## Facts

- Siemens Aktiengesellschaft (Siemens), a German corporation listed on the New York Stock Exchange, qualified as an “issuer” subject to the Foreign Corrupt Practices Act (FCPA) accounting provisions.
- From the mid-1990s through 2007, Siemens engaged in widespread improper payments to foreign officials in multiple countries and business lines to obtain or retain business.
- Siemens used mechanisms including cash desks, slush funds, off-the-books accounts, shell companies, and third-party intermediaries to fund and conceal improper payments.
- Siemens’s records allegedly disguised improper payments as legitimate expenses (e.g., consulting fees) and used accounting devices such as profit reserves later deployed for improper payments.
- Authorities characterized Siemens’s compliance failures as pervasive, involving employees at multiple levels, including senior management, and reflecting long-standing deficiencies in internal controls.
- The conduct included improper payment activity connected to various government-related projects worldwide and encompassed kickbacks in connection with the U.N. Oil-for-Food Programme.
- Siemens undertook extensive post-investigation cooperation and remediation, including a broad internal investigation, evidence preservation and analysis efforts, and compliance program reforms.

## Issues

1. Whether Siemens, as an issuer, willfully failed to devise and maintain internal accounting controls providing reasonable assurances as required by 15 U.S.C. § 78m(b)(2)(B).
2. Whether Siemens willfully caused false books and records by recording improper payments and related transactions inaccurately, in violation of 15 U.S.C. § 78m(b)(2)(A), enforceable through §§ 78m(b)(5) and 78ff(a).
3. What criminal penalties and compliance obligations were appropriate for large-scale FCPA accounting violations resolved by a negotiated corporate plea.

## Decision

- The government filed a two-count criminal information charging Siemens with FCPA internal-controls and books-and-records violations.
- Siemens waived indictment and venue objections and entered a guilty plea to both counts under a Rule 11(c)(1)(C) agreement.
- The court accepted the plea and imposed sentence consistent with the agreement, including five years’ organizational probation on each count.
- The court imposed a $448.5 million criminal fine and mandatory special assessments.
- Siemens was required to retain an independent compliance monitor for four years to report on compliance reforms and controls.
- Siemens was not charged in this case with FCPA anti-bribery violations; the resolution rested on accounting and controls offenses despite admitted bribery-related conduct.

## Legal Principles

- FCPA accounting provisions impose criminal exposure on issuers for willful failures of internal accounting controls and for willfully causing false books and records, even when anti-bribery counts are not charged.
- Recording improper payments as legitimate expenses and using concealed payment mechanisms can support books-and-records liability and demonstrate internal-controls failures.
- In negotiated corporate pleas, admissions in a statement of offense can establish the factual basis for accounting-controls charges and support probationary compliance conditions.
- Corporate cooperation and remediation may materially affect charging decisions and penalty calculations while still supporting substantial fines and external monitoring requirements.

## Conclusion

The court accepted Siemens’s negotiated guilty plea to FCPA internal-controls and books-and-records violations and imposed a major criminal fine, multi-year organizational probation, and a compliance monitorship, reflecting the view that issuer accounting failures enabling concealed improper payments warrant severe sanctions and long-term compliance oversight.


United States v. Siemens Aktiengesellschaft, No. 08-CR-367 (D.D.C. 2008)