Abstract
What do offshore bank accounts, money smuggling, and shell companies have in common? They were all part of two decades of rampant bribery initiated by the German company, Siemens AG. Siemens, a multinational electronics company known for innovation and quality, admitted to bribing governments for contracts. Siemens faced accusations of bribery and other corporate corruption in 20 countries, including Argentina, Bangladesh, Greece, and Nigeria, making the Siemens case the largest bribery scandal in modern corporate history.
China Mobile executive Shi Wanzhong received bribes totaling US $5.1 million in exchange for equipment contracts with Siemens. After the scandal was revealed, Shi was tried for economic crimes and given the death penalty, while the middleman who facilitated the bribes was given a 15-year prison sentence.
The Siemens case forces us to address the issues of bribery, corruption, and unfair competition, as well as certain philosophical questions about moral relativism and universal moral values in the context of a globalizing economy.
“Your economic achievements will only stand on firm ground if you diminish corruption.” (Stephan Rothlin, Eighteen Rules for Becoming a Top Notch Player, 2004)
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Notes
- 1.
One perspective expressing skepticism about Siemens’ turnaround and Transparency International’s praise for it appeared on the website of the Corporate Crime Reporter, which recently published a piece, “Transparency International and the Greenwashing of Siemens” (Corporate Crime Reporter 2014), claiming that TI was absolving Siemens of its involvement in corruption because it had applied for funding from the Siemens Integrity Initiative, established as part of the firm’s settlement with the World Bank which required it to put US$100 million into civil society fighting corruption. Our own review of the Corporate Crime Reporter’s evidence suggests that the case alleging an improper relationship between TI and Siemens is highly doubtful, since the allegations of ongoing corruption at Siemens are taken from Siemens’ own “Annual Report” (Siemens 2013), filed, as required by law, with the US Securities and Exchange Commission. The evidence cited by the Corporate Crime Reporter is taken from a list of legal proceedings disclosed by Siemens involving past cases of bribery and other corrupt practices. A careful review of the list, however, will show that none of these cases allege violations happening after Loescher and his team began the turnaround at Siemens. They consistently indicate that Siemens has cooperated with regulatory and other governmental authorities in the investigation and settlement of all previous allegations, some of which are still pending. It seems unfair to accuse Siemens of ongoing involvement in corruption, when the evidence clearly refers to ongoing attempts to settle previous claims against the firm. Similarly, if the charges against Siemens are without foundation, so is the charge that TI failed to do “due diligence” in reaching its decision to apply for a grant from the Siemens Integrity Initiative. The wisdom of TI’s decision to apply for such a grant may be questioned, but in no way should it be distorted into the serious and unsubstantiated charge of “greenwashing.”
- 2.
The social benefits resulting from allocational efficiency depend upon a number of conditions that roughly correspond to the assumptions operative in the principle of commutative justice. The outcomes of market activity may be regarded as optimizing not only justice but also efficiency so long as these conditions are generally respected. For example, the prices for various goods and services cannot be dictated by any entity exercising monopoly power and, among other things, must be both “informationally efficient” and “transactionally or operationally efficient” (Investopedia 2014).
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Rothlin, S., McCann, D. (2016). Competitors: Fighting Corruption in the Marketplace. In: International Business Ethics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-47434-1_14
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