• Identify what way of doing international business is involved in the case from pickingoneof the below ways:
  • Direct Contract(import/export of goods)
  • Foreign Agent Representation(hiring of a person or representative in the foreign host country)
  • Direct Foreign Investment(opening a branch office in the foreign host country by way of opening up a branch office or opening up a subsidiary)
  • Franchising(issuing a franchise to another to operate in the foreign host country)
  • Licensing(issuing a license to another to operate in a foreign host country)
  • None of the above(the case does not involve any of the forgoing ways of doing international business)
• Explain how this litigation and legal risk involved in the other student's case could have been avoided, mitigated or reduced.

Securities and Exchange Commission v. Siemens Aktiengesellschaft SEC Litigation Release no. 20829 (December 15, 2008) BACKGROUND AND FACTS least in part, for illicit purposes, including commercial Siemens, a German company that subjected itself to bribery and embezzlement. U.S. jurisdiction through its very significant U.S. busi- From 1999 to 2003, Siemens' Managing Board or ness, violated the FCPA by engaging in a widespread "Vorstand" was ineffective in implementing controls and systematic practice of paying bribes to foreign gov- to address constraints imposed by Germany's 1999 ernment officials to obtain business. Siemens created adoption of the Organization for Economic Cooper- elaborate payment schemes to conceal the nature of ation and Development (OECD) anti-bribery conven- its corrupt payments, and the company's inadequate tion that outlawed foreign bribery. The Vorstand was internal controls allowed the conduct to flourish. The also ineffective in meeting the U.S. regulatory and misconduct involved employees at all levels, including anti-bribery requirements that Siemens was subject to former senior management, and revealed a corporate following its March 12, 2001, listing on the New York culture long at odds with the FCPA. Stock Exchange. Despite knowledge of bribery at two During this period, Siemens made thousands of of its largest groups-Communications and Power payments to third parties in ways that obscured the Generation-the company's conduct at the top was purpose for, and the ultimate recipients of, the money. inconsistent with an effective FCPA compliance pro- At least 4,283 of those payments, totalling approxi- gram and created a corporate culture in which bribery mately $1.4 billion, were used to bribe government was tolerated and even rewarded at the highest levels officials in return for business to Siemens around the of the company. world. Among others, Siemens paid bribes on transac- Employees obtained large amounts of cash from tions to design and build metro transit lines in Venezu- cash desks, which were sometimes transported in suit- ela; metro trains and signalling devices in China; power cases across international borders for bribery. Authori- plants in Israel; high voltage transmission lines in zations for payments were placed on post-it notes and China; mobile telephone networks in Bangladesh; tele- later removed to eradicate any permanent record. Sie- communications projects in Nigeria; national identity mens used numerous slush funds, off-book accounts cards in Argentina; medical devices in Vietnam, China, maintained at unconsolidated entities, and a system of and Russia; traffic control systems in Russia; refineries business consultants and intermediaries to facilitate the in Mexico; and mobile communications networks in corrupt payments. Vietnam. Siemens also paid kickbacks to Iraqi ministries Siemens failed to implement adequate internal in connection with sales of power stations and equip- controls to detect and prevent violations of the FCPA. ment to Iraq under the United Nations Oil-for-Food Pro- Elaborate payment mechanisms were used to conceal gram. Siemens earned more than $1.1 billion in profits the fact that bribe payments were made around the globe to obtain business. False invoices and payment on these transactions. An additional approximately 1,185 separate pay- documentation were created to make payments to busi- ments to third parties totaling approximately $391 mil- ness consultants under false business-consultant agree- lion were not properly controlled and were used, at ments that identified services that were never intended continues444 Part 4: Regulation of the International Marketplace continued to be rendered. Illicit payments were falsely recorded as and a fine of 6395 million (approximately $569 million) expenses for management fees, consulting fees, supply to the Office of the Prosecutor General in Munich, Ger- contracts, room preparation fees, and commissions. many. Siemens previously paid a fine of 6201 million Siemens inflated UN contracts, signed side agreements (approximately $285 million) to the Munich Prosecutor with Iraqi ministries that were not disclosed to the UN, in October 2007. In addition, Siemens consented to the and recorded the ASSF payments as legitimate com- entry of a court order permanently enjoining it from missions despite UN, U.S., and international sanctions future violations of Sections 30A, 13(b)(2)(A), and 13(b) against such payments. (2)(B) of the Exchange Act; and ordering it to comply In November 2006, Siemens' current management with certain undertakings regarding its FCPA compli- began to implement reforms to the company's inter- ance program, including an independent monitor for a nal controls. These reforms substantially reduced, but period of four years. did not entirely eliminate, corrupt payments. All but $27.5 million of the corrupt payments occurred before November 15, 2006. The company conducted a massive internal investigation and implemented an amnesty program to its employees to gather information. RESOLUTION Siemens agreed to pay a total of $1.6 billion in dis- gorgement and fines, the largest amount a company has ever paid to resolve corruption-related charges. Siemens agreed to pay $350 million in disgorgement to the SEC, In related actions, Siemens will pay a $450 million criminal fine to the U.S. Department of Justice