The 11th Commandment
This is a fascinating article about the widespread and official use of bribes by the German company Siemens AG. Eventually things unraveled, and they are facing 1.6 billion dollars in fines and 1 billion in internal investigations/legal bills. Russia, China, Nigeria, Argentina, Venezula, Israel, Iraq (for the Oil for Food program while Saddam was in power of all things) and other countries had government officials accept bribes to land huge contracts (especially telecommunications contracts).
"Before 1999, bribes were deductible as business expenses under the German tax code, and paying off a foreign official was not a criminal offense. In such an environment, Siemens officials subscribed to a straightforward rule in pursuing business abroad, according to one former executive. They played by local rules.
Inside Siemens, bribes were referred to as “NA” - a German abbreviation for the phrase “nützliche Aufwendungen” which means “useful money.” Siemens bribed wherever executives felt the money was needed, paying off officials not only in countries known for government corruption, like Nigeria, but also in countries with reputations for transparency, like Norway, according to court records."
Each year, Mr. Siekaczek said, managers in his unit set aside a budget of about $40 million to $50 million for the payment of bribes. For Greece alone, Siemens budgeted $10 million to $15 million a year. Bribes were as high as 40 percent of the contract cost in especially corrupt countries. Typically, amounts ranged from 5 percent to 6 percent of a contract’s value.
The most common method of bribery involved hiring an outside consultant to help “win” a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient.
Siemens has acknowledged having more than 2,700 business consultant agreements, so-called B.C.A.’s, worldwide. Those consultants were at the heart of the bribery scheme, sending millions to government officials.
For his part, Mr. Siekaczek is uncertain about the impact of the Siemens case. After all, he said, bribery and corruption are still widespread.
“People will only say about Siemens that they were unlucky and that they broke the 11th Commandment,” he said. “The 11th Commandment is: ‘Don’t get caught.’”
The large companies of the world, many of them American corporations, likely operate in the same fashion. Corruption and bribery can happen anywhere. If you have two companies, both offering the exact same service, will you accept the one who can give you the best price or the one that pays you off? Unfortunately many officials look to personally enrich themselves while other people, who are shut out of the process, either lose business, or in the case of the people in the country themselves, are given substandard products. The corporation does not need to provide top of the line products since they've locked up the contract anyway.
On the other hand, should companies lose out because they are unwilling to "play this game"? If it's a question of corporate survival, I can see why people would be willing to compromise their morals and ethics. American foreign policy and even military interventions have often moved hand in hand with various business interests. If other countries are able to lock up strategic business contracts with allies or countries America WANTS as allies, then that has strategic, political, and economic impact beyond just the contract itself.
Ideally of course people would not want/need to do this sort of thing, but seeking out leverage and personal enrichment/advantage is a human desire. It's also not necessarily a bad thing if one is trying to improve your own lot or fighting for the advancement of your own country. Ra ra national sentiment and all that. Of course it'd be nice if we could spread the opportunities for wealth sufficiently such that other countries are operating at a comparable level and the need for underhanded dealings out of greed or for survival are not required.
Be well.
"Before 1999, bribes were deductible as business expenses under the German tax code, and paying off a foreign official was not a criminal offense. In such an environment, Siemens officials subscribed to a straightforward rule in pursuing business abroad, according to one former executive. They played by local rules.
Inside Siemens, bribes were referred to as “NA” - a German abbreviation for the phrase “nützliche Aufwendungen” which means “useful money.” Siemens bribed wherever executives felt the money was needed, paying off officials not only in countries known for government corruption, like Nigeria, but also in countries with reputations for transparency, like Norway, according to court records."
Each year, Mr. Siekaczek said, managers in his unit set aside a budget of about $40 million to $50 million for the payment of bribes. For Greece alone, Siemens budgeted $10 million to $15 million a year. Bribes were as high as 40 percent of the contract cost in especially corrupt countries. Typically, amounts ranged from 5 percent to 6 percent of a contract’s value.
The most common method of bribery involved hiring an outside consultant to help “win” a contract. This was typically a local resident with ties to ruling leaders. Siemens paid a fee to the consultant, who in turn delivered the cash to the ultimate recipient.
Siemens has acknowledged having more than 2,700 business consultant agreements, so-called B.C.A.’s, worldwide. Those consultants were at the heart of the bribery scheme, sending millions to government officials.
For his part, Mr. Siekaczek is uncertain about the impact of the Siemens case. After all, he said, bribery and corruption are still widespread.
“People will only say about Siemens that they were unlucky and that they broke the 11th Commandment,” he said. “The 11th Commandment is: ‘Don’t get caught.’”
The large companies of the world, many of them American corporations, likely operate in the same fashion. Corruption and bribery can happen anywhere. If you have two companies, both offering the exact same service, will you accept the one who can give you the best price or the one that pays you off? Unfortunately many officials look to personally enrich themselves while other people, who are shut out of the process, either lose business, or in the case of the people in the country themselves, are given substandard products. The corporation does not need to provide top of the line products since they've locked up the contract anyway.
On the other hand, should companies lose out because they are unwilling to "play this game"? If it's a question of corporate survival, I can see why people would be willing to compromise their morals and ethics. American foreign policy and even military interventions have often moved hand in hand with various business interests. If other countries are able to lock up strategic business contracts with allies or countries America WANTS as allies, then that has strategic, political, and economic impact beyond just the contract itself.
Ideally of course people would not want/need to do this sort of thing, but seeking out leverage and personal enrichment/advantage is a human desire. It's also not necessarily a bad thing if one is trying to improve your own lot or fighting for the advancement of your own country. Ra ra national sentiment and all that. Of course it'd be nice if we could spread the opportunities for wealth sufficiently such that other countries are operating at a comparable level and the need for underhanded dealings out of greed or for survival are not required.
Be well.