Bribery Scandal @ Siemens

Topics: Ethics, Foreign Corrupt Practices Act, Bribery Pages: 4 (1307 words) Published: November 12, 2012
Case Analysis by Steve Akana BUS 685 Global Business Management Case 1 ─ The Bribery Scandal at Siemens AG Overview The report will analyze the case study and discuss the bribery scandal at Siemens AG. The author of the case study paints a picture of a successful and arguably dominant multi-national firm, with a reputation for a war chest of competencies and innovative products. The obvious question, then, is why would a firm with this resume and list of global achievements become involved with corruption and criminal behavior? Therefore, the case study raised questions such as the accountability of senior managers to the rampant corruption occurring in global divisions. Summary On November 15, 2006, 30 offices and private homes were raided by 200 police officers, tax inspectors, and prosecutors in Munch and other cities in Germany to investigate suspected bribery, embezzlement of company funds, and tax evasion. Five Siemens employees were taken into custody in connection with the case. Swiss prosecutors were also involved in the raids because they had an independent investigation on three people connected to Siemens, which launched in 2005. As a result, there was €420M of questionable payments made over a sevenyear period from 1999 to 2006. Official Siemens records showed the payments as having gone to external consultants. It was determined, however, that the funds were actually paid to foreign purchasing officials and that the expenditures coincided with the procurement of “fixed-line line telecommunications business in various international markets," including Italy, Puerto Rico, Greece, and the United States. Siemens acknowledged that certain company employees were engaged in fraud, and the damage to the company could be around €10-30M. Because of the fraud Siemen’s was burdened with an additional €168M in income tax charges since 1999. Their net profit was restated from €3.106B to €3.033B. By the spring of 2007, two former Siemens...
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