What’s your reaction to the events mentioned in the case? Are you surprised that bribery is illegal? Why do you think bribery takes place? Why do you think it needs to be outlawed? Research whether other countries outlaw bribery. (Hint: look at the Organization for Economic Cooperation and Development.) We’ve said it’s important for managers to be aware of external environmental forces, especially in global settings. Discuss this statement in light of the events described. What might the managers at Siemens AG have done differently? Explain. Siemens AG is not the only company to be linked to bribery. Find at least three other examples and describe them briefly.
Dirty Little Secret
Money. Secrecy. Foreign officials. “Greasing palms.” Bribery. That’s the dirty little secret about doing business globally that managers at multinational companies don’t want to talk about. Although 39 countries worldwide have signed up for the OECD Anti-Bribery Convention to outlaw bribery and corruption, the problem is far from gone. Take Greece, for example, which has been censored by the OECD for failing in its promise to crack down on corruption. The practice of political favoritism and passing “fakelaki”—envelopes stuffed with cash—in return for services is as prevalent today as it ever was. Indeed, since the country joined the European Community, more than 150 scandals have come to light, and it is thought that part of the blame for the country’s €367 billion ($486 billion) debt is down to an epidemic of corruption. From needless jobs to a refusal to give receipts, through tax evasion and then on to high-level bribery, it is estimated that Greek citizens spent nearly €1.62 billion ($2.15 billion) in 2012 on bribes. Foreign companies looking toward Greece are aware that this is often the cost of doing business there. In August 2012, the German group Siemens AG, reached a €330 million ($438 billion) settlement with the Greek government over long running allegations that Siemens AG used bribery to secure a raft of contracts for the Athens Olympic Games in 2004. In an earlier case, two managers from another German company, industrial firm Ferrostaal, were convicted of paying bribes in Greece and ordered to pay fines.
Questions:
- What’s your reaction to the events mentioned in the case? Are you surprised that bribery is illegal? Why do you think bribery takes place? Why do you think it needs to be outlawed?
- Research whether other countries outlaw bribery. (Hint: look at the Organization for Economic Cooperation and Development.)
- We’ve said it’s important for managers to be aware of external environmental forces, especially in global settings. Discuss this statement in light of the events described.
- What might the managers at Siemens AG have done differently? Explain. Siemens AG is not the only company to be linked to bribery. Find at least three other examples and describe them briefly.
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