Nokia 2011 Annual Report Download - page 49

The internal review by Nokia Siemens Networks and Nokia is complete. Siemens has informed us that
its own investigation is also complete. Although the investigations by the German and United States
governments were concluded and resolved in December 2008, investigations in other countries
continue, as well as individual investigations of Siemens employees and other individuals. Accordingly,
until these investigations are complete and the matters are finally 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
as yet undetected additional violations of law that 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 affecting 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’ efforts to
comply with applicable regulations. Nokia Siemens Networks may also be joined to civil litigation
brought by third-parties against Siemens carrier-related operations.
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 Nokia Siemens Networks or us, resulting
from violations of law in the Siemens carrier-related operations that occurred prior to the transfer to
Nokia Siemens Networks. Siemens has also agreed, in certain circumstances and subject to the
fulfillment of certain criteria, to reimburse up to 50% of any lost profit suffered by Nokia Siemens
Networks as a result of the violations of law in the Siemens carrier-related operations that occurred
prior to the transfer to Nokia Siemens Networks.
We cannot predict with any certainty the final outcome of the ongoing investigations related to this
matter, when and the terms upon which such investigations will be resolved, which could be a number
of years, or the consequences of the actual or alleged violations of law on our or Nokia Siemens
Networks’ business, including its relationships with customers.
ITEM 4. INFORMATION ON THE COMPANY
4A. History and Development of the Company
Nokia is a global leader in mobile communications whose products have become an integral part of the
lives of people around the world. Every day, more than 1.3 billion people use their Nokia to capture and
share experiences, access information, find their way or simply to speak to one another. Nokia’s
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