In December 2008, Siemens paid the largest penalty ever imposed under the Foreign Corrupt Practices Act (FCPA)—U.S. legislation designed to prevent bribes being paid to foreign government officials. The FCPA was passed in 1977 in response to the Congressional Watergate hearings that uncovered corporate slush funds that were being used by multinationals to secure overseas contracts. Siemens, a German company, falls under the jurisdiction of the legislation because it operates in the U.S. The fine Siemens paid was $800 million:
“It has also agreed to pay 596 million euros, or $839.4 million, to German authorities, including a 201 million euro fine levied by a Munich court in 2007.”
If this wasn’t enough, in July, the firm announced an agreement with the World Bank concerning additional bribery allegations. The article in the url below details the extent of the agreement and the culture of bribery that had become ingrained within the firm:
“Siemens AG reached a settlement with the World Bank over bribery allegations, agreeing to pay $100 million to help anticorruption efforts and to forgo bidding on any of the development bank's projects for two years.”
What is interesting is that these amounts are considered lenient—a response to Siemen’s efforts to rebuild its image, offering extensive cooperation in an attempt to resolve all its outstanding claims.
In spite of these large fines that have been levied against the firm, it would be interesting to see an estimate of how much Siemens benefitted from the bribes it was paying:
“Investigators have alleged that the German engineering conglomerate spent more than $1 billion in recent years bribing government officials in at least 10 countries to win contracts on projects ranging from supplying power and medical equipment to building refineries.”
Since Siemens was only likely paying these vast sums because it thought it was worth its while to do so, my guess is that the benefits it received were multiples of the bribes paid. In terms of World Bank projects alone:
“Siemens said it has generated roughly $160 million in annual revenue in recent years from World Bank-financed projects.”
Perhaps crime does pay!?
Take care
David
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
Siemens Settles With World Bank on Bribes --- Company Will Pay $100 Million to Help Combat Corruption and Forgo Bidding on Contracts for Two Years
By Vanessa Fuhrmans
568 words
3 July 2009
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