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Actions speak louder than words

Actions speak louder than words

10.5.2012 9:40
Autor: KŠB, KSB

According to Martin, the engineering giant has adopted tough anti-corruption measures for both managers and staff. Among these are a ban on political donations and strict limits on corporate hospitality.

KŠB: Why are anti-corruption measures important to Siemens?

Dale Martin:
Anticorruption measures are important to any company because corruption has many negative effects. It blocks the sustainable development of nations, it sabotages markets and it also prevents you from seeing what you are doing globally as a company. Why is it important to Siemens? Siemens learned the hard way that it is important. We were one of the first companies that was hit globally and very hard. But this is also one way I see our organization being proactive.

KŠB: It must be difficult, in some markets, to do business without corruption in the form of facilitation payments and similar.

Dale Martin: This is definitely true. However, I think that it is a possibility which we have to exploit. As we are a global company, we don’t necessarily have to be everywhere and in every field. This frees us up to make choices. If there is corruption, then that’s the end for us. There is definitely a very clear tone from the top, and I mean from the very top in our company, and it is also the job of the CEO in whatever country to emphasise this tone. We act upon this; it is not just words.

KŠB: Could you give us an idea of some concrete measures which Siemens is implementing in order to combat corruption?

Dale Martin: When the Siemens story became public we exchanged the leadership. And not only at the top, but on many layers. The first CEO from outside Siemens joined the company. And then we had an independent investigation and one of the results was the centralization of bank accounts.

We do three things: we prevent, we detect and we respond. There is a lot of emphasis on prevention and - for example - we have regular trainings. You are not authorized to do certain things if you have not successfully completed the training.

We have clear policies and procedures. We are one of the very few global, decentrally evolved companies which has such a centralized set up, including a fully centralized bank account overview. So, if I release in my country a payment to a supplier, this is cleared through a central server and this means that if somebody says ‘whoops, we want to block that’ there is the capacity to do that.

So we have instruments within the organization to detect these things and then we also respond by taking appropriate action and exchanging people, if necessary. The people whom we exchange not only lose their job immediately but they also find they are exposed to further legal processes, so this is not a hush-hush thing and then a goodbye.

We are also still being monitored by the US Department of Justice and the Security Exchange Commission.

KŠB: Of the measures which you have described, what’s been a challenge to put into place and to get working?

Dale Martin: I would say the mindset. Because you do have cultural differences and our measures disregard cultural differences. Even if there is a tradition of I don’t know how many hundreds of years in a given country of doing something this way or another way, it’s just not being done now. We say that only clean business is good business and only this will give us a sufficiently sustainable business. Therefore all of our business is based on our market performance and where we have products that can’t be on the market, they just will cease to exist. Just like many products of ours have ceased to exist over our 160-plus year history. It’s evolution. I think in the medium and long term it really pays off, because then the whole thing is sustainable.

KŠB: One difficult area is the area of gifts and corporate hospitality: what’s acceptable and what isn’t. How does Siemens look at this issue?

Dale Martin:
Siemens introduced, again globally, very stringent regulations. Financial limits apply at each level of the organization. And we’re not talking about gifts, because we don’t really give gifts; this is for entertainment. If you go beyond those limits then you need approval from the compliance office. This includes everyone, even the CEO of a country. It is the intent which is really important. It is ‘substance over form’, and in many cases this was a new understanding because ‘form over substance’ also has a long tradition.

KŠB: Do you have some kind of register into which you are required to enter items of corporate hospitality?

Dale Martin: Yes, there are very strict limits with all governmental or public parties, but limits also apply to private parties. These are a little more flexible. The reason is to reduce bureaucracy. There is a points system which checks the value. On that basis you come up with a number of points and you sign that and, if that goes beyond a certain number, then it has to be approved by the compliance office.

KŠB: So you tend to have more sandwiches at your desk than you used to in the past?

Dale Martin:
I think you could maybe say yes. Once we invited a customer to a sit down dinner and they said “no thank you, we’ll come to your office and the maximum we can accept is sandwiches”. I think that what will happen more and more is that it will not so much be us who has to convince others, but others will be very happy that they are not being put into a situation which could raise questions which are totally unnecessary.

KŠB: You mentioned the sensitive interface between the private and the public sector. Do your anticorruption measures have specific provisions, for example, on political sponsorship?

Dale Martin: Definitely. First of all, we don’t sponsor political parties, churches or anything like that, for equality and other considerations. Any kind of contribution of this kind has to be entered into our SPoDoM tool, which stands for ‘sponsoring, donation and membership’ and runs through a multi-layered approval process.

KŠB: What, if any, provisions on whistle blowing do your systems contain?

Dale Martin: We have several layers of whistle blowing. First of all, we have an international hotline, which is open 24/7, so anyone can call there and say something like that. This is a channel that we clearly didn’t have pre-2006. There are also internal regulations about whistle blowers. We have a separate organization, a compliance office, which we established and they are the ones who issue these regulations and they’re also the ones who keep them up to date so it’s not a set of regulations that came out in 2007 and you say ‘boom, you have that’. It has adapted. So, being a living organization we also have living rules and adaptations.

It is a little bit like the police. In Austria, where I grew up, you have ‘the police, your friend and helper’. It’s a question of how you look at the policeman. If I don’t speed and all of my papers are correct and if the car is in good shape, if the policeman stops me, I’ll say thank you because this helps me and maybe my car won’t be stolen, or if it’s stolen it will be retrieved. Similarly, if an auditor comes to us, then I hope that I can show him that we are an organization which is well run. Therefore you can even say this is a good opportunity to show that things are ok.

KŠB: You mentioned tone from the top. Just by way of example, I recently heard the CEO of a large Czech company give his impression of tone from the top, which was, at the beginning of an anti-bribery training session, telling his senior managers that if they gave or received a bribe, he would personally kill them.

Dale Martin:
Our CEO hasn’t said anything like this, to my recollection. I’m not sure whether that would be compliant. I think facts say a lot more than threats. I think that two of the worldwide board members were physically imprisoned, even if only for a few days. But if you have a meeting of your global leaders, and the guy in charge is not there because he is physically in prison, this really gives all the participants the feeling of ‘whoops’. And that is very strong. Siemens is very uncompromising in this respect, and it not only says it but it does it. Again, we say that only clean business is Siemens business. We say zero tolerance. And if you can see and feel it happening, and those are not only phrases, then the picture comes together.

Eduard Palíšek, CEO, Siemens Czech Republic, takes the following view on tackling corruption:

“Siemens Czech Republic is an initiator of the “Coalition for Transparent Business”, which brings together businesses and institutions operating in the Czech Republic and endeavours to raise business ethics. We also cooperate with “Oživení” (“Revival”), a non-profit organization focused on transparency in public procurement. We were also involved in drafting the recent amendment to the Public Contracts Act.

Our emphasis on business ethics is a natural part of the internal anti-corruption policies we apply across our global corporate structure. Not only do our policies minimize corrupt behaviour, they also help distinguish between what is and what is not a corrupt practice and, at the same time, help avoid wrongful behaviour that might not always be deliberate. The policies introduced, among other things, measures to check high risk payments, which can be stopped at any time should there be any suspicion. We do, however, avoid cash payments wherever possible. We have also cut back on business via agents and third parties, assess and rate our business partners and have in place purchase committees to avoid a single person choosing a contractor or deciding on product purchases.

Our “scorecard” application helps our employees pre-determine whether a gift they might give or receive is reasonable. We have also made the scorecard test mandatory for interactions with representatives of public authorities. However, while the value of a gift is one thing, the intention behind it is quite another. If the aim of a gift is to influence a decision, then it’s always wrong even if it’s worth a single crown. In addition to setting the company’s rules and policies, our compliance department operates as a preventative authority, continually educates employees on business ethics and advises them on what goes beyond our code of ethics. I am also a strong supporter of instilling in people the idea that clean business is good business and the only business acceptable at Siemens.”

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