Case Analysis: The Bribery Scandal at Siemens AG The Siemens bribery scandal brought to light a strategic dilemma facing multi-national firms attempting to gain a competitive edge by operating abroad; specifically, how can they balance adherence to their own ethical and legal standards with the customs required to do business efficiently, or perhaps at all, in foreign markets?
Germany’s Co-Determination law has since drawn intense criticism as hampering competitiveness and creating untenable situations for management, rife with conflict-of-interest issues, not only because of Siemens, but also because of the number of other German-based companies accused of bribing labor union representatives.
The forced resignation of CEO, Klaus
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It was determined, however, that they were actually paid to foreign purchasing officials and that the expenditures coincided with the procurement of “fixed line telecommunications business in various international markets”, including Italy, Puerto Rico, Greece, and the United States. By March of 2007, two former Siemens managers were convicted of embezzlement of company funds for the purpose of bribing foreign officials. The employees argued that their actions did not violate any laws, resulted in no personal gain, and were taken solely for the purpose of improving Siemens’ positioning. They argued that they worked, only to secure a lucrative deal in which the payments were required by Enel management as part of the standard bid process. In fact, Siemens AG argued that the court order requiring forfeiture of earnings from the contract, prior to 2002 when the German government instituted a law prohibiting bribes to private officials abroad, specifically, had no basis in law. As previously stated, these events may appear to support the case in favor of questionable payments and loose ethical boundaries as a necessary cost of business. It is my opinion, however, that these events illustrate a flawed management culture and strategy. They are evidence of a system where a focus on true technological innovation has given way to a focus on unfettered expansion, and the unnatural duplication of the monopolistic type