Siemens Business Partner Compliance Due Diligence Process and ...
Siemens Business Partner Compliance Due Diligence Process and ...
Siemens Business Partner Compliance Due Diligence Process and ...
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<strong>Siemens</strong> <strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong><br />
<strong>Due</strong> <strong>Diligence</strong> <strong>Process</strong> <strong>and</strong> Tool<br />
Helge Seefeld<br />
<strong>Siemens</strong> AG<br />
<strong>Compliance</strong> Global Governance<br />
CL CO CO<br />
Roundtable “<strong>Compliance</strong>”<br />
Munich, March, 17th 2010<br />
Page 1<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
Applicability of <strong>Siemens</strong> <strong>Business</strong> <strong>Partner</strong> Policy<br />
Category 1: Intermediaries<br />
<strong>Business</strong> <strong>Partner</strong> acts on behalf of <strong>Siemens</strong>, e.g.<br />
• by interacting with Government Authorities<br />
(e.g. Tax Consultant, Customs Agent, Architect)<br />
• or by creating sales opportunities (e.g. business<br />
consultants, sales agents)<br />
plus<br />
• is able to influence conduct of the third party to<br />
the benefit of <strong>Siemens</strong><br />
plus<br />
• Receives a fee or other financial benefit<br />
Category 2: Reseller / Distributor<br />
<strong>Business</strong> <strong>Partner</strong> that purchase the products/<br />
services of <strong>Siemens</strong>, sell these to 3rd parties <strong>and</strong><br />
meet at least one of the following criteria<br />
• Receives reimbursement for special or dedicated<br />
expenditures that exceeds (e.g. advertising)<br />
• Terms granted to the BP are not usual for the<br />
industry or country (e.g. extended payment terms)<br />
• Contract with the BP is concluded specifically for a<br />
concrete project <strong>and</strong>/or a concrete customer<br />
• BP receives a specific discount for a concrete<br />
project <strong>and</strong>/or a concrete customer<br />
• <strong>Siemens</strong> business unit influences the agreements<br />
between the BP <strong>and</strong> 3rd parties<br />
• BP is stipulated by the end customer<br />
Category 3: Consortium <strong>Partner</strong>s<br />
• Exception: Silent Consortium <strong>Partner</strong><br />
Category 4: Joint Venture <strong>Partner</strong><br />
• Only if not reviewed as part of an M&A due diligence<br />
investigation<br />
Page 2<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> Review <strong>and</strong> Approval <strong>Process</strong><br />
The <strong>Siemens</strong> Circular requires that prior to commissioning or engaging a business partner,<br />
the proposed engagement must go through six phases, the critical 4 of which involve the<br />
<strong>Compliance</strong> organization<br />
Party<br />
identification<br />
<strong>Business</strong> <strong>Partner</strong><br />
<strong>Compliance</strong><br />
<strong>Due</strong> <strong>Diligence</strong><br />
Contract<br />
drafting<br />
Contract<br />
approval<br />
Payment<br />
Archiving<br />
<strong>Process</strong><br />
phases<br />
<strong>Business</strong> <strong>Partner</strong>s<br />
Responsibility<br />
Involvement<br />
<strong>Business</strong><br />
Unit<br />
<strong>Business</strong> Unit /<br />
<strong>Compliance</strong><br />
Corporate Legal & <strong>Compliance</strong><br />
<strong>Business</strong><br />
Unit<br />
Page 3<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
“Close-up” <strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
Party<br />
identification<br />
BP CDD<br />
Contract<br />
drafting<br />
Contract<br />
approval<br />
Payment<br />
Archiving<br />
<strong>Business</strong> <strong>Partner</strong>s Approval <strong>Process</strong><br />
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong> comprises four phases. The first three phases are performed by the<br />
<strong>Business</strong> Unit that proposes the new business partner. The approval phase is conducted by management <strong>and</strong> the<br />
<strong>Compliance</strong> Organization.<br />
1<br />
Key Data<br />
Collection<br />
2 3<br />
Front-end<br />
Risk Assessment<br />
<strong>Due</strong> <strong>Diligence</strong><br />
Questionnaire<br />
4<br />
Approval<br />
Phase<br />
In the first phase of the<br />
BP CDD, the <strong>Business</strong><br />
<strong>Partner</strong> key data as well<br />
as the transactional key<br />
data (scope <strong>and</strong><br />
conditions) under which<br />
the work will be<br />
performed, are entered.<br />
The key objective of the<br />
Front-end Risk<br />
Assessment is to<br />
determine the respective<br />
Risk Level of the<br />
<strong>Business</strong> <strong>Partner</strong>. The<br />
Risk Level helps to<br />
determine the potential<br />
corruption <strong>and</strong> bribery<br />
risk of the proposed<br />
<strong>Business</strong> <strong>Partner</strong>.<br />
In the third phase,<br />
additional information on<br />
the <strong>Business</strong> <strong>Partner</strong> <strong>and</strong><br />
its business activities<br />
needs to be collected to<br />
provide an adequate<br />
basis for the approval<br />
decision.<br />
In the fourth phase, the<br />
<strong>Business</strong> <strong>Partner</strong> is<br />
approved or rejected on<br />
the basis of the<br />
information provided by<br />
the <strong>Business</strong> Unit.<br />
Page 4<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong> <strong>Process</strong><br />
During the <strong>Due</strong> <strong>Diligence</strong> phase, the first 3 steps are performed by the <strong>Siemens</strong> <strong>Business</strong> Unit. The fourth step,<br />
the approval, is conducted by management <strong>and</strong> the <strong>Compliance</strong> Organization. The <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
has to be renewed every two years.<br />
<strong>Siemens</strong> <strong>Business</strong> Unit<br />
Management <strong>and</strong><br />
<strong>Compliance</strong><br />
1 Pre-Work 2 Front-end Risk Assessment 3<br />
<strong>Due</strong> <strong>Diligence</strong><br />
Questionnaire<br />
4<br />
Approval<br />
b<br />
Integrity Check<br />
(Internet Search)<br />
Positive<br />
integrity<br />
Doubtful<br />
integrity<br />
Lower Risk<br />
Release Review Approval<br />
Lower Risk<br />
Identification<br />
Keys Data<br />
a<br />
Risk classifiers<br />
(A-H)<br />
Higher Risk<br />
Medium Risk<br />
Medium Risk<br />
Local<br />
Management<br />
Local<br />
Management<br />
Local <strong>Compliance</strong><br />
Officer<br />
Local<br />
<strong>Compliance</strong><br />
Officer<br />
Sector/Chief<br />
<strong>Compliance</strong><br />
Officer<br />
Lower Risk<br />
Higher Risk<br />
Page 5<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
Front-end Risk Assessment<br />
a<br />
Integrity Check<br />
(Internet Search)<br />
b<br />
Risk Classifiers<br />
Multiple-choice<br />
Answer<br />
Numeric<br />
Scoring<br />
A<br />
Previous Experience with <strong>Business</strong> <strong>Partner</strong>?<br />
Answer<br />
Higher-level<br />
due diligence<br />
B<br />
Purpose of relationship?<br />
Answer<br />
C<br />
Government official / Government facing?<br />
Answer<br />
D<br />
E<br />
Recommended by government official?<br />
Nature of the relationship / agreement?<br />
Answer<br />
Answer<br />
∑<br />
Medium-level<br />
<strong>Due</strong> <strong>Diligence</strong><br />
F<br />
TI/CPI rating?<br />
Answer<br />
G<br />
H<br />
Compensation-structure?<br />
Upfront payment request?<br />
Answer<br />
Answer<br />
Lower-level<br />
<strong>Due</strong>-<strong>Diligence</strong><br />
Page 6<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
Danger Signs in Dealing with <strong>Business</strong> <strong>Partner</strong>s<br />
The <strong>Business</strong> <strong>Partner</strong>…<br />
appears to be no longer qualified or to be understaffed<br />
shows an indication for corrupt activities arises<br />
has expired or missing business licenses<br />
refuses to disclose business practices or communications<br />
requests that he be paid in cash or upfront or offshore<br />
payments<br />
requests unusually large compensation in relation to the<br />
value of the services provided<br />
seeks reimbursement for unusually high or undocumented<br />
expenses<br />
issues false documents or false invoices<br />
Page 7<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
As of March 12th 2010, 17.609 CDDs recorded in the BPC Tool. approx. 14.400<br />
active users in 548 <strong>Siemens</strong> entities (AREn) in 92 countries have performed<br />
CDDs on <strong>Business</strong> <strong>Partner</strong>s located in 162 countries<br />
Ramp Up of CDDs, Countries & AREs<br />
(without central upload incl pilot phase)<br />
Number of CDDs<br />
15.500<br />
15.000<br />
14.500<br />
14.000<br />
13.500<br />
13.000<br />
12.500<br />
12.000<br />
11.500<br />
11.000<br />
10.500<br />
10.000<br />
9.500<br />
9.000<br />
8.500<br />
8.000<br />
7.500<br />
7.000<br />
6.500<br />
6.000<br />
5.500<br />
5.000<br />
4.500<br />
4.000<br />
3.500<br />
3.000<br />
2.500<br />
2.000<br />
1.500<br />
1.000<br />
500<br />
0<br />
In addition,<br />
3311 <strong>Due</strong> <strong>Diligence</strong>s were uploaded<br />
centrally in the BPC tool<br />
(1681 sales agents, 1630 lawyers, tax<br />
consultants or centrally disapproved<br />
BP’s)<br />
14298<br />
548<br />
162<br />
92<br />
700<br />
650<br />
600<br />
550<br />
500<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
2008-08-08<br />
2008-08-31<br />
2008-09-21<br />
2008-10-11<br />
2008-11-02<br />
2008-11-23<br />
2008-12-14<br />
2009-01-04<br />
2009-01-25<br />
2009-02-15<br />
2009-03-08<br />
2009-03-29<br />
2009-04-19<br />
2009-05-10<br />
2009-05-31<br />
2009-06-21<br />
2009-07-12<br />
2009-07-31<br />
2009-08-23<br />
2009-09-13<br />
2009-10-04<br />
2009-10-25<br />
2009-11-15<br />
2009-12-06<br />
2009-12-26<br />
Number of Countries & AREs<br />
2010-01-17<br />
2010-02-05<br />
2010-02-28<br />
Total number of entered CDDs ARE Countries <strong>Business</strong> <strong>Partner</strong> Countries No of AREn<br />
Page 8<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
Backup<br />
Helge Seefeld<br />
<strong>Siemens</strong> AG<br />
<strong>Compliance</strong> Global Governance<br />
CL CO CO<br />
Roundtable “<strong>Compliance</strong>”<br />
Munich, March, 17th 2010<br />
Page 9<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
<strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong>s Overview<br />
deliberately left blank<br />
deliberately left blank<br />
Page 10<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
Risk Assessment<br />
Page 11<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
<strong>Due</strong> <strong>Diligence</strong> Questionnaire Overview (Higher Risk)<br />
deliberately left blank<br />
Page 12<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
<strong>Business</strong> <strong>Partner</strong> <strong>Compliance</strong> <strong>Due</strong> <strong>Diligence</strong><br />
CDD Questionnaire – Examples out of the BPC-Tool<br />
<strong>Business</strong> Activities – Information on prospective business relationship<br />
<strong>Business</strong> Information – Bank Account Information<br />
Page 13<br />
© <strong>Siemens</strong> AG 2010. All rights reserved
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