Nokia 2009 Annual Report Download - page 33

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.
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. To date, none of
the substantial fines imposed on Siemens by regulators in Germany and the United States has applied
to Nokia Siemens Networks or Nokia. 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.
The government investigations may also harm Nokia Siemens Networks’ relationships with existing
customers, impair its ability to obtain new customers, business partners and public procurement
contracts, affect its ability to pursue strategic projects and transactions or result in the cancellation or
renegotiation of existing contracts on terms less favorable than those currently existing or affect its
reputation. Nokia Siemens Networks has terminated relationships, originated in the Siemens carrier
related operations, with certain business consultants and other thirdparty intermediaries in some
countries as their business terms and practices were contrary to Nokia Siemens Networks’ Code of
Conduct, thus foregoing business opportunities. It is not possible to predict the extent to which other
customer relationships and potential business may 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.
Siemens has agreed to indemnify Nokia and Nokia Siemens Networks for any government fines or
penalties and damages from civil law suits incurred by either, as well as in certain instances for loss
of business through terminated or renegotiated contracts, based on violations of law in the Siemens
carrierrelated operations that occurred prior to the transfer to Nokia Siemens Networks.
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