Bribing: Unethical or Legal - Admission/Application Essay Example

Bribing Unethical or Legal Corruption’s one form is bribing. The definition of bribery is well defined in Black’s Law Dictionary which describes it as receiving, soliciting, and offering or getting favor of particular items from the authorized person for the desired action. Other ways to understand it more clearly is gaining the favor in form of money, action, property, dispensation, ointment and advancement or persuade in public or an official capacity. The clear illustration of active bribery in legal point of view is directly or indirectly submission of gifts in the form of money or goods, etc. To take any advantage for the person or for the company in the form of favor against the bribery is defined as an illegal activity. Inactive bribery is directly or indirectly, request, excessive advantage, acceptance to give favor to an individual or a company after taking bribery in the form of promise. In many ways, employees of different companies who are in need of business contracts, tenders, favors from the clients, offer bribery in form of money or gift. These offers are mostly made by company managers, salesmen, employees, or we can also include the top management to the potential client to get favors in return. To get the food providing services in the States of New Mexico prison system, Aramark was accused of bribery or offering gifts to the assistant warden. A bribe is a way for the companies in some cases to continue their businesses when the system of Law is not completely implemented. They were determining that company employees in return of business are paid bribes. For example, firm or production plants are harassed by custom officials in the form of checking the irregularities; they might freeze the activities of the firm. The firm pays an exceeded amount to the custom officers to save itself from the interference and suffers. Siemens Bribing Scandal In 2006, Siemens AG was under investigation by the German prosecutors. During 2006 and 2007, Siemens was in news and under (Bribery Scandal, 2009) investigation because of its bribery scandals. The scandals involved the names of some company employees gain contrast and slush fund to bribe foreign officers In late 2006, Siemens telecommunication division faced another scandal of bribing the officials abroad by involving slush funds to secure the foreign contracts. Siemens was also accused by the Germany dominant labor union, IG Metall that the company tried to bribe AUB to support its policies. The German authorities conducted raids on the offices of Siemens and after their action, other countries like the United States, Switzerland, Greece, and Italy, companies units in Venezuela, Bangladesh and Argentina were also probed for possible transgression. Police officers, along with tax inspectors and prosecutors, raid around 30 offices and private homes of Siemens and its employees to investigate bribe, fraud in company funds and tax evasion in Munich and other cities of Germany on November15, 2006. In connection to the bribery cases, five employees were arrested. For the investigation which was launched in 2005 in Switzerland, Swiss prosecutors were also involved in raids to catch three Siemens employees. After arresting these employees, company acknowledges that these employees were engaged in fraud of around €10-30 million. But, during the investigation the cash which was used as bribe or suspect payments end up at €420 million. The €420 million illegal payments were made over seven years dated back to 1999 (Mellor, 2006). The €420 million illegal payments were made over seven years dated back to 1999. This saves the company reputation; Siemens stated that they are working with the investigators to check if such payments were valid and if it involved receipts. After this scandal, Siemens lost its reputation and this also impacted the revenue of the company in the form of an additional income tax of €168 million since 1999 on December 11, 2006. For 2006 fiscal years, Siemens was forced to restate the net profit down to €3.033 billion from €3.106 billion on September 30, 2006 (Mellor, 2006). Thomas Ganswindt, the former board executive of Siemens was found as suspect in the transactions and was arrested for the investigation with reference to the same case. The whole suspicious payments were reportedly paid to the fixed line telecommunication businesses in the international market and were paid to some external consultants of Siemens. The bribes were paid to purchase officers in several countries like Italy, Greece, Rico and the United States. Through the investigation process, the exact routing of the embezzled money was traced. The legislation of the United States, Italy, and Greece, etc raised concern for the company after the bribery scandal.  Wrongful practices seem to be tolerated at Siemens Several early warnings to Siemens ought to wake up from the suspicious nature of transactions. In 2004, for fraudulent payment suspicion in Liechtenstein, few of the employees’ bank accounts of Siemens were seized. In Geneva, Switzerland, bank account of the former Siemens employee was seized in August 2005. Another escrow account of Siemens's employee came in to notice in June 2006. After acquiring the account information of suspected accounts, company requested the trustee in July 2006 to provide the complete documentation or details to the company and transfer the funds back to the bank account of Siemens. The famous Siemens' bribery scandal of €420 million also came in notice, in result of an unknown complaint to the company, to acquire judicial assistance to check Siemens’ unit fraud in Switzerland and Italy. If Siemens had mitigated the list of fraud or bribery knowledge and had initiated to check the fraud of the company internally then it could save the company reputation internationally. That could also help the company to make things easier and to cross check its employees easily. Law in the countries where bribery took place When we talk about the law of bribery, it’s better to be cautious while conflicting? What exactly meant by conflicting here? Do you mean mixing cultural and social norms? Or you mean conflict with the cultural and social norms? Giving something cash form to convince someone for favor is considered as the criminal acts; however, it is legal in the United States. In some countries, tipping off comes in bribery but in others, the concept is not the same. Bribe has different meanings and styles in different countries like, mordida in Spanish speaking countries, backshish in Arab countries, dessous-de-table (under the table commission), pot-de-vin (literally, wine pot), or commission occulte (kick back or secret commission) French speaking countries. The last two expressions in French seem negative implication and can be accepted as business practice. $1 trillion (£494 billion) bribery was estimated around the world (BBC, 2007). The international community put efforts to convince the countries to separate the active and passive briberies as separate offences. It’s better to make early steps to give a clear impression that bribery is not acceptable in any form. The reason behind this association is to clear that a corrupt deal is an offence. German court convicted two employees of Siemens, Andreas Kley and Hoest Vigener who were charged for embezzling the funds of the company to bribe Enel, Italian Energy Company. They were accused to pay €6 million to the managers of Enel to get orders between 1999 and 2002 for gas turbines (Siemens Fine, 15) it was meant around €450 million for Siemens to secure a gas turbine contract. The payments were paid from Switzerland and Liechtenstein to the executives in Monaco, Abu Dhabi and Dubai via the web bank account. Kley received two years and Vigener received nine months suspended sentence in the bribery case. Siemens paid €38 million as benefit from the bribe deal ordered by the court. The former Siemens official stated that the payments were made in the bidding process demanded by Enel managers. After the raid and arrest of Siemens employees, it was argued that the payments were for the company benefit and not for their personal interest. They were charged under the German law, which prohibited bribery abroad. 68% of Enel’s stakes were owned by the Italian state and the charges were sustained against the former employees. Siemens officially appealed against the fine in the case of Enel. Bribing was stated as the prohibited practice for all public and private companies, this has been implemented by the new law in 2002 at Germany. Analyze the responsibilities If we give a look to the international survey then more than half companies claim that they lost a deal because of the bribery offers by their companies to get businesses. In 2005, one third companies who were French claimed that they lose their potential customer because of bribery (Workman, 2006). In Hong Kong, 76% of the companies were badly affected by the bribery and lost deals over the last five years (Workman, 2006). A survey of 350 business tycoons was conducted from Simmons and Simmons was reported that many participants were agreed that corruption will increase and will get worse as the time passes. In 2005 transparencies, international corruption perception index conducted another survey. In these, they measured that the world business community perceived corruption or bribery to exit from a company, public and politician. They rated the situation from 0 to 10. 0 means extremely corrupt and 10 mean impeccably clean (Workman, 2006). Companies Options against Bribery Bribery is considered as corruption in most of the countries by the law and the religion. Companies pay huge amount of money as a bribe to the tycoons or the concerned department officials to get favors in desired areas. In this scenario, if a company wants to conduct clear and neat business then the contract winning chances are zero. Even so, we need to stop this because then, companies have been considering acquiring a business not on the ground of the product value but on the basis of commission they receive against their decision... Time to time, surveys are conducted to gather the views, facts and comments over Bribery.  As soon as the Siemens cases were leaked and were brought under investigation, other German companies like Volkswagen G, Deutsche Bahn AG, Deutsche Telekom AG and Deutsche Post AG were also brought in light. The senior executive of Volkswagen was fined with €576,000and was sent to prison in January 2007 against the charges of illegal money, prostitution and foreign trips for bribing labor representatives (Bribery Scandal, 2009). There were several scandals involved of bribing the labor representatives of German companies. As per analysts, there are flaws in the Co-determination law and Mitbestimmung. If we compare the law of Co-determination then, 10 out of 20 are the labor representatives. This leads to the suspicious relationship between the management and the labor. After the bribery scandal of Siemens and Daimler, a pledge was signed between the foreign leading companies in Russia to do business without bribery with Russian officials. German firms also initiated and they decided to do business without bribery. The 50 leading companies of Germany decided to stop bribing and not a pay any amount to get a business, this considered as the important step towards the fight against bribery. Russian-German Chambers of Commerce chairman Michael Harms considered this as a positive step; he called it a good start in the long run.  Whatever plan companies make to fight against, bribery is imperative to get successful results of the fight. Cross check is very important in this regard. Top management or the managers are mostly involved in this. This means exploitation of the mix utensils, record keeping of funding, senior manager statements, domestic monitoring arrangement of the company, observance office establishment, whistle blowing amenities and threats against penalizing action (Gordon & Miyake, 2000). Companies should draw a line between the corrupt practices or bribery in relationship building. Management should not be allowed to use their positions and power illegally or should not bribe to get a contract. In some countries, bribes are bukshish or are in the form of gift, companies should make the strict rules that there should not be any excuse to use bribery in any culture or nation at anyhow. One company cannot do it alone; this thing has to be done globally. Organization for Economic Co-operation and Development (Known as OECD) has played a very important role in international business to stop bribery and corruption. Question 2: Was the board right in not extending Kleinfeld's term even though he had performed well as CEO and was not implicated in the scandals directly? What is the likely impact of his departure on the company? Was Siemens really at fault or was it just unfortunate to have got caught since many other companies bribed for contracts the way it did? Kleinfeld’s time in Siemens Kleinfeld joined Siemens AG in 1987. He was appointed as the Corporate Sales and the marketing unit of the company. Kleinfeld moved to the United States in January 2001 as Chief Operating officer (COO) and during 2002 to 2004, he worked as President and CEO (Chief Executive Officer) of Siemens. Kleinfeld was appointed to Corporate Executive Committee in January 2004. In the mid of 2004, Kleinfeld was appointed as the Vice President and CEO on January 27, 2005 of Siemens AG. Kleinfeld modernization was one of the conflicts with the Siemens old business culture defender inside and outside. Siemens faced numerous scandals in such a short span of time. Questions were asked about the performances of top management and regarding their failure against stealing huge amount of money. After the scandal, the company’s CEO Klaus Kleinfeld and chairman of the supervisory board of Siemens, Heinrich Von Pierer quit their jobs besides the fact that they were not directly involved. New chairman states that the change of board leadership will indicate the past of the company. After the unbelievable bribe scandal in Munich, the head quarters of Siemens, the globe situation was under fire and fireman was in sight. The boss of 475000 employees left the country was one of the biggest news (Pham, 2007). The boss was dishonestly ditched by his own management board members, who started searching for the new CEO for Siemens. The fact was, new contract was delayed because of the hesitation of the board. Everyone thought that the opposition would be the trade unions who were not in favor of Kleinfeld Anglo-American style of work or management, but it came from the crème de la crème business world of Germany. As per the analysts, who analyzed the situation very closely stated that, Kleinfeld should remain on his seat. He was the main source who worked hard to get Siemens back in profit. He was also known as the Jack Welch of Germany, who was his role model. Siemens appointed a law firm to investigate the complete situation and bribery scandal. The firm found no link between Kleinfeld and bribery or fraud. Even so, company board of directors was not willing to continue to the contract, and they were delaying that. Kleinfeld told in company meeting that he is not available for the renewal his contract after the September 30.  Kleinfeld was associated with Siemens for 20 years and during his career Siemens made some historic achievement. And for his achievements, critics felt that he should not be removed. In 2009, Siemens AG after the bribery charges reached the settlement from his former managers and two executive officers. Heinrich Von Pierer who worked with Siemens during 1992 to 2005 paid €5 million. Kleinfeld paid €2 million. Both resigned in 2007 after the bribery scandal at Siemens (Kleinfeld Scandal, 2009). Conversion of Siemens in Kleinfeld Time Kleinfeld handed unsuccessful mobile handset to BenQ. He led the successful phone network operations for years followed by a joint venture with Nokia. On acquisitions to reinforce the automation, energy units and medical, $12 billion were spent during his time and computer services, which were not profitable joint with software division. The net income of per Siemens employee was lower than the General Electric Co. when Kleinfeld inherited the company. Siemens mobile unit strength was weaker than its rivals in the market, and as they were losing day by day. Half of the company division was beyond profits and targets. The employees were called for overtime to overcome the company loss without pay (Thiel, 2007). Kleinfeld could remain the part of Siemens because of its achievements for the company benefit. No transgression by Kleinfeld was proven from the investigation done by Debevoise & Plimpton. In their investigation report, they stated that Kleinfeld was not involved in bribery or any transgression, and they also clear that he has no knowledge of the money laundering in a company (Thiel, 2007). Impact of Kleinfeld Resignation After the board of director’s hesitation for the restoration of Kleinfeld contract, he announced his resignation in press. He stated that company needs to be apparent about his headship, and he is also clear that company and Kleinfeld are free for his action to secure future (Prodhan, 2007).  After the decision was taken, investors were doubtful about any further improvements. That fear dropped 5% or more than that in early trading at SI.N Siemens New York trade shares. Share holders and market leader were waiting for the company verdict before any further move from the board. They wanted the clarity regarding board support or rebuff after the resignation of Kleinfeld. German newspapers took Kleinfeld departure negatively. As per FT Deutschland editorial, they wrote that company would face obstacles without the effective management for at least six months. In an editorial, they also pointed out that the strategies of Siemens, led by Cromme and Ackerman, were not clear. According to FTD, Kleinfeld removal was compared to the open heart surgery and it’s like a pacemaker arrival is delayed by several weeks. Similar conclusion like FTD on Kleinfeld departures were also done by the Financial Times in their editorial (Departure of Siemens, 2007). As per the editorial of Handelsblatt, they called it a tragedy about its affair. They also said that large industrial company of Germany is without any leadership. As per the editorial, Kleinfeld departure from Siemens was not the solution of the scandals which company was facing (Departure of Siemens, 2007). Siemens Bribed for contracts To get contracts and favors, many companies give something as a form of gift, money or anything suggested by the person or management from which they wish favors. Siemens is not the only company that was involved in bribery. There were other companies as well. Siemens case is famous because of the money which was involved in bribery. They used enormous amount of money to get contracts or to secure them. Siemens paid $40 million as a bribe to win a National Identity Cards contract of $1 billion. To build power plants in Israel, Siemens paid $20 million to senior government officials. To get the contract of Urban Rail Line, Company paid $16 million in Venezuela. The amount of $14 million was paid in China for the medical equipments. Siemens also paid $1.7 million in Iraq; this amount was paid to Saddam Hussain and his partners. To get a contract, Siemens paid numerous bribes to the companies. Competitors were angry on Siemens way of work and the amount they pay. Companies who were not able to pay huge amounts as bribery lost many contracts.  Government contract is not easy to get. Their process unclear and loser don’t file a formal complaint. The process is very confidential that it’s hard to find out who lost the contract with Siemens. In United States, many companies protested, but abroad they were conquered by Siemens by winning contracts.  Roughly, Siemens paid $2.6 billion for the sake of its goodwill and brand name, for fines and fees in the United States and Germany, $1.6 billion amount was paid. For the internal investigation, Siemens paid more than $1 billion (Shapiro, 2008).  The United States fined Siemens a record amount of $800 million (£623 million) to settle bribery and corruption charges. The home town of Siemens Munich, company agreed to pay a fine of €395 million (£354 million) to settle bribery case in Germany (Gow, 2008). After such a disaster of Siemens and other companies, many countries passed the anti-bribery and anti-Corruption law to control bribery and punish if someone was caught. Any payment or gifts present to government officials to get desirable favor or advantage will be prohibited by the Anti-Bribery law (Anti- Bribary Law, n.d). The anti-corruption efforts in China are most noteworthy in a dynamic rise in the United States enforcement actions by FCPA. China passes the anti-corruption law to join WTO and as becoming a market leader of economic power along with other trade issues. The Chin’s new law of bribery is impressive and very strong as compare to other past laws. Government is also taking a close look on bribery law and prosecuting (Anti- Bribary Law, n.d). 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Most Corrupt Trade Nations. Retrieved July 5, 2010, from Suite101: http://internationaltrade.suite101.com/article.cfm/most_corrupt_trade_nations Read More