In November 2010, after he had already been told that he was being let go, Liu sent an emailed statement to Waigel and the company’s compliance department explaining what he described as “the whole picture.” In it, Liu said he had seen many compliance failures, including “one-time dealers [being employed] without applicable process control/authorization,” “ineffective intermediary management,” and “unqualified distributors . . . approved over the objection of [the] responsible compliance officer.”
The problem, Liu wrote, unfolded in stages. “Briefly, at an organizational level, compliance independence was surrendered first, followed by compliance gravity shifted from ethics to revenue, and inevitably, compliance metamorphosed into complicity.”
Whether Waigel received Liu’s email, and how he dealt with the email in his monitoring reports, is unknown, thanks to the secrecy he and Siemens insisted upon in fighting against their public release. Shortly afterward, he reported that “Siemens . . . is working to implement all 114 recommendations [from his first year report] in a timely manner.” In October 2011, after three years of assessing Siemens’s compliance policy and procedures, Waigel concluded in his final work plan that the German company had “fully implemented all of his Year One recommendations.”
To the letter, Waigel was correct. The monitor had recommended a “review” of the company’s practices involving resellers, which Siemens had, indeed conducted. However, the spirit and intent behind the recommendation–rooting out practices conducive to bribery–appear to have been largely sidestepped in favor of a more passive approach, of reacting only after corrupt actors had been identified by external parties – such as the Chinese courts.
Waigel, who now practices European competition law at a Munich law firm, refused to provide comments for this article, saying that it was no longer possible for him to remember the details of his monitorship. Nevertheless, partly as a result of his role, Waigel has since gained a reputation in Germany as a compliance troubleshooter for major international corporations. In 2017, he was hired by European aviation giant Airbus to check compliance standards, and in February 2021, he was named chairman of an expert commission for auditor Ernst & Young in the aftermath of the recent Wirecard scandal, one of Germany’s biggest-ever cases of corporate fraud.
Despite assurances that the problems at Siemens have been fixed with a comprehensive compliance policy and new controls, how exactly Siemens has responded to these problems remains unclear. That is because the monitoring reports in settlements like this are kept secret by the companies found to have broken the law and the government agencies charged with enforcing it, said Matt Kelly, publisher of the Radical Compliance newsletter.
Kelly emphasized how rare it was that even part of a monitor’s report be made public. “In the 17 years I’ve been doing this, I’ve only found one (other) monitoring report that ever became public,” he said. “They’re highly confidential material.”
For some compliance experts, the way the judicial system dealt with Siemens’s FCPA violations is suspect, particularly in light of Siemens’s subsequent reputation, burnished by the DOJ itself in its 2008 sentencing memorandum, which praised Siemens’s “reorganization and remediation efforts” and maintained that it had “set a high standard for other multinational companies to follow.”
“The DOJ frequently talks about transparency in FCPA enforcement, but when given a chance to demonstrate transparency, it does the exact opposite,” said Mike Koehler, who runs the FCPA Professor website and teaches at several law schools.
Koehler and other experts argue that the public and shareholders have a right to know whether a company’s business is honest.
In fact, transparency has been a mantra of the Justice Department itself. In a 2015 speech on corporate compliance at the NYU School of Law, the head of the Criminal Division, Assistant Attorney General Leslie R. Caldwell, said, “Greater transparency benefits everyone. The Criminal Division stands to benefit from being more transparent in part because if companies know the benefits they are likely to receive from self-reporting or cooperating in the government’s investigation, we believe they will be more likely to come in and disclose wrongdoing and cooperate.”
Nevertheless, the Justice Department argued the exact opposite in the Siemens case, alleging that releasing the monitoring reports would “decrease the amount and accuracy of information that DOJ received from future monitorships, which will ultimately inhibit DOJ’s ability to reduce corporate crime.” In opposing the release of its compliance reports, Siemens maintained, in part, that its measures to counter bribery amounted to “trade secrets,” whose release could give Siemens’s competitors an advantage.
In the face of Siemens’s apparent inaction, the problem persisted. According to a recently-released Chinese court verdict, in the same year that Waigel concluded his monitorship, a Siemens business manager offered to pay a hospital president in the Anhui district ¥2 million ($300,000) in exchange for help ensuring that Siemens products won bids. The hospital president who made this confession was convicted of taking bribes from 2004 to 2017.
Two years after Waigel’s monitorship ended, the most senior sales manager at Siemens China blew the whistle on corruption among third-party resellers. In a 2013 email to dozens of senior staff at Siemens China, the manager, Cao Yong Sheng, spelled out his concerns. He asserted that there was a “huge gap between biddings and contracts,” and asked, “Where’s the gap going?”
Sheng, who had been sacked over his own alleged corrupt actions, maintained that Siemens knew full well that intermediaries were overcharging for equipment, building in the cost of bribes to hospital officials.
“It made us very uncomfortable and so worried,” he wrote.