Whistleblower Lawsuit Against Siemens Dismissed

A federal judge has dismissed a whistleblower lawsuit against Siemens AG, claiming the law that protects tipsters from retaliatory measures is valid only in the United States.

U.S. District Judge William Pauley in New York, N.Y., threw out a suit by Meng-Lin Liu, ruling that whistleblower protections in the Dodd-Frank Act do not apply overseas. “There is simply no indication that Congress intended the Anti-Retaliation Provision to apply extraterritorially,” Pauley wrote in his opinion.

Liu filed a whistleblower complaint in January 2013, claiming he uncovered a kickback scheme in which Siemens Ltd. China submitted inflated bids to sell medical diagnostic and scanning equipment to public hospitals in China and North Korea, and sold the equipment at reduced prices to intermediaries that charged the hospitals the full bid price. Liu, who was hired by Munich, Germany-based Siemens in 2008 as a compliance officer, claims he was fired after presenting evidence of the scheme to a senior executive at Siemens’ China unit.

Pauley dismissed the suit, denying Liu’s request that he be permitted to file an amended complaint, reasoning that an amendment would be futile because the law does not apply to Liu’s case.

The plaintiff said he encountered a culture of “evading and circumventing” anti-corruption laws when he started at the company in 2008.
While the dismissal clears Siemens of at least any stateside legal trouble, the lawsuit’s allegations of a culture of corruption are alarming considering the company’s checkered history. Back in 2008, Siemens paid more than $1.6 billion to U.S. and German authorities to settle sweeping international bribery charges, and the company disclosed last year that it is under investigation by prosecutors in Munich and New York.

But the German technology giant has been at working reforming its business model since then, starting from the top. Siemens jettisoned CEO Peter Löscher in July and has cut more than 15,000 jobs around the world as it works to reorganize its fractured model and return to revenue growth.