Bribery Case

Bribery is the giving of money or gift to a recipient with the goal of altering his or her behavior "the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust"(Transparency International, 2009) . Bribery has been a common practice for companies doing business abroad. This is truer in underdeveloped and developing countries "most managers perceive bribery as endemic in business and government in parts of Africa and South and East Asia" (Deresky, 2011, P 47). Companies are caught between and risk being in a disadvantage if not go along with the acceptable practice of some of these countries and the moral implications of their actions back home (Deresky, 2011). According to the New York Times (2012), at least 78 corporations are under investigations for possible violations in the Foreign Corrupt Practices Act, which is a law that bans American companies from paying bribes to government officials abroad.

There are large corporations that have paid fines and some officials sent to jail for bribery. Siemens AG is one of the growing lists of companies that have been involved in bribery. Siemens AG was founded in 1847 in Germany, and won its first international contract to build a telegraph net work in Russia in 1853. The company grew over the years and expanded its operations to include information and communication, automation and control, power, transportation, medical solutions, lighting, financing and real estate, and expanded global net work spanning hundreds of countries. In 2001, the company was listed in the New York Stock Exchange. To the surprise of the public, and may be the business world, approximately 30 offices and private homes of Siemens and its employees were raided by police officers, prosecutors, and tax inspectors for suspicions of bribery, embezzlement, and tax evasion in 2006. This assignment discusses and analyzes the bribery scandal at Siemens. It explains how Siemens, with all its achievement and innovation became involved in corruption activities to gain competitive edge and increase their profit margins. At the end, recommendations will be offered on how to deal with these situations if it arises in the future.

Summary

This case began when on November 15, 2006, approximately 30 offices and private homes of Siemens AG and employees were raided by tax inspectors, police offices, and prosecutors in the city of Munich, Germany and other cities across Germany for suspicion of bribery, embezzlement, and tax evasion with five people taken into custody. Simultaneously, Swiss prosecutors were also involved in the raids as part of a separate investigation against three people connected to Siemens AG. At the end, it was estimated that dating back to 1999; approximately 420 million Euros of illegal and questionable payments were made with official records indicating that payments were made to external consultants, which were not true since the payments were made to foreign purchasing officials in various countries to secure contracts for fixed