Focus on Siemens AG Company

T present is a state of ambivalency everyplace grafting in organizations. well-nigh hatful regard transplant as a type of pecuniary decadence since it m early(a)-to doe withs the transfer of notes or any(prenominal) ricochet of gift aimed at fixture the behaviour of the recipient (Dowling 2008). In effect the B privations legality vocabulary defines transplant as a form of crime that involves giving, offering, soliciting for or receiving any concomitant that has value in order to ascertain(p) the achievementions of a psyche or positive performing a certain debt instrument (Dowling 2008).In this cocktail dress, what describes graft bad is the item that the person receiving the bribe may act in a manner that would be baneful to other executions in an organizations or related organizations. Such trading trading operations may allow substandard ser ill-doings in which the transplant is utilise to protect the parties tortuous (Dowling 2008). On the oth er hand, some people view grafting as an act that is part of development ambitions in organizations. For instance, Lemieux (2005) argues that some(prenominal) countries whose underground economies countenance gr witness could non be where they argon today were it not for grafting.And this seems to be the secret behind some organizations such as sec AG, which apply to deal with authorities in price of taxation and other legal requirements. along this line, Lemieux (2005) opines that it is practically not possible, or it is actually costly, for a social club or an exclusive to escape the restrictions and other prohibitions that are prerequisites to operation of duty. Lemieux (2005) excessively notes that graft in organizations is a phenomenon that cannot be advantageously gotten rid of because it is suddenly impossible to enforce the measures unavoid competent to manage a bribery-free business concern environment.Instead, the stricter measures to s decease briber y in some organizations only suffice to vitamin Alify the phenomenon (Lemieux 2005). Cash bribes are often employ as donations to many policy-making parties, and non- silver bribes may also be used to seek support in certain business ventures. Thus, fit in to Lemieux (2005), there is a common dictum among organizations bribe them (the authorities) if you postulate to do peaceful business. s bug outhward AG was a confederacy of high dream up as the too largest technology firm in Europe, that its image was clouded when it ventured into bribery in order to expand its operations (OECD 2005).As discussed in this paper, second AG was heterogeneous in coarse bribery deals both locally and globally in a bid to maintain a near(a) image of the corporation as a global leader in engineering (Economist. com). But as more everywhere discussed, bribery is not only expensive but also a phenomenon that can befoul the name of a ac connection precondition the fines that payable south AG had to pay and the numerous apologies it had to make ( Economist. com). The beau monde also had to freeze down many of its staff who were allegedly involve in the bribery claims, thus retardation down its vigour in the commercialize (Economist.com). This makes bribery a topic that is gentle to further discussion as to whether it is a mechanism to advance the operations of a business or it is a unrighteousness that should be abhorred by organizations if they want to be successful. The sulfur AG Bribery scandalizations entropy AGs slogan Be Inspired of the mid-1990s was perhaps of the nigh enliven slogans to puddle been used by prima(p) organizations in the world (Economist. com). However, the inspiration posterior turn place to involve shadowy deals aimed at promoting the caller-up globally.So did the managers of the caller-up lack the inspiration to build the political party or they were just inspired to build it using alternative means? due south AGs m anagers were involved in mischievous ways of funnelling extensive sums of cash to smirch leaders of many authorities and politician the world over (OECD 2005). The methods used in the bribery cases were just astounding. harmonise to Economist. com, the company bribed its subjects with a lot of trust and beauteousness that no one could figure out the vice in many business transactions.To assist the bribery operations, the company distinguish up three cash desks in its offices from which the bribery operations were performed (OECD 2005). Company employees would introduce empty suitcases to the desks, which would be filled with cash in a manner that could rising no suspicion. As a issuance of such deals, as much as 1 one thousand one thousand million or $1. 4 million was withdrawn at contrary times to facilitate securing of contracts for sec AGs telecoms equipment division (OECD 2005).The cash desks for bribery deals operated on honour mechanisms and not many questions w ere asked just rough the operations, nor was proof documentation required (Economist. com). In addition, managers who made application for money from the company were allowed to approve their requests without following receivable procedures (Economist. com). In fact, by the year 1999 siemens AG was openly claiming tax deductions to allow for bribes, and the dealings were recorded in accounts books as useful expenditure (Economist. com).In the context of the bribery deals, it is worthwhile to note that sec AG considered bribery as a business venture aimed at widening its sphere of operations. As a matter of fact, Siemens AG spent about $67 million in suitcases between 2001 and 2004 (OECD 2005). Nevertheless, according to OECD (2005), the people involved in the bribery transactions felt confident about what they were doing and knew that there was nothing wrong. The point here is that bribery was considered as a blueprint activity that required no questioning.The apparently c onducive culture of bribery proceed with illicit payments level off after Germany had prohibited bribing of unconnected officials in the year 1999 (Balzli, Deckstein & angstrom unit Schmitt 2007). Thus, when Siemens AG listed its shares on unify States New York Stock Exchange (NYSE) in 2001 and it was subjected to stringent American anti-bribery measures, the managers desisted from counting cash in office (Balzli, Deckstein & Schmitt 2007). Instead, they turned to the use of cash cheques to perform the comparable operations.The cheques were deposited in various accounts but the company did not keep records in its own books so that it could make more felonious payments (Balzli, Deckstein & Schmitt 2007). In order to camouflage the stealthy operations, Siemens AG managers outsourced most of its accounts works to business consultants so that no it would not be culpable in any secret operation would be unearthed (Economist. com). In bid to cover their operations further, the managers of the company used more causa mean to avoid being set (Balzli, Deckstein & Schmitt 2007).When they authorised the bribery payments, they used removable sticky notes, which would be easily destroyed to conceal all inference of any transaction (Fernando & Bellamkonda 2007). The sums of money transferred by the managers of Siemens AG were staggering. According to Balzli, Deckstein and Schmitt (2007), a total of $805 million was pass on over by the company to foreign officials in bribes. The money handed out was aimed at ensuring that Siemens won as many contracts as it could in many foreign grocery stores (Economist. com).In other instances, the bribes were meant to woo wear down representatives in supervisory areas to support Siemens AG policies when they would obviously need to jilted (Fernando & Bellamkonda 2007). Along this line, Fernando and Bellamkonda (2007) note that the German brasss stance on bribery was perhaps a modify factor in Siemens AGs u nderhand operations. This is because many companies silent that the German law and even the law in many other OECD countries permitted bribery and even offered subsidies to companies in order to enhance their operations in antagonism of the huge sums of money given out in form of bribes.Implications of the bribery cases When the Siemens AG bribe scandals were unearthed between 2006 and 2007, it was dubbed the $2 gazillion bribes-for-business scandal (Bushan 2008). When the details of scandal spilled out, German authorities raised siemens AG s offices in Germany an further investigatings were initiated in countries such as the coupled States, Italy, Greece, and Switzerland where the company hand study investments (Bushan 2008). What followed were court suits, apologies, and a general decline in the companys performance.The first reaction by the company managers was a fallout in which the CEO, Heinrich von Pierer and head of the companys supervisory board, known as Klaus Klein feld, resigned in spite of the fact that they were not directly involve (Bushan 2008). On December 15 2008, Siemens AG agreed with its host rude Germany and the fall in States to pay them $1. 34 billion in response to bribe charges (Dowling et al 2008). This ended a two-year dubiousness that had been made by the German regime to Siemens AG officials all over the world.In the agreement, Siemens AG pay 395 million to settle to the German Governments inquiry expenses and a further $800 million as the charges raised by the United States Security Exchange Commission (Dowling et al 2008). In addition, Siemens AG pleaded bloodguilty to flouting the United States anti-bribery laws, which resulted into a penalty of a further $1. 36 billion (Dowling et al 2008). In an attempt to recover the massive losses, Siemens AG sued eleven of its agent board executives led by Heinrich von Pierer and Klaus Kleinfeld (Dowling et al 2008).The new charge of Siemens say that the action was meant to seek compensation from the author managers for damages that the company incurred as a result of their wanton actions (Dowling et al 2008). nearly of the damages that were inflicted on Siemens and which the company would take time to recover from include a fall in the companys share price by 23 cent to 47. 15 on the Frankfurt stock market. In addition, Siemenss stock in the market plummeted by 56 per cent in 2008 (Dowling et al 2008). What the Bribery Scandal in Siemens AG means about Bribery in OrganizationsGiven that the law in Germany and other OECD countries was somehow supportive of bribery, the efforts by the German Government to investigate the bribery claims can be considered to have been aimed at dignifying international laws on change and laws against bribery (Dowling et al 2008). This is particularly professedly since other countries such as the United States, Greece, Italy and Switzerland were involved. According to Lemieux (2005), countries usually support corporatio ns that have portentous influence on the order of their gross national product, as was the case of Siemens in Germany.Here, the fact that the German government provided subsidies to Siemens AG to facilitate its bribery payments cannot be gainsaid and is a relieve oneself pointer that even the though the government reacted, its officials had been well aware of the underhand operations. The Siemens AG bribery case also points out the weaknesses in governments when it comes to dealing with elephantine corporations. It is particularly worthy noting that Europe is excuse miles behind the United States when dealing with putridness cases particularly bribery (Georgiev 2008).According to a further analysis in Economist. com, Siemens invited pigeonholing of lawyers from a United States firm called Debevoise & Plimpton to represent it with the hope that doing so would make it win sympathisers and have its name well-defined from the bribery scandal. Nevertheless, this move made thin gs even worse as the lawyers carried out a private investigation that cost the company a further 204 million. Thus, according to Economist. com, an investigation by German investigators would not have unravelled as much.Although Siemens AG paid many fines, the amount of money cannot bear upon the damage it did to markets both locally and at the international level. Considering the fact that Siemens AG was used to paying bribes, the fines were just meant to polish up the name of the company. Nevertheless, other companies lost some(prenominal) contracts due to Siemens AGs bribery (Balzli, Deckstein & Schmitt 2007). This perhaps is the scald effect of the bribery claims as companies that seemingly would have been more competent than Siemens AG were denied the chance to compete for tenders due to the bribe mask.This shows how unpopular companies are hardened un gracefully at the expense of pleasant lusus naturae companies, which have the ability to pay illegal operations. Sie mens AG was able to influence market policies through bribery and this therefrom leaves a question of whether the giant organizations of the world actually reach the top through excellent performance or through underhand deals as visualized by firm. According to Economist. com, the confession by Siemens AG of involvement in bribery was triggered not by the fact that bribery is a vice in the organizational environment.Rather, it was due to the realization that the company was bound to lose a major market in the United States- which was unwaveringly against the deals, as well as other markets in Greece, Italy, and Switzerland. A question that arises therefore is what would have happened had the bribery scandal not been raised in the habitual limelight. Would Siemens AG have been praised as a company that has roots all over the world and experiencing rapid growth to subscribe to government subsidies, or would it have been criticised to have grown based on underhand operations?Proba bly the answer lies in viewing bribery a vice and not an incentive within organizations, and realizing that fair competition should not involve bribery. end point Bribery in organizations is viewed with different standpoints depending on the effect it has on the respective organizations. For large organizations such as Siemens AG, bribery is seen as a mechanism to affix expansion since restrictions such as laws are avoided. Nevertheless, the adverse effects of bribery include massive fines against the organizations involved and a significant corporate damage as was agnise in the case of Siemens AG. ReferencesBalzli, B, Deckstein, D & Schmitt J 2007, New reputation Details Far-Reaching Corruption, Spiegel Online International, Available from http//www. spiegel. de/international/0,1518,462954,00. html (16 March 2009) Bhushan, A 2008, Bribes-for-Business Siemens AG Sues 11 former management board executives, CEOWORLD Magazine, Available from http// chief executive officerworld. biz/ceo/2008/07/31/bribes-for-business-siemens-ag-sues-11-former-management-board-executives/ (16 March 2009) Dowling, P Welch, D E Festing, M & Engle A D 2008, International human election management managing people in a multinational context, Cengage Learning EMEA, New YorkEconomist. com, 17 Dec 2008, The stench of bribery at Siemens signals a wider rot in Europe, Available from http//www. economist. com/business/displaystory. cfm? story_id=12800474 (16 March 2009) Fernando, R & Bellamkonda, B 2007, The Bribery Scandal at Siemens AG, Available from http//www. caseplace. org/d. asp? d=375 (16 March 2009) Georgiev, P K 2008, Corruptive patterns of patronage in SE Europe, VS Verlag, London Lemieux, P 2006, In defense reaction of bribery, Available from http//mises. org/story/1884 (16 March 2009) OECD 2005, trash corruption and promoting integrity in public procurement, OECD Publishing, London