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Case 1:14-cv-01264-RC Document 83-3 Filed 09/26/17 Page 1 of 12

UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF COLUMBIA

)
IOOREPORTERS LLC, )
)
Plaintiff, )
)
V. ) Civil Action No.: 14-1264 (RC)
)
UNITED STATES )
DEPARTMENT OF JUSTICE, )
)
Defendant. )

DECLARATION OF MARK F. MENDELSOHN

I, Mark F. Mendelsohn, declare pursuant to Title 28, United States Code, Section 1746 as

follows:

1. I am a partner in the Litigation Department at the law firm of Paul, Weiss,

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

Litigation Practice Groups.

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

States Attorney's Office for the Southern District of New York.

3. I submit this Declaration in Support of the United States Department of Justice's

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

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practice; my work in criminal investigations; my review of documents obtained in DOJ's

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.

4. As Deputy Chief in the Fraud Section, I supervised all ofDOJ's investigations

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

laundering, mail fraud, wire fraud, and procurement fraud.

5. As Deputy Chief in the Fraud Section, I supervised the investigation and

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

Weinstein, who was assigned to work on the Siemens case.

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

enforcement agencies in ongoing investigations of individual Siemens employees. Siemens was

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

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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

Attachment 2 to the Plea Agreement.

THE DELIBERATIVE PROCESSES THAT OCCURRED


DURING THE MONITORSHIP

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)

the extent of Siemens' continuing effort to assist in the Government's then-ongoing

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.

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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

course of the investigative phase of the case.

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.

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YEAR ONE WORK PLAN

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

enable him to fulfill his mandate.

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

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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

evaluation of the Monitor's performance as the Monitorship proceeded.

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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

inhibiting the DOJ's ability to engage in full deliberations related to monitorships.

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

One Work Plan and his mandate.

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

its plea agreement were adequate.

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YEAR ONE REPORT AND ASSOCIATED DOCUMENTS

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

be extended by one week. (D0J_0005239 to D0J_0005240.) After considering Mr. Warin's

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.

(D0J_0000029 to D0J_0000293; D0J_0004329 to D0J_0004748 (exhibits)). I reviewed the

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

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complicity of certain members of senior management who had facilitated the Company's flagrant

violations of anti-corruption laws including the FCP A. Consequently, we had an ongoing

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

Two Work Plan and Review.

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

the criteria set forth in Attachments 1 and 2 to the plea agreement.

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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.

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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

of the Monitorship to enable him to fulfill his mandate.

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

countries the Monitor should focus on during Year Two.

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

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By this time, Mr. Joey Lipton had replaced Ms. Weinstein as the trial attorney on the Siemens
case.

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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

would intrude on the decision-making process of government employees involved in compliance

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

monitors would be released to the public.

30. Additionally, in my experience, both at DOJ and in private practice, corporate

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

decide to be less forthcoming in dealing with a monitor.

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.

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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

the DOJ's goal of achieving corporate rehabilitation.

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

information would be released.

I declare under penalty of perjury under the laws of the United States of America that the

foregoing is true and correct~

Executed on this2Z day of September, 2017.

Mark F. Mendelsohn

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