The Bribery Scandal at Siemens AG
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Case Details:
Case Code : BECG076
Case Length : 16 Pages
Period : 2006-2007
Pub Date : 2007
Teaching Note : Not Available
Organization : Siemens AG
Industry : Diversified
Countries : Germany
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
Questions Relating to Ethics in Corporate Germany
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Around the same time as the Siemens cases came out, unethical practices surfaced
in other German companies including Volkswagen AG (Volkswagen), Deutsche Telekom
AG, Deutsche Bahn AG and Deutsche Post AG.
At Volkswagen, a senior executive was fined 576,000 euros and received a
suspended prison sentence in January 2007 for bribing labor representatives with
money, foreign trips and prostitutes. Since several of the corruption scandals
involved the bribing of labor representatives on the boards of German companies,
some analysts felt that the Co-determination law or Mitbestimmung in Germany was
flawed.
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According to the Co-determination law, the supervisory board of a company had
to have 20 members, of whom 10 were to be labor representatives. This led to
a suspicious alliance between the management and the labor representatives,
which could never set a stage for proper discussions during the board
meetings...
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Outlook
Analysts opined that on account of increasing competition, companies
were resorting to illegal payments to win international contracts
especially in some emerging economies where the practice was common.
Siemens along with many other companies was found guilty of paying
bribes to secure contracts abroad. That the company officials had
resorted to bribing was not in question, but the remaining questions
were even more worrying - how deep were the scandals rooted in the
company and to what extent was the board aware of the fraud... |
Exhibits
Exhibit I: A Note on the Co-Determination Law or Mitbestimmung
Exhibit II: Major Business Activities of Siemens (as of July 2007)
Exhibit III: Income Statement of Siemens
Exhibit IV: Stock Price Movement of Siemens
Exhibit V: A Note on Siemens'Anti-Public-Corruption Compliance
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