created position of Chief Counsel Compliance, Klaus Moosmayer, the current Compliance Operating Officer, will be responsible for all legal aspects of compliance. Klaus Moosmayer will be responsible for company-wide Compliance guidelines, related legal questions, monitoring and internal investigations.

Started on July 1, 2010, both men will report directly to Siemens Managing Board member Peter Y. Solmssen.

Josef Winter (left) named Chief Compliance Officer and Dr. Klaus Moosmayer Chief Counsel Compliance


Employees FY 2007

Global Compliance Organization – Ramp-up also in the Sectors and Regions

Employees FY 2009

CorporateΣ 80

Sectors &Divisions

Σ 195

RegionsΣ 323

Σ 598

14

Σ 173

CorporateΣ 14

Sectors &Divisions

Σ 68Regions

Σ 91


Siemens Compliance Program aims at the synergy of all three dimensions

Prevent Detect Respond

Compliance investigations

Compliance reviews

Compliance controls

Consequences for misconduct

Global case tracking

Monitoring effectiveness

Integration in personnel processes

"Tone from the Top"

Compliance Organization

Compliance Helpdesk 1)

Training

Policies, Proceduresand Compliance Tools

Programcommunication

Centralization

Conti-nuous

improve-ment

DoJ/SEC have appointed

a Monitor who is watching

our compliance program

1) Incl. Global Ombudsman function


Acting on what is said to be required, the management has to find the “bad” guys in the company and take actions visibly

Take actions (Z Circular No. 39/2007): A Corporate Disciplinary Committee

evaluates allegations of misconduct and selects appropriate disciplinary sanctions

Sanctions depending on local labor laws (Informal/formal warning; Forfeiture of remuneration elements / stock awards; Forfeiture of variable pay; Transfer to another position; Dismissal)

Visibly (Compliance Progress Reports)

Disclosure of training activities, Helpdesk requests & reports, staff increases, disciplinary sanctions

Finding the “bad” guys in the company 1 2

3

Categories of Compliance Cases: Compliance cases are cases where a legal requirement or an internal rule based on such requirements is violated.

Phases of internal investigations: Compliance investigations are always based on a mandate.They are carried out by either Compliance Investigations (CL CO I) or Forensic Audit (CF A FOR) in coordination with a lawyer from Compliance Legal (CL CO L).


Compliance is one of the four main categories of the Internal Control System

Risk identification highlights gaps in internal controlsand influences the identification of necessary controlrequirements as well as their monitoring.Enterprise Risk Management

(ERM)Internal Control System

(ICS)

Monitoring of control requirements may resultin the identification of unmitigated risks.

Risk and Internal Control

Quarterly

Update

The Policy & Control Masterbook (PCMB) comprises in total ~750 Siemens global control requirements and forms the basis for the Siemens “In Control” Statement.

Corporate Circulars

SOA 404 Annex 4

ICS Self Assessment Catalogue

ICS Task Force Output

Others

Sour

ces

Categories

Strategic

Operations

Financial

Compliance

CL CO* is governance owner of 44 control requirementsthereof - 25 CCF** - 19 other sources, e.g. CL CO circulars

* CL CO = Corporate Legal Compliance; ** CCF = Compliance Control Framework


New Compliance Control Framework (CCF) reflects best implementation and testing practices

Implementation of Policies and Procedures'Tone from the Top'

Case Tracking3

1

Policies & Training

4

Implementation of Policies and Procedures

Gifts & Hospitality

Finance & Accounting

Integration with Personnel Processes

6

7

8

9

10

11

5

ComplianceOrganization

2

Business Partners

Tender & Contracts in Project Business

Finance and Accounting

Integration with Personnel Processes

Antitrust

M&A, JVs and Minority Investments

Controls and policies were implemented and audited in over 1000 Siemens entities, started in Q1 FY2008

11 focus areas


… however, ultimately, controls are not enough.We need to continue fostering an integrity culture

Is it the right thing for Siemens?

Is it consistent with Siemens core values and mine?

Is it legal? Is it ethical?

Is it something I am willing to be held accountable for?

If the answer is YES to all of those questions, DON'T WORRY, BE CONFIDENT

Questions to guide Siemens employees towards compliant and responsible behavior

1

2

3

4


Compliance – Focus Topics 2010

Responsibility and integrity - Drive change from a rules-based culture to a values-based culture

Increase efficiency of compliance program – Continue to reduce complexity and to simplify control processes and policies

Intensify collective action initiative and execute visible anti-corruption alliances

Further strengthen Siemens´ position as industry role model in terms of compliance and integrity – Continue intensive stakeholder dialogue and external communications

Intensify internal compliance communication - Strengthen awareness of Compliance as business enablerand its value proposition to the company

Upgrade compliance training program – Creative, comprehensive, tailor-made and involvingmanagement in training

Continue to proactively support the Monitor – Adopt recommendations expeditiously

Develop a global high-performance Compliance team – Strengthen skills and capabilities

Stay vigilant ! Assure sustainability of best-in-class compliance program


IT-based tools make sure, that compliance policies are implemented in an effective and reviewable way

Tools ImpactPolicies

Policies:* Project Business Business Partner Sponsoring, Donations,

Memberships Gifts & Hospitality Compliance Investigations

GlobalImplementation

Smart IT Tools: Limits of Authority

Approval procedure for external projects

Business PartnerDue Diligence

Sponsoring, Donations and Memberships

Approve ItApproval process for gifts & hospitality

TRACICompliance Case Tracking Tool

Internal: Maximum support for global

implementation Transparency Standardized processes

and language

External: Minimized corruption risk in

the entire value chain Improved company

reputation in the external environment

* Examples


Compliance Helpdesk Consists of Five Parts

"Tell Us" “Find It"

“Approve It" “Improve It"

"Ask Us"

The Compliance HelpDesk “Tell Us” function provides global, round-the-clock facilities for making statements on compliance-related breaches.

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

Partlyavailable


Type of Training

Siemens employees have been provided with training specific to their roles and responsibility

Target Group Trained so far

In-person trainings

Web-based trainings

Basic and Refresher Training on

Anti-Corruption Antitrust

Training on Compliance Tools 1)

Introduction Program for Compliance Officers and Leaders@Compliance

Anti-Corruption Global Competition

(antitrust) Business Conduct

Guidelines Your Signature –

Your Responsibility

Senior Management “Sensitive Functions” 2)

Compliance Organization Business/regional specific

groups (e.g. project management, procurement, assistants)

Employees with signing authority

~1,400 Senior Managers

~91,000 employees from “Sensitive Functions”

~ 260 Compliance Officers/team members

~188,000 employees with signing authorization

1) Limits of Authority (LoA, approval process for business projects), Business Partner Due Diligence, gift & hospitality 2) Manager / staff who interact with govt. officials (“sensitive functions”), personnel involved in sales, project management, regular interactions with government (such as Tax, Customs)

© Siemens AG 2010September 2010

Various media from Compliance are addressing focus groups, …

Compliance CardSet

Andy’s Welt Industry IA, DT

Corporate Compliance Intranet

Compliance Update!Newsletter for the Global Compliance Organization

Anti-Corruption Handbook

Siemens Management InfoBusiness Conduct GuidelinesCompliance Quiz Austria

Compliance Comic Brazil

July 2010 For internal use only© Siemens AG 2010

… but personal dialogue and engagement are what counts to create a culture of integrity

• Compliance Training • Siemens wide road show of BoM members and CCO• Skip level meetings• Regional / Global Conferences• DialogMap® on “the four integrity questions“ (project)


Employee Perception Survey 2009: Measuring the compliance culture

Survey Results

Positive perception of com-pliance as business enabler and lever for competitive advantageImprovements in most areas compared to 2008 lead to ranking as high performance companyCompliance is understood as top management priority and seen as important driver for cultural changeFurther need to foster employee engagement and belief in Siemens goals Integrity and consistent behavior with external partners needs to be emphazised

Response rate ~47% out of 90,000

randomly chosen 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

Identify best practicesand problem areas

Survey Overview

Integration with Employee Engagement Survey 2010


Impact / Effectiveness of Compliance Program

Results of Employee Perception Surveys conducted by the employees

What is evaluated?

Make Compliance a common standard in the company

* Relevant for Siemens’ Senior and Top Management

Impact

Customers

EmployeesFinancials

Processes

New

ComplianceIncentiveSystem

Components

In 2009, compliance made up 17% of management’s* bonuses

Compliance as an integral part of management’s incentive system


Metrics

Compliance Program related Target structure & Perception Survey 2009

1

Impact / effec-tiveness ofCompliance program

2Compliance perceptionsurvey

Prevent Tone from the top / Integrity culture Daily operations / Cooperation with monitor Implementation kit – tested quality on time1)

Contributions to efficiency improvements

Detect and Respond On time reporting Incidence of new serious compliance

cases (systematic failure) Cooperation during investigation Adequate sanctions taken

Employee perception Results of compliance perception Reporting structure as last FY within Sector: Division

within Cluster: Regional Company

1) Only for entities not assessed in FY 2008

Not achieved

Partially achieved Achieved Partially

exceededSustain.

exceeded

0% 40 to 70% 90 to 120%

130 to 160%

175 to 200%

Integration into PMP

Compliance-program related target is 20% of unit performance

The decision proposal for the Managing Board is prepared by a Compliance round table meeting

Participation rate is not relevant for the calculation

Calculation – as last FY – will be based on Compliance Performance Index (e.g. specific key questions)

Refined criteria in 2010, e.g.- Implementation of the new Control Framework (CCF)

- Misconduct detected early / sanctions & remediation being taken immediately

- Collective Action Engagement /stakeholder relation

- “Best practice“ incentivized additionally


O

Detect Handeln Prevent Respond

Compliance – Progress Report Q3 FY 2010

73

Helpdesk

Helpdesk

Disciplinary Sanctions in Q3

Compliance Staff Worldwide

Training1)

13

"Tell Us" & Ombudsman

30%

"Ask Us"

Participation in person training

699687

972

Q3Q2Q1/10Q4

1,110

Q3

1,2603)

35 3625

Q3

136

123

13

Q2

125

106

19

Q1/10

149

124

Q4

139

103

Q3/09

148

113

SubstantiatedNot substantiated

521

598

170

FY 09FY 08

6211005)

FY 07FY 06

864)

Participation web-based training

in thousands

108infringements resulting in disciplinary sanctions

Warning 72 Others 2)5

Dismissal/ Separation

31

Helpdesk"Tell Us“ Topics Q3 FY 10

1) Cumulative 2) Forfeiture of variable payment elements, transfer to another position, suspension 3) Rollout of the enhanced Compliance Control Framework 4) Compliance only one area of responsibility 5) Including Implementation Management

82 8491

Q3

279

188

Q2

235

151

Q1/10

225

143

Q4

219

140

79

Q3/09

213

138

75

Others37%

Conflict ofinterest

8%

Embezzlement/theft

9% Internal regulations9%

Working conditions

16%

Leadershipissues21%


Collective Action: What we do to drive fair market conditions

1) NGO: Non-Government Organization TI: Transparency International ICC: International Chamber of Commerce IO: International Organization PACI: Partnering Against Corruption Initiative CIPE: Center for International Private Enterprise

IBLF: International Business Leaders Forum 2) Is designed for class room discussions in university and highlights the importance of business integrity and compliance. Will be taught in the spring term 2010.

Continuous stakeholder dialogue

Collective Action project

Project Compliance Learning Initiative

Fight corruption in joint agreement with industry peers and other stakeholders

Promote Integrity and Compliance Pacts as well as Long-Term Initiatives in order to foster fair competition in public sector

www.siemens.com/integrity-initiative to fight fraud and corruption (US$ 100 million over next 15 years)

Increase compliance awareness of current and future business leaders

Share compliance best practices with stakeholders by www.siemens.com

Collective Action Learning Initiative

Compliance EfficiencyCompliance EffectivenessCompliance Ineffectiveness

Governance

Policies

Incentives Governance

Po licies

Incentives

Governance

Policies

Incentives

Harvard Case Study2)

Knowledge transfer

www.

Learning Compliance

NGO

Top 5 NG

Os

1)

IO

Transparency International

World EconomicForum

IBLF

ICC

CIPE

UN GlobalCompact

World BankInstitute

Since 2008

Since 2009 Q4/‘10

Start March 2010

http://www.siemens.com/integrity-initiative

http://upload.wikimedia.org/wikipedia/de/f/fe/Transparency_International.svg


Compliance 10 main focus topics for 2010:Intensify collective action and execute visible anti-corruption alliances

Approach Public Sector customersvia an independent 3rd party and propose project-specific Integrity Pact

Approach Public Sector customers directly and propose project-specific Integrity Pact

Approach competitors to set up Compliance Pact as long-term industry initiative against corruption

1) Non-Governmental Organization, e.g. Transparency InternationalSource: Collective Action Project

& competitors

Customer

Independent3rd party (NGO) 1)

NGO / Legal Counsels to be involved to avoid

anti-trust issues

Optional approach

Integrity Pact1

Long-term initiative3

Compliance Pact2

Work with peers, government and societyto pave the way for an anti-corruption culture

Channels to drive Collective Action


Siemens Integrity Initiative – Key Parameters

Financial

Content

• USD 100 Million over 15 years

• First funding round (2009): ~USD 40 Million, 3-5 years

• Additional funding rounds will be announced separately

• Funding of up to USD 5 Million per project proposal, minimum of USD 50,000

Objective: Fighting Corruption & Fraud through collective action, education & training

Process

Role of World Bank• Veto rights over selection of organizations• Audit rights over use of funds• Annual reporting obligation for Siemens (progress and financial reports, forecasts)

• 2 project categories: Collective Action, Education & Training• Focus on clear business impact and Siemens markets and sectors• Objective: Create fair market conditions for all market participants

– Raise standards and create awareness on compliance and business integrity– Create a common platform for dialogue for the private and public sector– Strengthen the rule of law

• Public invitation to submit proposals• Open, competitive selection in two phases (expression of interest, full proposal)• Payment of funds linked to achievement of milestones (Funding Agreement)• Eligible organizations: non-profit organizations


2 stage application process: Expression of Interest, Full ProposalAllocation method: Public invitation process, open competitive allocation

Siemens Integrity Initiative: First Funding to be expected in December 2010

Expressions of Interest

(Dec 9 – Jan 31)

• project concept note

• core information on organization, partners & key project staff

Full Proposal(Apr – Jun 2010)

• detailed description of activities and milestones

• detailed information on organization, partners and key project staff

Funding Volume: USD 100 mln over 15 years

First funding round: up to USD 40 mln

Start: December 9, 2009

Second and third funding round: up to USD 60 mln

Will be announced separately

December 9, 2009

• Call for Expressions of Interest

• Launch of website

• Global World Bank / Siemens press release

World Bank Non-Veto Decision

Initial Review

(Feb – Apr 2010)

Review and Due Diligence

(Jul – Sept 2010)

Funding Agreement (Fall 2010)

Payment of funds upon achievement of milestones and regular progress review

September 2010 © Siemens AG 2010

Tapping future growth in emerging markets requires a proper implementation of compliance

Strengthening local presence in fast-growing markets to gain market share...

1) Europe = EU 15 w/o Germany 2) Source: Transparency International – Corruption Perceptions Index 2009

China

India

Middle East

Brazil Africa

RussiaEurope 1)

GermanyUnited States

CPI 2009 2)

7.0 – 7.96.0 – 6.9

3.0 – 3.92.0 – 2.91.0 – 1.9

...is as important as implementing compliance to protect against the high corruption risk

Bubble size = EstimatedGDP growth from 1990 to 2020

8.0 – 8.9

4.0 – 4.9


Compliance will remain a top priority on our agenda. It is now time to take compliance to the next level

New Focus of Compliance

“Stay Vigilant! Assure sustainability of the

compliance program”

“Integrity is the foundation of our

Business”

“Integrity enables sustainable

business success”


Back-up


Our values: Highest performance with highest ethics

Responsible

Excellent

Innovative

Committed to ethical and responsible actions

Achieving high performance and excellent results

Being innovative to create sustainable value


Key messages - Peter Y. Solmssen

“We cannot afford to make any mistakes; Siemens' credibility is at stake.”

The employees have internalized the meaning of compliance; the messages are being heard and the Compliance Program is being accepted.

Business and integrity are not mutually exclusive.

Managers have a particular responsibility to exemplify proper conduct to their employees – to lead by example.


Key messages - Dr. Heinrich Hiesinger

“Compliance is still the top priority.We will sacrifice business if it is not clean business.”

In the next two years, we intendto further improve our compliance processes and boost their effectiveness and efficiency.(October, 2008)

Our clear goal is to become the benchmark in compliance and transparency.

For us compliance is the toppriority. All business, wherever and whenever conducted, must be clean.


Building a "Cartel of the Good" by partnering against corruption

Partnering Against Corruption Initiative – PACI

Zero Tolerance of bribery

Development and implementation of an internal ethics and anti-corruption program

Levelling the playing field

PACI brings together over 150 companies to fight bribery and corruption

MAKE A COMMITMENT TO ERADICATE CORRUPTION

http://www.weforum.org/en/index.htm

http://www.topnews.in/files/wef-logo.jpg

http://www.weforum.org/en/index.htm

siemens compliance program – track record and challenges za saradnju sa eu/usaglasavanje... ·...

Documents