The World Bank on Thursday announced a comprehensive settlement with Siemens AG in the wake of the company's acknowledged past misconduct in its global business and a World Bank investigation into corruption in a project in Russia involving a Siemens subsidiary.

The settlement includes a commitment by Siemens to pay 100 million dollars over the next 15 years to support anti-corruption work, an agreement of up to a four-year debarment for Siemens' Russian subsidiary, and a voluntary two-year shut-out from bidding on Bank business for Siemens AG and all of its consolidated subsidiaries and affiliates.

As part of the settlement, Siemens has also agreed to cooperate to change industry practices, clean up procurement practices and engage in collective action with the World Bank to fight fraud and corruption, said the World Bank in a statement.

Siemens will also provide information on any additional cases of wrongdoing to the Bank's Institutional Integrity Vice Presidency (INT), which investigates fraud and corruption in Bank Group-financed activities.

"This settlement provides significant consequences for past wrongdoing by Siemens. At the same time, Siemens' ongoing extensive cooperation could help the World Bank hold more corrupt firms and individuals accountable for diverting precious development resources away from the people who need them," said Leonard McCarthy, integrity vice president at the World Bank.

"This ground-breaking settlement advances the World Bank's Governance and Anti-corruption agenda while supporting the new management team at Siemens which has introduced a robust and comprehensive compliance program and has committed to clean up the company and end corrupt practices in Siemens operations worldwide," he said.

"We look forward to continuing to work with the Bank to eliminate fraud and corruption in our markets and we see this as confirmation of our work to establish a robust compliance program and to pursue collective action together with the Bank in those markets," said Siemens Chief Compliance Officer Andreas Pohlmann in a statement.

As part of the settlement agreement, the Siemens AG affiliate, "Siemens Russia," will face up to a four-year debarment in connection with violations, prior to 2007, following an investigation by the World Bank into corrupt practices under the Bank-financed transportation project in Russia, the Moscow Urban Transport Project.

Siemens' two-year voluntary restraint means it loses the right to bid on Bank-financed projects until Dec. 31, 2010. Siemens will now have to withdraw any bids not accepted as of January 2009 when the restraint period takes effect.

Siemens' commitment to pay 100 million dollars to support global efforts to fight fraud and corruption would include providing funds to organizations and projects aimed at combating corruption through collective action, training and education. The money will also be directed to helping governments to recover assets stolen by corrupt leaders, and strengthen efforts to identify and crack down on corrupt practices.

The World Bank noted that it will have audit rights over the use of these funds and veto rights over the selection of anti-corruption groups or programs receiving the funds.

Siemens' cooperation with the World Bank follows a series of international investigations and legal proceedings in numerous jurisdictions around the world related to fraud or corruption in Siemens' operations. Last December, Siemens settled related allegations made by the United States and German authorities including the U.S. Securities and Exchange Commission (SEC).

Source: Xinhua