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Siemens Settlement: Relief, But Is It Over?

Now that Siemens has settled corruption charges, it must prove it can win business honestly, even when rivals may continue to bribe

It's not often that a $1.3 billion legal settlement is viewed as good news for the company that has to pay it, but that is how stock markets greeted the announcement that German engineering and electronics giant Siemens (SI) has resolved corruption charges brought by U.S. and German authorities. As major indexes in Europe and the U.S. fell on Dec. 15, Siemens shares rose 1% in New York trading amid investor relief that the company, accused of massive bribery to win contracts around the world, now can begin putting the case behind it.

Siemens will pay fines and other penalties totaling $800 million in the U.S. after pleading guilty in U.S. Federal Court in Washington, D.C., to violations of the Foreign Corrupt Practices Act. The agreement also resolves a civil suit brought by the U.S. Securities & Exchange Commission. In addition, Siemens agreed to pay $540 million to German authorities, in addition to a $274 million fine already levied. The company already has set aside enough money to pay the penalties. "For Siemens, the corruption cases in Germany and the U.S. are now over," Siemens Supervisory Board Chairman Gerhard Cromme told reporters at a press conference in Munich. "Now we can concentrate on business."