Nokia 2006 Annual Report Download - page 18

The Siemens carrierrelated operations to be transferred to Nokia Siemens Networks are the
subject of various ongoing prosecutorial investigations related to whether certain
transactions and payments arranged by some current or former employees of those
operations violated applicable laws. As a result of those investigations, government
authorities and others could take actions against Siemens and/or its employees that may
involve and affect the carrierrelated assets and employees transferred by Siemens to Nokia
Siemens Networks, or there may be undetected additional violations that may have occurred
prior to the transfer, or ongoing violations that may occur after the transfer, of such assets
and employees that could have a material adverse effect on Nokia Siemens Networks and our
business, results of operations, financial condition and reputation.
Prosecutorial investigations are being conducted by authorities in Germany and certain other
countries with respect to whether certain transactions and payments arranged by some current or
former employees of Siemens’ Com business group, covering the carrierrelated operations for fixed
and mobile networks to be transferred to Nokia Siemens Networks, violated applicable laws. We
understand that Siemens has voluntarily informed the SEC and the US Department of Justice about
this matter. As well, additional government authorities in these or other jurisdictions could launch
separate investigations. If any of these government authorities determines that violations of law
have occurred, including violations of the US Foreign Corrupt Practices Act, they may take action
against Siemens and/or some of its employees. These actions could include criminal and civil fines,
penalties, sanctions, injunctions against future conduct, equitable remedies including profit
disgorgement, disqualifications from engaging in certain types of business or other restrictions, as
well as requiring modifications to Siemens’ business practices and compliance programs. We
understand that Siemens is cooperating with the various government authorities. It is not possible
at this time to predict whether such government authorities will take such action and if they do
what it might be and the extent to which such action might apply to the assets and employees
transferred by Siemens to Nokia Siemens Networks.
The government investigations and Siemens’ and Nokia’s own internal investigations into these
alleged violations of law by some current or former Siemens’ employees are ongoing. Accordingly, it
is not possible to ensure that at the time of the closing of the merger certain Siemens employees
who may have been involved in the alleged violations of law are not transferred to Nokia Siemens
Networks. Nor is it possible to predict the extent to which there may be undetected additional
violations of law that may have occurred prior to the transfer of the carrierrelated assets and
employees to Nokia Siemens Networks that could result in additional actions by government
authorities. It is also not possible to predict whether there may be any ongoing violations of law
after such transfer and the closing of the merger involving the assets and employees of the Siemens
carrierrelated operations that could result in additional actions by government authorities. The
development of any of these situations could have a material adverse effect on Nokia Siemens
Networks and our business, results of operations, financial condition and reputation. In addition,
detecting, investigating and resolving such situations could be expensive and consume significant
time, attention and resources of Nokia Siemens Networks and our management, which could harm
our business and that of Nokia Siemens Networks.
The government investigations could also harm Nokia Siemens Networks’ relationships with existing
customers, impair its ability to obtain new customers, business partners and public procurement
contracts and result in the cancellation or renegotiation of existing contracts on terms less favorable
than currently exist. To the extent certain Siemens carrierrelated customer relationships involved
payments and transactions in violation of applicable law, it is not possible to predict whether such
relationships would be affected by Nokia Siemens Networks legally compliant business terms and
practices. Third party civil litigation may also be instigated against the Siemens carrierrelated
operations and/or employees transferred to Nokia Siemens Networks.
From its inception, Nokia Siemens Networks will have a comprehensive and robust compliance
program and internal financial controls designed to ensure the highest standards of reporting and
17