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May 2009

ConfidentialHealthcare / H CO Wolf-Dietrich Guhl

Lessons

learned

from the

Siemens Case

Wolf-Dietrich Guhl, Siemens AG, Sector Compliance Officer Healthcare

For internal use only / Copyright © Siemens AG 2009. All rights reserved.

Who helps me reliably to provide patient care at its best?

Siemens Healthcare Sector THE integrated healthcare company

May 2009


Siemens Healthcare Key figures

FY 2008 FY 2007 in million EUR

Sales

Profitin % of sales

Order entry

Nom.growth

Employees (in 1.000)

11,170

11,779+15%10,271

9,8511,323 -7%

+13%

48,942,6 +15%

1,22513.4% 11.0%

comparablegrowth

+4%

n.a.

+2%

n.a.

May 2009


ConcordOCS

Hoffman Estates(Chicago)

MIAX, RS Piscataway

AU

KnoxvilleMI

Oxford MR, MI Erlangen/Forchheim

AX, SP, CT, MR, A, RSHS, CV, RV, IKM, CS

Madrid SP

SingaporeA

Shanghai CT, AX, CV

Malvern HS

Mountain ViewUS

Suzhou A

Shenzhen MR

Goa CV

Kemnath CV

Rudolstadt RV

Kyongju-siUS

Indonesia A

WuxiRV

BangaloreHS, IKM

Divisions/HeadquartersMajor manufacturing sites

~49,000 employees worldwide

Dublin DX

FlandersDX

IssaquahUS

Siemens Healthcare Global presence

LlanberisDX

SudburyDX

Heidelberg OCS

SeoulUS

Cary CS

ElkhartDX

Walpole DX

Marburg DX

New Jersey DX

Wales DX

DeerfieldDX

Los AngelesDX

TarrytownDX

May 2009


The

Siemens Case!

May 2009


Siemens from 1999 to 2009 The Milestones over 10 years

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2 3

7

6 11

10

7

8

7

5

7

6

11

11

12

12

4

5

8

11

10

10

10

10

9

7

7

1

2

3

12

6

8

8

8

1

1

2

3

6

7 1

2

9

8

10 9

6

6

3

3

May 2009



February 1999 Germany ratified the OECD ConventionMarch 2001 Registration of „SI“ on the „NYSE“July 2001 Distribution of Business Conduct Guideline, including anti corruption

provisionsJuly 2001 Implementation of part-time Compliance OfficerJune 2002 Principles and recommendations regarding internal controls and BCA‘sNovember 2003 Codes of ethics for financial matters issuedJuly 2004 First message from the Board that corruption would not be tolerated

and that more control over business consultants is neededAugust 2004 First company wide policy on the use of bank accounts and external

payment ordersOctober 2004 Establishment of a Corporate Compliance OfficeMay 2005 Liechtenstein authority report identified five off-book accountsJune 2005 Company rules governing the use of business consultants

May 2009



July 2005 Redistribution of BCG with new forewordJuly 2005 Benchmark analysis comparing Siemens with GE compliance programNovember 2005 Report about lack of effectiveness of the regional Compliane OfficersSeptember 2006 Testifying a material weekness in internal control system by KPMGNovember 2006 Implement reforms to the internal controlsDecember 2006 Implementation of OmbudsmanDecember 2006 Launch of independent investigation through Devevoise, DeloitteApril 2007 Centralization banc accounts and paymentsMay 2007 Sponsorship ToolJuly 2007 Mandatory Background Checks for recruitment of Senior ManagementJuly 2007 Implementation of the Compliance HelpDesk (Tell us)August 2007 Disciplinary Consequences for Compliance violationsAugust 2007 New Corporate Disciplinary sanction committeeSeptember 2007 New setup of Corporate audit function

May 2009



October 2007 Chain of command circular with regard on the implementation of Siemens internal regulations in all entites and affiliated companies

October 2007 Compliance as part of management incentive for FY 2007/08October 2007 New setup of Corporate Legal and new Chief Compliance OfficerOctober 2007 Start of web-based training (FCPA and competition law)October 2007 Amnesty program offeredNovember 2007 New Limit of Authorization ToolJanuary 2008 New setup of Sector, Regional and Central Compliance functionsFebruary 2008 Start of in-person anti-corruption trainingMarch 2008 Compliance Roadshows in 54 countries by Board Members &

Compliance OrganizationMarch 2008 Compliance screening for Key Function Manager prior to a promotionMarch 2008 Implementation of anti-corruption Toolkit in highrisk entitiesJune 2008 New Enterprise Risk Management approach

May 2009



June 2008 Start of first Compliance Perception SurveyJune 2008 Implementation of „improve-it“ function in HelpdeskAugust 2008 New Business Partner Evaluation ToolAugust 2008 New Corporate Audit ChartaAugust 2008 Frame regulations signature policySeptember 2008 Confirmation of effective control system by the auditorsDecember 2008 Settlement SEC / DOJJanuary 2009 Start of Collective Action ActivitiesJanuary 2009 New BCGJanuary 2009 Annual investor meeting elects Ernst & Young as external auditorFebruary 2009 New Gifts & Hospitality ToolFebruary 2009 First presentation to the MonitorMarch 2009 Rollout of Competency Management in ComplianceJune 2009 Start of second Compliance Perception Survey

May 2009


Siemens learned from it‘s History

and started an enormous

Change- and Improvement Program!

May 2009


Headlines – where to concentrate?

Management CultureManagement Structure

Corporate StructureCompliance Organization

Compliance Processes

May 2009


Management Culture

High integrity for high performance

Tone from the top – Clean Business Message

Compliance based portion in compensation system

Compliance is part of managers communication

Perform regular perception surveys

Talk about compliance in high risk areas

Get trust back from Customers, Business Partners, NGOs, Worldbank, etc.

Spread your message and start collective actions

May 2009


Management / Corporate Structure

Implementation of a Legal / Compliance Board Member

Centralization of Legal and Audit

Change to the CEO principle (one responsible)

Streamline Number of entities

Reduce Complexity in array of business groups and regional companies

Replace executive and senior management

Install amnesty program

Establish disciplinary committee

Enforce Audit- and Risk Management Committee‘s

May 2009


Compliance Organisation

Define „Compliance“Establish a reliable Compliance organization; build up an internal networkCentralize support and guideline competence in a worldwide ComplianceorganizationBe local (as sales is local)Let Compliance Officer be a trusted advisor of line management, but a guardian, tooImplement an internal HelpDeskEstablish whistleblower hotlineCompliance organization follows line organizationStart with competency management in Compliance organizationBuild up a company independent trusted fellowship with other Complianceofficers

May 2009


Compliance Processes / Programs

Siemens has developed a comprehensive new Compliance Program. It is implemented worldwide and is base on three pillars.

Prevent

TrainingPolicies &ProceduresProgramcommunicationCentralization

Compliance investigationsCompliance reviewsCompliance controls

Consequences for misconductGlobal case trackingMonitoring effectiveness

Integration with personnel processes

Compliance helpdesk (incl. Global Ombudsman function)

Compliance Organization

"Tone from the Top"

Conti- nuous

improvement

Detect Respond

+ Continuous Improvement

May 2009


Lessons learned about important aspects of Compliance processes

• Use centralized payment systems

• Have a limited number of banc accounts

• Avoid cash payments

• Define and control high risk payments

• Have a clear approval and authority policy

IT-Workflows

Training

Payment Transactions

• Good experience, easy use and process tracking, clear

documentation

• In-person training is interactive and more favorable compared

to web-based training (WBT)

• WBT is used for repeated trainings and special scopes

May 2009


Lessons learned about important aspects of Compliance processes (continue)

Business Partner

Internal Controls

Implementation of a Compliance Control Framework System with the

following focus area:

• tone from the top• compliance organization• case tracking• policies & training• business partner• tender & contracts• gifts & hospitality• finance & accounting• integration with personnel processes• anti-trust• M&A; JV‘s; investments

• Define their roles and workscopes

• Perform due diligence checks

• Implementation risk classes and use specific

contractual provisions

• Communicate your compliance policy to them permanently observe

their behavior

May 2009


Lessons learned about important aspects of Compliance processes (continue)

• Mandatory process for emloyees in corporate key functions or in

compliance, audit or legal functions

Compliance Reviews

Case tracking

• Use of Compliance KPI‘s

• Information of executive management by Compliance Officer

• Define actions in specific areas

• Monitor actions

• Registration of all issues coming up in a central tool

• Documentation of all follow-up‘s until closing

• Investigation evaluation (disciplinary sanctions) closing

Gifts & HospitalitySponsoring &

Donations

• New Policy

• New Workflow-Tools implemented

Screening

May 2009


What happens now?

We have the Monitor „on board“

We know, we are in a „probation phase“

We now have to prove the reliability and sustainability of our

culture, policy, systems

We have started many compliance integritiy projects (collective action)

May 2009


Video from Peter Loescher is shown in all training – his authenticity and clarity set the tone from the top

"Only Clean Business is Siemens business.Everywhere – everybody – every time!""Compliance as part of Corporate Responsibility is 1st priority!“

Source: P. Löscher; Compliance Officer Conference October 2007

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