You're reading: Expats to Watch: Siemens Ukraine CEO sees big needs, potential ahead

Siemens AG, the technology powerhouse with more than $100 billion in global sales last year, knows quite a bit about operating in corrupt nations such as Ukraine.

In fact, an epic scandal exposed German-based Siemens as fueling some of this corruption by bribing government officials to gain business. In 2008, the company paid a $1.6 billion fine – half to Germany, half to the United States — to settle allegations of bribery that took place in Argentina.

On a much smaller scale, Siemens’ subsidiary in Ukraine last year paid a $6,250 fine to settle the state antitrust body’s accusation that it engaged in price fixing involving a supply contract with a hospital in Rivne.

The scandals transformed the company in a positive way, said Siemens Ukraine’s CEO Cornelius Granig, who was appointed in October. After the 2008 case, he said Siemens launched an anti-corruption initiative, the appointment of a mostly new board of directors and a new CEO. As far as the local 2012 case, Granig said, the health sector manager responsible for the alleged price-fixing got fired.

Now, Granig said, Siemens is as honest and as transparent as a company can be. The first message that employees receive after logging onto their work computers is: “Compliance is not a program, it is a way of doing business!” The company no longer tolerates bribes to win contracts, Granig said, and employees who engage in such practices are fired.

“I’m very happy to work in such a company,” said Granig. “It’s clear for employees and for customers what we stand for. So there is no gray zone.”

Granig, an Austrian citizen, came to Siemens Ukraine after serving as deputy board chairman of Raiffeissen Bank Aval for four years. Before that, he worked for a decade with IBM. He now leads a unit of Siemens with 300 employees (only three of whom are foreigners) and sales of approximately $200 million a year.

It’s a small operation for the big company, but given Siemens Ukraine’s specialties – supplying cutting-edge technology in energy, health care, infrastructure and industry – the possibilities for growth seem unlimited in a nation that needs modernization almost everywhere.

In energy, Siemens is active in all areas except for nuclear and solar. A world leader in turbines, the global giant also has other equipment and technology to help Ukraine improve productivity and efficiency of its steel mills, iron ore mines, gas transportation network, electrical power stations, coal mines and wind power. It has equipment for the hoped-for shale gas boom ahead.

In the short run, Granig sees potential in the company helping to refurbish the nation’s outdated power plants. “We call this a repowering,” he said. “They have 50-year-old technology. In the meantime, Siemens has developed efficient power production with fewer emissions.”

The company’s single largest client is billionaire Rinat Akhmetov’s System Capital Management, the large conglomerate. But another major client is ArcelorMittal, owner of the nation’s largest steel mill in Kryvyi Rih. That plant is “truly state of the art,” Granig said, but the prospects for heavy investment in Ukraine’s other steel plants are dicey. “Many plants could produce more if they would modernize, but then the question is who would buy it because Chinese steel is cheaper,” he said.

Siemens Ukraine also plans this year to help upgrade Ukraine’s aging tram fleet.

“We are currently in the process of discussing with different companies to whom we want to license the technology,” Granig said.

Kyiv and Lviv will be the pilot cities, he said, for the faster, more comfortable and more energy efficient trams.

Granig also sees the need for construction of a high-speed train to shuttle people from Boryspil International Airport to Kyiv, a distance of about 32 kilometers.

So what’s stopping Siemens Ukraine from boosting sales in these areas?

The answer is complex and varied. It involves Ukraine’s lacks of public funds and access to private financing. The government is starved for cash and international banks are reluctant to lend in Ukraine because of the high risks and the lingering hangover from the 2004-2008 credit boom that went bust.

Ukraine is also being held back by the absence of a long-term strategy.

“We have a new energy minister. What I want to do is meet with him and help Ukraine develop a roadmap for the country,” Granig said. “It’s necessary to have a plan for the next 20-30 years. This is difficult in the political area to agree on such long-term projects. But without that, you won’t have a long-term effect.”

Granig, however, sees reason for optimism if Ukraine’s leaders create better conditions for young people and the European Union does more to help, including the relaxation of visa requirements so more Ukrainians can travel freely abroad.

“For me, it’s necessary to have more optimism about the country,” Granig said. “It’s necessary to create an environment so that young Ukrainians want to stay in the country. Of course, Ukraine needs external help. I really hope the European Union will do more than they have in the past.”

And Granig wants to be living in Ukraine when the brighter future arrives.

“For me what is very interesting in Ukraine is that it’s completely unclear where the journey will end,” Granig said. “It’s fascinating. It’s only a one-and-a-half hour flight from my home and it’s a hot spot. So life is never boring here.”

Cornelius Granig

Age: 42

Citizenship: Austrian

Position: CEO of Siemens Ukraine

Years in country: Five years

Tips for succeeding in Ukraine: “First of all, to understand the country, you should have Ukrainian friends. Then everything works. So move out of the ‘ghetto’ of the expats.”

Kyiv Post chief editor Brian Bonner can be reached at [email protected]