Nokia 2008 Annual Report Download - page 27

continuous learning as competition for skilled personnel remains keen. We are also continuously
developing our compensation and benefits policies and taking other measures to attract and motivate
skilled personnel. Nevertheless, we have encountered in the past, and may encounter in the future,
shortages of appropriately skilled personnel, which may hamper our ability to implement our
strategies and materially harm our business and results of operations.
Some of the Siemens carrierrelated operations transferred to Nokia Siemens Networks have
been and continue to be the subject of various criminal and other governmental
investigations related to whether certain transactions and payments arranged by some
former employees of Siemens were unlawful. As a result of those investigations, government
authorities and others have taken and may take further actions against Siemens and/or its
employees that may involve and affect the 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 violations that may have occurred after the transfer of such
assets and employees that could have a material adverse effect on Nokia Siemens Networks
and our reputation, business, results of operations and financial condition.
Public prosecutors and other government authorities in several jurisdictions have been conducting
and in some jurisdictions are continuing to conduct criminal and other investigations with respect to
whether certain transactions and payments arranged by some current or former employees of
Siemens relating to the carrierrelated operations for fixed and mobile networks that were transferred
to Nokia Siemens Networks were unlawful. These investigations are part of substantial transactions
and payments involving Siemens’ former Com business and other Siemens’ business groups which
were and are still under investigation.
In December 2008, legal proceedings and government investigations against Siemens were concluded
in Germany and settled in the United States. To resolve these legal matters, Siemens agreed to pay a
fine of EUR 395 million to German authorities, in addition to the EUR 201 million fine previously paid,
and to pay a criminal fine of USD 450 million to the US Department of Justice and to disgorge profits
of USD 350 million to the US Securities and Exchange Commission for criminal and civil violations of
the US Foreign Corrupt Practices Act. The investigations of employees of Siemens and other
individuals remain unresolved by these settlements. To date, none of the fines imposed on Siemens
has applied to Nokia Siemens Networks or Nokia. It is not possible at this time to predict whether
other government authorities will take further actions and if they do what they might be and the
extent to which such actions might apply to or affect Nokia Siemens Networks or Nokia.
The internal review by Nokia Siemens Networks and Nokia is complete. Siemens has informed us that
its own investigation is also complete. Although the government investigations of Siemens by
German and United States authorities have been concluded and resolved, investigations in other
countries continue, as well as investigations of Siemens employees and other individuals. Accordingly,
until these investigations are complete and the matter resolved, it is not possible to ensure that
Siemens employees who may have been involved in the alleged violations of law were 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 that could result
in additional investigations or actions by government authorities. Such actions have, and could
include criminal and civil fines, tax liability, as well as other penalties and sanctions. It is also not
possible to predict whether there have been any ongoing violations of law after the formation of
Nokia Siemens Networks 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
reputation, business, results of operations and financial condition. In addition, detecting,
investigating and resolving such situations have been, and might continue to 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.
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