Publicado el 11 November 2019Compliance, Comportamiento, Cultura, Ethics, Ética

Siemens’ comeback

From the latest scandals of private companies, linked to corruption issues, many ask: what is left of this? How can a company rise, like a phoenix, from the situation it is in? Is it really possible?

The best example for this, in our opinion, is the case of Siemens. In November 2006, regulatory investigations determined that its workers had been diverting millions of euros in false contracts, false invoices and other documents to pay massive bribes that allowed them to win bids. This led them to be investigated by the Munich Prosecutor’s Office, the Securities Market Commission and the US Department of Justice, as well as other authorities at the global level.

This scandal, clearly, affected the reputation of Siemens, as well as the existing relationship with its shareholders and investors. But, mainly, it led Siemens to question how the integrity of the company had been handled, the behavior of the members of senior management for having tolerated and accepted these practices, and how that type of action had been consolidated to the point to be part of the corporate culture. We will not delve into the amount of money that was destined to the payment of fines in different countries, investigations and others that, as you can imagine, was an important sum.

How did Siemens get to this? One of the main conclusions of the investigations was that the corporate culture had led to systematic corruption. It was found that the company had such an aggressive growth strategy that, possibly, forced managers to consider bribes as a tempting shortcut to achieve difficult performance objectives, a complex structure that allowed divisions to be effectively executed, and processes deficient accounting.

We could say that, at that time, the company was at its lowest point. However, more than 10 years later, Siemens has been awarded # 9 in the Global 100 Most Sustainable Corporations ranking, # 21 in The 50 Most Innovative Companies, # 47 by Global RepTrak 100, # 49 in The World’s Most Valuable Brands, and the list goes on. What did they do, then, to achieve this? How did they go from that stage, to be praised by the OECD and the US authorities for their response to the crisis? We will mention the most important initiatives.

It all started when Siemens announced a one-month amnesty for those employees who told everything. About 40 employees, known as whistleblowers, provided incriminating evidence, which included even directors of the organization. Based on this, and based on the information obtained:

  • They dismissed the majority of members of the Senior Management, and even the Board of Directors, who had also been involved in these events.
  • They developed strict anticorruption rules and for processes related to compliance.
  • They hired more than 500 full-time compliance officers to organize their research unit.
  • They generated more than 900 internal disciplinary processes, including dismissals.
  • They assigned the responsibility of all Siemens heads with respect to compliance: all managers of our company must not only set the example, but ensure that business decisions and actions are always taken in accordance with current legal provisions and our values ​​and regulations.
  • They generated more than 900 internal disciplinary processes, including dismissals.

Additionally, the research showed that the regulations existing before the crisis had not been communicated to the collaborators and that, therefore, they had not been put into practice. Given this, one of the key points for the implementation of the new Compliance System of the organization was the training and training program on anti-corruption practices, which all its employees at the international level must carry on a mandatory basis. This with special emphasis on sensitive areas such as legal, sales and project management.

On the other hand, they established reliable reporting channels for internal and external interest groups, through which collaborators and others can provide confidential and anonymous information (according to the legislation of each country), if they wish, about possible infractions It is important to emphasize that it was evidenced as a bad practice from the past that, when undue conducts had been reported, they had not been investigated on time, nor had they been assigned the necessary resources. We emphasize then, the need not only to have the channel, but to carry out a process of investigation and appropriate sanction.

Finally, a practice to be highlighted is that, on an annual basis, the organization publishes the “Siemens Integrity Initiative”, which reports on compliance management in the organization. This is not a common practice in the market and therefore, once again, we highlight the current management of the company in terms of integrity and compliance.

We see, then, that it is possible to get up when one falls. Remember that these situations are opportunities to review what we have been doing, to think about what we have missed and to be really self-critical to move forward. It is possible to rise from the ashes.

“For Siemens, compliance is not limited solely to compliance with the law and the internal regulations of the company whose cornerstone is the Siemens Code of Business Conduct. It provides the basis for all our decisions and activities and is the key to integrity in business. Compliance is not a program: it is our way of doing business.

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