The Bribery Scandal at Siemens AG

In your opinion is Bribing unethical and illegal or just a cost of doing business? Discuss this in
the light of Siemens bribery scandal. What options do companies have to win business contracts
without bribing, especially in foreign countries?
I think it is both sides of unethical/illegal and cost of doing business.

Why it is cost of doing business:

First bribery scandal: Siemens AG bribed the employees of Enel Spa (Italian energy
company). Two former managers Andreas Kley and Horst Vigener of Siemens admitted they
bribed employees of Enel who demanded bribery for return for business contracts, also said they
didnt do anything wrong, they did it for the benefit of the company and not for their own gain.
There arent any other ways to win business contracts through international in some countries
only way was to bribe and it was a normal common way. On May 14, 2007. German court
convicted Andreas Kley and Horst Vigener for paying 6 million euros from the company money
to managers of Enel. Even though it was order to win gas turbines and meant to secure gas
turbines contracts, it is valued 450 million euros for Siemens. Vigener and Kley defended
themselves stating it will enable Siemens to establish power generation equipment market in
Italy. Also the employees argued bribe payment did not break any law of Germany.

Second bribery scandal: Telecommunication division of Siemens created certain funds to bribe
other countries to secure contracts. IG Metall Germany based company was accused that
Siemens tried to gain for its policies of a union called AUB.
Researchers stated the bribery scandal of Siemens influenced the ethical cost of intense
competition for global markets. Also some companies were resorting to underhand bribe money
to win contracts but they didnt caught like Siemens. Several developing countries the bribery
was normal common way to make business contracts. Companies state its just a business cost.
On Februay 14, 2007, Authorities in Nuvemberg, Germany stated some Siemens offices proved
that they bribed their own employee representatives to secure their support for its policies.
Co-determination laws are one of the influence to bribery scandal. Co-determination laws are
that supervisory board of a company had to have 20 members, of whom 10 were labor
representatives, also its only allowed German directors to be members of supervisory board
Germany MNC. Many companys CEOs and managers told to Germany government We should
change the law of bribery. Soon after government reported that they will modify the laws of
corporate bribery, allowing companies write bribes as business expense.
Researchers stated increasing competition, companys only way is to pay illegal payments to win
international business contracts. Especially several emerging countries it was just a normal
situation.

Wal-Mart calculated it would attract 250 customers an hour if only it could put a store in Mrs.
Pinedas field. In April 2012, The New York Times reported the details that alleged Wal-Marts
Mexican division paid more than $24 million in bribes so stores could be opened faster than if
the company had gone through normal government channels.

Why it is unethical/illegal:
According to first bribery scandal: Germany court stated that Siemens to pay 38 million euros
for bribing Enel. It is unethical because they paid 6 million for the bribery and 38 million charge
for the court, Siemenss bribed situation is valued 450 million euros which they earn benefit by
bribing.
According to second bribery scandal:

The bribery scandal of Siemens also caused damage and paid 800 million USD to US, and 395
million euros to Germany because of Siemenss corruption charges.
On November 15, 2006, 200 police officers, tax inspectors and prosecutors raided 30 offices and
private homes related to Siemens and its employees all over Germany. They investigated bribery
and embezzlement of company funds and tax evasion. Siemens stated that certain employees
were implicated in fraud and cause damage to the company and others. First investigation was
they only damaged 10-30 million euros, as the investigation continued turns out they damaged
420 million euros to companies and others. It also damaged Siemens and its honor. Soon on
December 11,2006, Siemens have to pay 168 million euros of additional tax because of the
bribery.
Siemens lost many employees

In some cases where the system of law is not well-implemented, bribes may be a way for
companies to continue their businesses. In the case, for example, custom officials may harass a
certain firm or production plant, officially stating they are checking for irregularities, halting
production or stalling other normal activities of a firm. The disruption may cause losses to the
firm that exceed the amount of money to pay off the official. Bribing the officials is a common
way to deal with this issue in countries where there exists no firm system of reporting these
semi-illegal activities. A third party, known as a White Glove, may be involved to act as a clean
middleman.

Siemens agreed to pay a record $1.34 billion in fines in December 2008 after being
investigated for serious bribery. The investigation found questionable payments of
roughly 1.3 billion, from 2002 to 2006 that triggered a broad range of inquiries in
Germany, the United States and many other countries.
In May 2007 a German court convicted two former executives of paying about 6 million
in bribes from 1999 to 2002 to help Siemens win natural gas turbine supply contracts
with Enel, an Italian energy company. The contracts were valued at about 450 million.
Siemens was fined 38 million