May 12, 2007

Our Honorary Citizen

This man is Dr Heinrich von Pierer. Until quite recently, he was Board Chairman of Siemens AG, one of Germany's best-known companies. Then he resigned amidst a corruption scandal that has already been going on for quite some time:

Siemens chairman Heinrich von Pierer resigns

MUNICH, Germany — Amidst rising pressure in the context of ongoing bribery allegations against Siemens top managers, the company's long-time CEO Heinrich von Pierer has announced to vacate his present position as supervisory board chairman. However, von Pierer pointed out that there is no connection to the investigations.

Von Pierer, who was CEO and President of the industrial conglomerate over most of the time the alleged contraventions have happened, announced Thursday night (April 19) he will step down as chairman of the supervisory board with the beginning of the next board meeting scheduled for April 25.

Though von Pierer always denied any involvement in the recent scandals, many observers see the move as a result of the ongoing discussions over his role in this affairs and the rising pressure to step back.

The scandal series took its start when in autumn 2006, police raided the Siemens headquarters over bribery allegations - according to the reproaches, the company in the past years had spent up to €420 million (about $567 million) to bribe potential customers in order to receive orders.

Another scandal came to daylight recently, when managing board member Johannes Feldmayer was arrested over embezzlement allegations: Feldmayer is said to have funded an 'independent' anti-union group in the Siemens works council with €15 million (about $20 million), which is a criminal

On the bright side, if life gets too unpleasant in Germany for Heinrich, he can always come to Singapore to live. After all, just six weeks before Heinrich resigned from Siemens, President SR Nathan made him an Honorary Citizen of Singapore.

The Honorary Citizen Award is the highest form of national recognition that the Singapore government can give a non-Singaporean. Honorary Citizens (and their family members) get the right to live and work in Singapore and to purchase property if they decide to stay here.

Makes you wonder how the Singapore government picks its Honorary Citizens, doesn't it?


Anonymous said...

Net worth. Most probably.

Anonymous said...

Sounds like he was picked on net worth. :)

But to be fair, hindsight is 100%. Kind of reminds me of the John Browne episode (he just resigned from the board of Goldman btw) albeit a fiasco of a different nature.

Anonymous said...

Wow, you blog real early in the morning, Mr Wang!

By the way, is there a list of foreigners that the spore govt has chosen as Honorary Citizens?

Anonymous said...

According to the link you provided:

1) The allegations are against Siemens top managers, and not von Pierer.

2) Managing board member Johannes Feldmayer was arrested over embezzlement allegations.

3) All these happened on von Pierer's watch as CEO, but he was not personally involved.

Is a CEO personally responsible for every wrong-doing committed by his employees? Siemens is a company with 475,000 employees. How possible is it for a person to oversee everything that goes on?

It's like requesting a principal to resign if a student from his school shoplifts, or a teacher molests his students (as in the recent case of Ding). Siemens is over 200 times bigger than the typical school.

I know you're trying to make the Singapore government look stupid, but it really isn't justified in this case.

In any case, judging by your previous posts, am I right to say that you seem keen to emigrate? So you probably shouldn't care much about the value of a Singapore citizenship anyway.

Anonymous said...

Well, it's a little careless of them, you might say. In the last few years Germany has been rocked by one major corporate sleaze scandal after another, tainting all the big names like Mercedes, BMW, Volkswagen, and now Seimens, amongst others. Sex n' drugs n' rock'n'roll at shareholder expense seems to be one of the perks of doing business provided you don't get caught, of course.

Still, you'd have thought with all the chest-beating over how much the nation frowns upon the slightest whiff of corruption, the super-salaried board (heh, they'll never live that one down!)of S'pore Inc ought to have made a better fist of due-diligence, wouldn't you?

Curiously enough in the case of Dr. Albert Winsemius who passed away in 1996,

For his contributions to Singapore's economic development, he was conferred several honours. In 1967, President Yusof bin Ishak awarded him the Distinguished Service Medal. In 1970, he was conferred an honorary degree by the National University of Singapore. In 1976, he received the National Trades Union Congress' May Day Gold Medal of Honour.

there is no mention of Singapore Confers Prestigious Honorary Citizen Award... ...bla, bla. Perhaps I've missed it. If anyone ever deserved the honor, it would have been he.

Anonymous said...

those people are awarded the honorary citizenship based on their CONTRIBUTION TO SINGAPORE, thus, honorary citizen of SINGAPORE...

His resignation makes people THINK that he'd done something wrong IN GERMANY, not in SINGAPORE...
nothing to do to his contribution to SINGAPORE at all. no?

are u gonna judge him based on how well he is on bed too?

Gilbert Koh aka Mr Wang said...

The Honorary Citizen Award was introduced in 2003. Looking at the history of the award and the people who have gotten it so far, you get the unmistakeable impression that the whole idea is to use the HCA to (1) sell the FT idea locally and (2) to raise the profile of Singapore internationally, as a potential home for global talents.

Heinrich, I think, would make a bad choice, because his reputation is tainted with this scandal.

It's not a case of hindsight being perfect. The scandal has been on for a long time already. It didn't just happen after S'pore had already given the award.

"Is a CEO personally responsible for every wrong-doing committed by his employees?"

No. But if you're Chairman of the Supervisory Board, I think you cannot disclaim responsibility for something as large as this - other reports are saying that a fund was set up for bribery purposes. This is not the act of a single errant employee, it is something much more systemic.

In this kind of situation, many countries (I'm fairly certain that Germany would be one of those) would have laws that can hold the senior responsible.

Think NKF - it's not just Durai, but the entire board that is under investigation, even though the other board members are not anywhere as culpable, and may not even have been dishonest. Possible liabilities would be built around negligence; breach of fiduciary duty etc etc even if there is no actual dishonesty.

Anonymous said...

By boons" opinion< if a country is in disarray< its government is not responsible for it because it is the people who would have caused the problems> And every government has so much subjects to look after or "to run"

Anonymous said...

The two attempts to sanitize and whitewash what has clearly been a boo boo by the government is the usual Charge of the Light Brigade effort by people unable to think outside of the 156th's spiel. It was impossible that he could not have known about it..big sums were involved and this happened over several years. If nothing else, he was gulity of negligence for not taking steps to curb the practice after the first reports surfaced. Sounds familiar when you think about NKF too...

Anonymous said...

it is possibly a good idea for the elite men to peg the salary against this new avenue of high net worth individual, notwithstanding the scandal of course?

Anonymous said...

NKF is different. Durai was personally involved in the deed. The way I see it, Siemens CEO resigned to take responsibility for his subordinates' mistakes, the way Korean or Japanese ones would. Resignation can be seen as an act of honor or acknowledgement of guilt, depending on how you want to view it and the circumstances.

In the same vein as arguments for homosexual acts are made, his "imcompetence" did no harm to Singapore, so why hold it against him as an honorary citizen? Should he be criminalised?

Gilbert Koh aka Mr Wang said...

You misunderstand my point about NKF.

My point is not that Heinrich is likened to Durai. My point is that Heinrich could be likened to one of the NKF board members other than Durai.

In other words, Heinrich may not be personally involved, but it could be said (depending on the facts) that he had failed in his duties as a member of the board, to ensure that the organisation was properly run.

For example, you could be liable for failing to act in the shareholders' best interests. You could be liable for breach of directors' duties. You could be liable for negligence.

It does not mean that you were personally involved in planning or effecting any corruption schemes. But it is your duty as a director (certainly as Chairman of the Supervisory Board) to take steps to ensure that such things do not happen, eg by making sure that internal audits are done; by making sure that the staff are all educated on corporate governance; by setting clear policies; by ensuring that there are processes and procedures in place regarding payments by Siemens to 3rd parties.

Anonymous said...

And to re-iterate Mr W's point on board responsibility, notice that in the on-going Conrad Black fraud trial, the great-and-good non-executive board members of Hollinger International - celebrities like former US secretary of state Henry Kissinger, top diplomat and government official Richard Perle - are also in the firing line even though they almost certainly are innocent of any wrong-doing.

"I don't think they really had any idea of what was going on," says Mr Eisenhofer, "but they should have."

"It's nice to go to the Board meetings, it's nice to cash the cheque. It's nice to get the royal treatment. But it comes with some responsibilities, and when you don't exercise those responsibilities, your shareholders are now going to hold you accountable," says Mr Eisenhofer.

In other words, it's not a gaji buta job by any means, not when the brown faecal matter hits the rotating mechanical device it isn't.

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Gilbert Koh aka Mr Wang said...

I deleted the last two comments. I think they come a bit too close to sounding defamatory.

Anonymous said...

Ok, i have to say this to all those who think von Pierer is innocent in the scandal.

I highlighted the Siemens scaldal in the comments section when Mr Wang wrote about the extradition issue on 9 May 2007.

Von Pierer was not innocent. He knew about the dealings. There were meetings and minutes which documented this knowledge, dating as far back in the 90s. This was reavealed in news reports in Germany, in German. And it was for this reason that von Pierer was FORCED to step down from his position. He innitially fought it but was eventually left with no choice. It wasnt out of honour (likened to the actions of the Koreans or Japanese by another reader, May 13, 2007 2:26 PM). It was because he had no other choice.

You see, these information were available to me because i could read the German reports and the Siemens employee newsletter because i have been living in Germany for the last 1 year.

Some ask: And why should von Pierer not be honoured for contributing to Singapore or should he be held accountable for something bad he was involved in in Germany and not Singapore? Afterall, what happens in Germany has nothing to do with Singapore some might say.

Unfortunately, the Singapore government prides itself for being as uncorrupted as possible. By honouring a person with such a high title is akin to ignoring the reputation of the nation despite the person's deeds. Is this really then appropriate? More like slapping your own face with your own hand.

And to Mr Wang, thanks for clarifying the difference between citizenship and Honorary Citizen to me.


Gilbert Koh aka Mr Wang said...

I read on Bloomberg today that a couple of Siemens employees have just been convicted. More on the way, I think.

Anonymous said...

The rash of cases where basic due diligence or research has apparently not been carried out e.g purchase of Shin Corp,real hard evidence to substantiate claims that the public sector will lose talent as well as not attract talent because its salaries are not competitive and now this....seems to lend support to the fear that there is absence of spine and spunk to challenge decisions probably made by the top man. So sad for Singapore!