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In April 2005, the Mail on Sunday Newspaper reported that Gordon Brown met with Alan Wood, Siemens' UK chief executive, who gave his view on why UK companies seemed to fail in securing lucrative contracts on the continent.

Siemens itself, however, has made regular appearances in the Press, as well as in courtrooms, in connection with allegations of bribery and corruption.

Siemens is currently involved in a large number of other PFI contracts across the UK. But from January 1st 2006, as a result of Article 45 of the EC's public procurement Directive, UK contracting authorities will be required to take account of a company's corruption track record and exclude companies found guilty of corruption from public contracts.

SIEMENS' CORRUPTION TRACK RECORD

GERMANY: Anonymous allegations were made against Siemens for 'bribery, preferential treatment and unacceptable agreements' in an E6 billion contract for the German Ministry of Defence.

In the 2004 German affair over MNCs financing politicians, it was revealed that Siemens paid E60,000 per year to the MP, Chair of the Parliamentary Research Committee, Deputy Regional Chairwoman of Northrine-Westphalia and FDP member Ulrike Flach (it was claimed these payments were in exchange for her translation work for Siemens).

ITALY: In April 2004, an Italian judge banned Siemens from taking part in any public tenders in Italy for a year following an investigation into alleged bribes made by Siemens to Italian utility company Enel. Siemens was accused of paying £4 million in bribes to Enel executives for a gas turbines contract. Subsequently, the ban was limited to gas turbine contracts.

RUSSIA: In April 2005 the Mail on Sunday newspaper reported that two former employees went public with allegations that Siemens regularly paid bribes in order to win public contracts. The allegations are supported by affidavits and internal Siemens documents and concern events that took place throughout the 1990s. According to Mr. Papernick Siemens secured a £20 million contract in 1999, with an alleged £4.5 million kickback, to supply equipment to the Bourdenko Institute of Neurosurgery in Moscow. The whistleblower alleges that this contract was dropped in 2000 as Siemens prepared to be listed on the New York Stock Exchange and feared it could be vulnerable under the US Foreign Corrupt Practices Act.

SINGAPORE: In 1996, Siemens and a number of other multinational corporations were debarred for five years from Singapore government contracts. A consultant working for those multinational corporations allegedly bribed the Chief Executive of the Public Utilities Board.

SLOVAKIA: In 2001 Siemens was alleged to have offered SKK 1.5 million to the Chair of a tender commission concerning a large IT contract for the Slovak Treasury. However, Siemens Business Services successfully appealed in April 2002 and was able to re-enter bidding for an IT contract in the Slovak Treasury.

SPAIN: In 2001 Spanish judges suggested that Siemens was involved in money laundering, corruption and party financing amounting to DM 19 million in connection with the construction of the Ave rapid rail link between Madrid and Seville.

SIEMENS: CONTRACT FAILURES IN THE UK

Besides this list of allegations and investigations Siemens has also been involved in a number of contract failures in the UK, which have been the subject of detailed scrutiny and reports by the National Audit Office.

SIEMENS IN THE UK: PASSPORTS AND IMMIGRATION

The installation of a new computerised system at the Passport Agency's Liverpool and Newport offices resulted in massive delays and major inconvenience and costs to the public. At its peak in the summer of 1999, 565,000 passport applications were outstanding which lead 500 people to miss their holidays. The NAO added up the cost of this episode to £13 million (of which £16,000 were spent on umbrellas for people queuing, £5,000 on luncheon vouchers, £161,000 in compensation, and 500,000 on a publicity campaign). The bulk of the increased costs were spent on overtime and additional staff.

What is interesting about this £120 million contract, however, is how the risk was shared. While Siemens has been fined £60,000 for its performance, another£275,000 due for contractual failings were waived. At the same time, the price per processed passport was increased, resulting in an additional £1.3 million the Government had to pay Siemens per year. Ironically, a system whereby Siemens would have had to pay 10p per day a passport remains unprocessed, was planned but not yet implemented.
In 1999 the NAO also published a scathing report about Siemens collecting most of its fee for an IT PFI contract in the Immigration Office while the computer system was delivered more than a year late and forced the Government to take on extra staff to deal with the problems.

Also in 1999, Siemens Transportation Services were fined £6,000 at Bournemouth Crown Court for damaging a 33,000 volt cable and thereby endangering public health and safety.

SIEMENS BUSINESS SERVICES TAKING OVER NATIONAL SAVINGS AND INVESTMENTS

Despite this record Siemens was awarded a £635 million PFI contract in 1999 to take over National Savings - an entire Government department. Virtually all of the 4000 staff were transferred to Siemens Business Services.

However, a first report by the National Audit Office in 2000 pointed out that the contract included a number of key features in order to achieve the projected improvements and savings:
- in addition to the contract to SBS, National Savings hired independent IT consultants to enable it to act as an intelligent customer;
- it avoided to be locked into the contract and could terminate it when performance targets are not achieved;
- and it allowed close involvement of senior departmental staff in negotiating and monitoring the contract, also allowing for changes and adaptations to be made over the course of the project.
Also, the contract was structured so that SBS had to find alternative work for the employees that would lose their jobs due to improvements.
Another NAO report in 2003 stated that the deal was good value for money but, as it remained a high risk project, National Savings must stay vigilant. Savings for 2001/02 were put at £176 million, partly due to SBS. The NAO spelled out some of these risks:

‘Siemens Business Services is unlikely to make its projected returns on the project as it was unable to deliver the full business transformation as soon as it had planned. It has incurred more capital expenditure than planned and despite increasing productivity, it was unable to reduce staff numbers in line with its original plans and has not yet created as many third party jobs as expected, although 650 new jobs have been created to date. It is also spending more than planned on the upkeep of the three sites at Blackpool, Durham and Glasgow.’