BulletProofBlog the blog on crisis communications

A billion dollars in fines is never anything to scoff at. But when considering the penalties that German engineering giant Siemens could have faced as a result of a years-long international bribery investigation, things certainly could have been a lot worse.

At the end of the day, the $1.34 billion that Siemens will pay to governments throughout the world is only a mere fraction of the fines that could have been levied by U.S. regulators alone. Under federal sentencing guidelines linked to the Foreign Corrupt Practices Act, the U.S. Department of Justice and Securities and Exchange Commission could have pursued penalties totaling $2.7 billion and even barred the company from future bidding on U.S. contracts.

After reaching a sentencing agreement in the final days of 2008, the company will instead pay a record-shattering $800 million to U.S. regulators and another $534 million to foreign regulators, but still be allowed to bid future business in the U.S. Given the nature of the allegations, it' s about as good a deal as Siemens could have hoped for.

How did Siemens secure such a relatively favorable outcome? And what can other companies learn from Siemens at a time when FCPA investigations and enforcement actions have more than doubled in the last four years?

On The FCPA Blog, attorney and FCPA expert Richard Cassin points to a Justice Department statement commending Siemens' cooperation as a sure sign that transparency and corrective action were key contributors to reduced penalties. Regulators praised Siemens' "exceptional" and "wide-ranging" efforts to make information uncovered in internal inquiries accessible to government investigators. And in the sentencing memorandum filed by prosecutors, it' s made clear that the government' s leniency had a great deal to do with "recognition that Siemens has implemented substantial compliance changes over the course of the investigation."

With an unprecedented level of international cooperation becoming the norm, and all signs pointing to an upward trend in FCPA investigations, Siemens has provided a template that all companies can follow should this newly heightened level of scrutiny bring unwanted attention.

By making transparency and internal reform the hallmarks of its approach, Siemens spared itself crippling fines and sanctions and even enlisted the regulators themselves as allies in reassuring stakeholders that the company' s compliance strategy moving forward is sound.