Nokia 2012 Annual Report Download - page 47

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 current or 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.
Public prosecutors and other government authorities in several jurisdictions have conducted and in
some jurisdictions continue to conduct criminal and other investigations related 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 remain under
investigation.
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
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