EMERGING

EMERGING MARKETS:
A Review of Business and Legal Issues
an isolated practice on foreign markets, and British, French or American companies did the
same. 1 The methods applied at Siemens were only a way to retain the competitive position of
the corporation. They implied that top management knew about this way of "supporting" sales
growth. The suspicions may be corroborated by the earlier searches carried out in the offices
of the top management staff including the CEO. On 11 December 2006 Thomas Ganswindt, a
former (until September 2006) member of the Board of Directors at the head office, who had
been responsible for the COM department, was arrested, which also may confirm these
suspicions. 2 The investigation revealed corruption transactions in more than 60 countries,
which raises suspicions about systemic corruption. Since Siemens possesses one of the best
and most modern corporate communication (sales promotion) and knowledge management
systems (ShareNet, Communities@Siemens, etc.) 3 , it seems justified to suspect that superiors
had known about multimillion transfers of assets in the company structure.
Klaus Kleinfeld, a President of the Board of Directors, who was merely a witness,
adopted a different line of defence. Since the investigation began, he denied that, although in
2004 he had himself supervised the telecommunications department as a member of the Board
of Directors, he knew anything about forbidden practices used on the company’s lower levels.
Other members of the Board of Directors and of the Supervisory Board shared this attitude.
They also stressed that they were only witnesses in the case, and not suspects. Considering the
traditional role of the telecommunication department in Siemens business activity, many
members of the present Board of Directors had worked in the COM department and the
company’s foreign branches in South America or Africa, where investigative officers were
led. They believe that corruption is connected with the embezzlement of company funds by an
organised criminal group. The Board of Directors did not deny that they had occasionally
been informed about bribery, as in the case of the investigation carried out in Liechtenstein in
1 so far (October 2007) no specific examples of similar practices in the case of tenders in which Siemens also
participated, or of an investigation carried out in a similar case have been mentioned;
2 released after several days, Handelsblatt, 2006;
3 M.Franz et al.: The development of the Siemens Knowledge Community Suport. [in:] Knowledge Manangement
Case Book Best Practices, eds.: T.H.Davenport, G.J.B.Probst, Willey & Publicis, Erlangen 2002, p.147;
Page 15 Volume 1, April 2009