Bribery CaseEssay Preview: Bribery CaseReport this essayBribery 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.
SummaryThis 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
The indictment of the executives in the alleged embezzlement (or other fraud in the banking industry during the period 1999-2006) also found that the alleged members of the bank were “transnational criminals” of questionable character under an “extensive international investigation.” The U.S., German, United Kingdom, France, and Israel also all reported that they had been targeted by “foreign tax authorities,” meaning that they had been in government or military service for years and in any criminal organization or for decades in one country. The names of those targeted in the indictments can be found below, which could indicate that a different set of individuals were targeted by an international investigation or that tax fraud had been involved in many of their financial dealings and activities.
The U.S. government announced the arrests of more than 100 people linked to various businesses of Siemens AG, including the largest multinational bank, Deutsche Telekom AG, a “cybersecurity company that generates billions of euros to benefit political and business lobbying clients” and the first Russian entity to buy French power.
An alleged German company was named by U.S. prosecutors as a defendant for embezzling a mere 12,000 euros. It was known by German companies as the “Ferraris AG,” with several individuals under investigation, including a member of the Bundesbank and a former member of the Bundesbank, as well as a number of smaller companies based in Europe.
In the criminal indictment, the alleged Siemens AG head, Hofer Reichert and former employees were charged with a total of 6,700.
The indictments did not take into account the amount of bribes that had gone wrong on the part of Siemens AG, but included claims that the company had had at least 80 such payments between 1999 and 2006, but that was all said in connection with their investigations in order to avoid the penalties for having to deal with foreign tax officials, to evade taxes, and to avoid having their private investment wiped from the U.S. treasury. The allegations of wrongdoing were made through public statements made in connection with the bribery allegations made against Reichert and his former employees and were not made by the German authorities.
The indictment also noted the existence of a criminal investigation by the U.S. federal government into the alleged money laundering and tax evasion of Siemens AG subsidiary, NDB Group. The U.S. government said in its order to suspend investigation for the year that a separate prosecution was under way in Germany over a potential $100 billion corruption investigation, meaning that the investigation was ongoing.
“The ongoing investigation into the Siemens AG subsidiary in relation to money laundering and tax evasion carries with it the possibility of an international probe. But without a complete international probe, the United States does not have probable cause to seek criminal prosecution of all of the company’s associates and other employees. So far the government does not appear to be pursuing any criminal charges at all. All they have is the promise of a $100 billion international probe into alleged illegal payments made to political, business, or legal entities,” said U.S. Attorney Carmen Ortiz in July 1996 as part of a response to the U.S. Department of Justice’s (DOJ’s) earlier probe in 2007 into alleged money laundries by Siemens AG in Switzerland. The federal law prohibits an