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Capital market-relevant press releases, 2013-07-23, 11:24 AM

Compliance at ThyssenKrupp

The German Federal Cartel Office has imposed a second fine on Essen-based ThyssenKrupp GfT Gleistechnik GmbH in the rail cartel case. This fine in the amount of €88 million relates to the private market and turnouts sections of the proceedings. The Group has accepted the fine, for which it had already recognized a corresponding provision. In July 2012 the authority imposed a first fine of €103 million for illegal agreements on rail deliveries to Deutsche Bahn. With today's fine the allegations against ThyssenKrupp in connection with the rail cartel have now been fully and finally settled.

From the outset ThyssenKrupp assisted strongly in clearing up the rail cartel with its own compliance department and external support. In this context the Federal Cartel Office explicitly acknowledged the Group's own compliance work. The company’s full cooperation with the investigating authorities throughout the proceedings was taken into account as a significant extenuating factor in the calculation of the fine.

In mid-2011 the Group acted firmly in the spirit of zero tolerance and took personnel action. Several sales managers, a managing director and the responsible business area CEO had to leave the company. The public prosecutor's office is continuing its criminal investigations into the individuals involved in the cartel.

Constructive talks with Deutsche Bahn on compensation
In connection with the rail cartel, Deutsche Bahn filed claims for damages against several companies – including ThyssenKrupp – at the end of 2012. ThyssenKrupp is continuing to conduct constructive talks with Deutsche Bahn on this matter. Both the damage assessment and the burden-sharing among the companies involved in the cartel require detailed investigations. The statement of defense does not have to be submitted until October 2013.

Results of the amnesty program
Despite considerable compliance efforts in recent years, significant damage has been caused to the company particularly by the rail cartel. Against this background and in view of the suspicion of price fixing by ThyssenKrupp Steel AG asserted by the Federal Cartel Office at the end of February, the Executive Board of ThyssenKrupp AG decided to intensify the Group's compliance efforts still further, also with support from external law firms. As well as establishing an ombudsman, the company carried out an amnesty program from April 15 to June 15, 2013.

ThyssenKrupp promised employees who disclosed compliance matters voluntarily and fully that it would not assert/enforce damage claims against them and that it would not terminate their employment.

The amnesty program led to more than twenty leads. No serious or structural compliance infringements were identified. The review of the leads commissioned by ThyssenKrupp has now been initially assessed with external counsel support, the detailed reviews are ongoing.

The relevant information received under the amnesty program relates mainly to individual misconduct in dealings with customers and suppliers in Germany and abroad. This conduct was stopped following internal measures. In addition the Executive Board has decided to carry out a Groupwide review of its employees' activities in associations and to give employees extra certainty on how to conduct themselves in dealings with competitors.

Around a third of the reports under the amnesty program led to no findings. Among other things they related to questions from employees wanting to make sure that their conduct was in line with the Group policies on combating corruption. ThyssenKrupp will take up this subject again and integrate it into the existing compliance training programs because, particularly abroad, employees need further support on dealing with invitations and gifts.

In the amnesty program no information was brought forward on the ongoing investigations by the Federal Cartel Office into possible price fixing in the delivery of certain steel products to the German automotive industry and its suppliers. Acting on an anonymous tip, the Federal Cartel Office among other things searched the business premises of ThyssenKrupp Steel Europe AG at the end of February this year. The official investigations by the Federal Cartel Office are ongoing. Significant risks for the Group’s asset, financial and earnings situation cannot be ruled out at present.

Dr. Heinrich Hiesinger: “Our corporate culture stands for values like openness, transparency and credibility. These values form the basis for our actions and also include compliance with the law as a matter of course. The amnesty program has helped drive forward the culture change at our company. We on the Executive Board expect all managers to ensure business processes are conducted in a proper manner in their area of responsibility and to stay alert and act. Anyone who doesn’t cooperate has no business working for us.”

Further development of the compliance program at ThyssenKrupp
The ThyssenKrupp compliance program is based on the pillars “Inform”, “Identify” and “Report and Act”. A compliance organization has been set up to develop, manage and implement the program: Both centrally at corporate headquarters and in the business areas and regions, the chief compliance officer will be supported in the future by around 60 full-time compliance officers worldwide. They will advise, inform and educate employees around the world about important legal requirements and internal policies; their work will also include performing proactive compliance audits and investigating suspected non-compliance. The compliance officers in turn are supported in the business areas and Group companies by a network of some 350 compliance managers – generally managing directors – who ensure that the compliance program is implemented at operating level in their areas of responsibility.

In a next step, the compliance program is to be developed further. This will involve above all further strengthening the compliance culture in the Group. Against this background, in late 2012 the Executive Board and Supervisory Board of ThyssenKrupp AG once again made clear that managers at ThyssenKrupp bear corporate responsibility for compliance in their area of responsibility.

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