Professional Documents
Culture Documents
)
IOOREPORTERS LLC, )
)
Plaintiff, )
)
V. ) Civil Action No.: 14-1264 (RC)
)
UNITED STATES )
DEPARTMENT OF JUSTICE, )
)
Defendant. )
I, Mark F. Mendelsohn, declare pursuant to Title 28, United States Code, Section 1746 as
follows:
Rifkind, Wharton & Garrison LLP, in the Washington D.C. Office, where I am co-chair of the
Anti-Corruption and Foreign Corrupt Practices Act ("FCPA") Practice Group and a member of
the White Collar Crime and Regulatory Defense, Internal Investigations, and Securities
2. From 2004 to 2010, I was a Deputy Chief in the Fraud Section of the Criminal
Division of the United States Department of Justice (DOJ). From 2003 to 2004, I worked as a
Senior Counsel in the Computer Crime and Intellectual Property Section of the Criminal
Division of DOJ. From 1998 to 2003, I was an Assistant United States Attorney in the United
Renewed Motion for Summary Judgment. I make this declaration based upon my experience in
FCPA cases, including cases with compliance monitors, both as a prosecutor and in private
1
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 2 of 12
investigation and prosecution of Siemens AG ("Siemens") and related entities, and Siemens'
compliance monitorship; conversations I have had with DOJ attorneys; and my review of court
filings and monitorship documents from the resolution that DOJ entered into with Siemens and
related entities.
and prosecutions of violations of the FCPA, including over 16 compliance monitorships in FCPA
cases brought by the Fraud Section. I also supervised criminal cases involving money
prosecution of Siemens under the FCPA and personally negotiated Siemens' plea agreement to
FCPA charges and its resulting compliance monitorship. I supervised a DOJ trial attorney, Lori
6. The Siemens case was at the time DOJ's largest FCPA resolution, so it was one of
my top priorities. Besides the prosecution of Siemens and several of its affiliates, we were
investigating individual Siemens officers for potential FCP A violations. I was intimately
involved in and actively managed all aspects of the Siemens case, including the compliance
monitorship.
7. Several provisions of the Siemens plea agreement guided DOJ's approach to and
deliberations concerning the Monitorship. Under those provisions, Siemens was required to
commit no further crimes and to continue cooperating with DOJ, the SEC, and other law
also required to maintain an ethics and compliance program that was designed to detect and deter
violations of the anti-corruption laws and meet certain minimum requirements, which were listed
2
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 3 of 12
in Attachment 1 to the Plea Agreement. I personally participated in developing the format for
this document.
8. As part of its resolution with DOJ, Siemens also agreed that Dr. Theodor Weigel
would serve as compliance monitor for up to four years, with a mandate to evaluate the
effectiveness of the internal controls, record-keeping, and financial reporting policies and
procedures as they related to Siemens' compliance with the FCPA and other applicable anti-
corruption laws, and report to DOJ about those issues. Siemens was obligated to cooperate with
the Monitor, which included, among other things, giving him access to its relevant information,
records, and employees. The Monitor's duties and responsibilities were spelled out in
9. Broadly speaking, DOJ engaged in two types of deliberative processes during the
Monitorship. The first type of deliberative process concerned Siemens. That process involved
evaluating Siemens' efforts to comply with the terms of its plea agreement. This evaluation was
continuous throughout the first year of the Monitorship, which culminated in DOJ' s evaluating
the monitor's first annual report and related presentations and records. The criteria which guided
this deliberative process included: (a) whether Siemens had engaged in further misconduct; (b)
investigations of Siemens executives and other employees; (c) the level and degree of Siemens'
cooperation with the Monitor by making its records, facilities, and personnel readily available to
the Monitor; and (d) whether Siemens' compliance program made progress toward meeting the
criteria for a corporate compliance program set forth in Attachment 1 to the Plea Agreement.
3
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 4 of 12
10. The second type of deliberative process related to the Monitor. That process
involved assessing the Monitor's performance of his mandate, as set forth in Attachment 2 to the
Plea Agreement. The evaluation of the Monitor occurred continuously throughout that first year
of the Monitorship, based on our periodic telephone conversations, in person conversations, and
written communication with the Monitor and his U.S. counsel. This ongoing evaluation was
guided by our assessment of: (1) whether the Monitor's work plans and related materials, if
implemented, would enable the Monitor, DOJ, and SEC to evaluate the quality and effectiveness
of Siemens' internal controls, record-keeping, and financial reporting policies and procedures as
they related to its compliance with anti-corruption laws; and (2) how successfully the Monitor
had in fact discharged his mandate over the course of the year and implemented his work plan, as
shown in his first annual report, associated materials, and meetings with DOJ. Our assessment of
the Monitor's performance was also informed by the Fraud Section's and my personal
experience working with other compliance monitors in other FCPA resolutions, our own
expertise in anti-corruption compliance matters, and our experience with Siemens over the
11. Joseph Warin, the Monitor's U.S. counsel, and I consulted periodically during the
Monitorship. Mr. Warin regularly briefed me on how the Siemens Monitorship was progressing
and whether any problems had arisen. We also discussed issues relating to the Monitorship by
telephone. In addition, I consulted regularly with attorneys at the SEC, which settled a civil case
with Siemens and also appointed Dr. Weigel as a compliance monitor. By this time, I had been
involved in more than 16 other compliance monitorships, had seen problems that could arise in
monitorships, and had specific ideas about how to ensure monitorships' prospects for success.
Based on all this, I provided input to Mr. Warin on many aspects of the Monitorship.
4
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 5 of 12
12. In order to carry out the Monitor's mandate, the Monitor was required to conduct
an initial review and three follow-up reviews. With respect to each review, the Monitor was
required to prepare a written work plan and provide it to DOJ for comment 60 days before
implementing it. The work plan was a crucial document because it set forth the steps to be taken
to determine whether Siemens was complying with the plea agreement and provided DOJ the
means necessary to evaluate whether the Monitor was faithfully discharging his mandate.
13. Mr. Warin and I consulted often during the development of the Monitor's first
work plan. I based my review of the Year One Work Plan on many things, including my
experience with previous monitorships and related work plans. Among other things, I wanted to
make sure that the Monitor's first year review would cover a broad cross-section of geographic
regions and business sectors. I recall in particular that Mr. Warin and I discussed those
geographic regions.
14. On March 13, 2009, I received a copy of the Monitor's Year One Work Plan.
(DOJ_OOOOOl to DOJ_000028.). According to the Year One Work Plan, the Monitor was
planning to undertake extensive efforts to understand Siemens' complex corporate structure, vast
business operations, and areas of greatest potential corruption risk. The Year One Work Plan
reflected the government's input and the Monitor's opinions, recommendations, and
deliberations regarding what steps he should take during the first year of the Monitorship to
15. On April 1, 2009, Ms. Weinstein and I met with the monitorship team to discuss
the Year One Work Plan. Mr. Warin made a presentation summarizing the main parts of the
Work Plan, and there was a robust discussion about the Work Plan and how the Monitorship was
progressmg. The discussion covered the issues described above that I had previously discussed
5
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 6 of 12
with Mr. Warin. Additionally, we discussed the importance of the Monitor's independence and
the various tools, including external and internal resources at his disposable to carry out his
mandate.
16. On April 16, 2009, I received a letter from Mr. Warin addressed to myself, Ms.
Weinstein, and several SEC attorneys advising that the Monitor planned to alter his review of
Siemens' operations in a southeast Asian country that I had asked the Monitor to add to his
review. (D0J_005232 to D0J_005233.) I reviewed Mr. Warin's letter, and decided that the
change in the Monitor's plan was reasonable. Mr. Warin was so informed.
17. Fallowing the April 1, 2009 meeting, Ms. Weinstein and I discussed some of the
concerns raised at that meeting. On April 15, 2009, Ms. Weinstein drafted a letter to Mr. Warin
providing feedback on the Work Plan, which I reviewed before she sent it. (DOJ 005226 to
D0J_005227.) Prior to finalizing the letter, Ms. Weinstein sent Mr. Warin an email message
seeking additional information. On May 5, 2009, after receiving that information, Ms. Weinstein
sent Mr. Warin the signed letter providing DOJ's feedback on the Year One Work Plan.
(D0J_005235 to D0J_0005237.)
18. After reviewing the Year One Work Plan, consulting with Mr. Warin, SEC staff,
and others, taking part in the April 1, 2009 Monitorship meeting, and reviewing the other
information and records available to me, I concluded that the Year One Work Plan was
reasonable in fulfilling that part of the plea agreement, that the Monitor's Year Two Review
should proceed, and that the Monitor was faithfully discharging his mandate. These conclusions
were the product of a consultative process between DOJ, the Monitor team, and the SEC. The
conclusions and the underlying records and information served as a basis for DOJ's continuing
6
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 7 of 12
19. In my view, disclosure of the Year One Work Plan and its related materials,
including internal communications or communications between the Monitor and the government,
would expose the deliberative process that the government engaged in to carry out its duties to
oversee the monitorship, including overseeing the Monitor's work and Siemens' efforts to
comply with the plea agreement. Moreover, there was no doubt that both Siemens and the
Monitor provided information and documents to the government with the expectation that the
information and documents would remain confidential. As such, I believe that disclosure of such
information or documents would stifle the candid flow of information and deliberation between
and among the affected company, the monitor, and the government. This chilling effect would
adversely impact the government's ability to promote compliance with the FCPA by making it
difficult to obtain complete and candid information from companies under monitorships and by
20. On July 6, 2009, I received a letter from Mr. Warin addressed to me, Ms.
Weinstein, and several SEC attorneys reporting on the status of the Monitor's Year One Review,
including informational meetings, forensic work, and walk-through analyses. This letter
supported and strengthened my belief that the Monitor was effectively implementing the Year
21. As stated above, throughout the first year of the Monitorship, Mr. Warin provided
me periodic reports on the status of the Monitorship. These reports assisted me in my ongoing
evaluation of whether the Monitor was effectively carrying out his mandate and, together with
input from the Monitor, and my assessment of whether Siemens' efforts to date to comply with
7
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 8 of 12
22. On September 10, 2009, I received a letter from Mr. Warin, addressed to me, Ms.
Weinstein, and several SEC attorneys, requesting that the delivery date of the Year One Report
explanation of why he was seeking this extension, I agreed that it was appropriate. Mr. Warin
was so informed.
23. On or about October 5, 2009, the Monitor issued his Year One Report.
report, including the attached exhibits. The Monitor summarized the activities of the
Monitorship over the prior year. Among other things, the Monitor stated that the Monitorship
team had assessed Siemens' leadership and corporate culture, reviewed its compliance program,
collected and reviewed thousands of pages of documents (in several different languages),
interviewed numerous Siemens employees, and conducted many on-site visits around the world.
The Monitor made a large number ofrecommendations for improving Siemens' compliance
efforts. The Year One Report reflected the Monitor' s considered opinions, recommendations,
and deliberations concerning what Siemens had already accomplished by that time, and what
additional steps the Company needed to take to implement an effective compliance program.
The report reflected consideration of official DOJ guidance concerning interpretation of the
FCPA.
24. On November 19, 2009, I, together with several SEC attorneys, attended a
Monitor presentation concerning the Year One Report. At that meeting there was a robust
discussion concerning the status of the Monitorship and Siemens' progress. We asked probing
questions to ensure that we understood the report and recommendations. The facts admitted by
Siemens in its plea agreement show a historically flawed corporate culture at Siemens and the
8
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 9 of 12
complicity of certain members of senior management who had facilitated the Company's flagrant
dialogue with Siemens, its counsel, and the Monitor to address the issues set forth in the
Statement of Offense, and concerns about the Company's corporate culture. We raised these
issues so that we could determine whether the Monitor and Siemens complied with certain of
their obligations as set forth in Attachments 1 and 2 of the plea agreement. Many of the issues
discussed were topics that we and the Monitor agreed would need to be addressed in the Year
25. Throughout this process, DOJ continuously evaluated whether the Monitor was
effectively carrying out his mandate and, together with the Monitor, whether Siemens' efforts to
date to comply with its plea agreement were adequate. After deliberating, among other things,
upon all the information and records I had received to date, including the Monitor's Year One
Work Plan, the Year One Report and associated records, the Monitorship presentations on April
1, 2009 and November 19, 2009, Mr. Warin's July 6, 2009 letter, and my conversations with Mr.
Warin, SEC staff, Ms. Weinstein, and others, I concluded that Siemens was making sufficient
progress towards complying with its plea agreement, and that the Monitor was carrying out his
mandate effectively. These conclusions were the product of a consultative process between the
governn:ient and the Monitor, and the conclusions and the underlying records and information
served as a basis for DOJ's continuing evaluation of the performance of the Monitor and
Siemens as the Monitorship proceeded. 1 The conclusions were also based upon my analysis of
1
Although I remained focused on the Siemens monitorship, by this time I was in the process of
turning over responsibility for supervising the case to my eventual successor as Deputy Chief,
Charles Duross.
9
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 10 of 12
26. On February 8, 2010, I received a copy of the Monitor's Year Two Work Plan. I
reviewed the Work Plan. According to the Work Plan, the next phase of the Monitor's work
included a project- and contract-based review of Siemens' business practices and its efforts to
implement the a large number recommendations from the Monitor's Year One Report. Unlike
the First Year Review, which was generally broad-based, the Year Two Review was more
focused and targeted specific issues identified in the Year One Review. The Year Two Work
Plan covered issues that we had raised during the November 19, 2009 meeting that needed to be
covered in the next work plan; this was consistent with my expectation that discussion and
consultation between DOJ and the Monitor would impact how the Monitor carried out his
mandate. Ultimately, the Year Two Work Plan reflected the Monitor's opinions,
recommendations, and deliberations concerning what steps he should take during the second year
27. On February 23, 2010, I, Mr. Charles Duross, Mr. Joey Lipton,2 and several SEC
attorneys attended a Monitorship presentation concerning the Year Two Work Plan. Mr. Warin
made a Powerpoint presentation summarizing the essential parts of the Year Two Work Plan,
and we had a vigorous discussion about that work plan and how the Monitorship was
progressing. (DOJ_ 00003 84 to DOJ_ 0000418.) We discussed, among other things, which
28. On March 24, 2010, I received a follow-up letter from Mr. Warin addressed to
me, Mr. Lipton, Mr. Duross, and several SEC attorneys. (DOJ_005248 to DOJ_00525.) The
letter addressed certain of the questions we had raised at the February 23, 2010 presentation on
2
By this time, Mr. Joey Lipton had replaced Ms. Weinstein as the trial attorney on the Siemens
case.
10
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 11 of 12
the Year Two Work Plan. Mr. Warin enclosed a copy of Siemens' employee training program
for using its business partner compliance tool (DOJ_0000325 to DOJ_0000383), an excerpt of
the Monitor's Year One Report (DOJ_005251 to DOJ_005255), and the Monitor's Year Two
Work Plan (DOJ_0000294 to DOJ_0000324). Mr. Warin's letter also addressed concerns we
had raised in the February 23 meeting about the decision not to visit a particular country
operation.
29. In my view, disclosure of the materials upon which these conclusions were based
monitorships, and consequently would chill the candid expression of opinions by such
individuals. I also am of the opinion that disclosure of the material obtained under the
monitorship program would dissuade at least certain companies from accepting a compliance
monitorship as part of their plea agreements, or cause them to resist a settlement altogether,
because of the substantial risk that their corporate information and communications with
fraud cases are often accompanied by derivative class action lawsuits, shareholder lawsuits, or
other similar litigation. There is a significant risk that if sensitive non-public information was
shared with a monitor, and then obtained by plaintiffs or their counsel, such information could be
used against a company in these types of lawsuits. In light of this risk, companies may well
31. As a consequence, this chilling effect might curb the monitors' ability to identify
deficiencies within the affected company's compliance program, thereby frustrating the remedial
goals of the DOJ in settling corporate fraud matters with monitorship requirements.
11
Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 12 of 12
32. Furthermore, this chilling effect on corporate transparency would frustrate one of
the government's objectives in enforcing anti-corruption laws due to the impact on the level of
candor fi;om companies subjected to monitorships. This, in turn, would reduce the flow of
quality and reliable information between the monitors and the government. Knowing that
confidential information may be disclosed may also inhibit the monitors from rigorous
examination of the affected companies and thus restrict the information flow from monitors to
the government. Ultimately, the lack of candor and transparency would affect the government's
ability to evaluate companies' progress toward remediating their compliance programs and harm
33. As Deputy Chief of the Fraud Section, one of my goals was to promote corporate
compliance. Corporate monitorships were one effective way of achieving that goal. This
important goal would be adversely affected if information exchanged between companies and
monitors, and between monitors and the government were not kept confidential because
companies would not cooperate with the government due to concerns that their confidential
I declare under penalty of perjury under the laws of the United States of America that the
Mark F. Mendelsohn
12