The Bribery Scandal at Siemens AG


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Case Details:

Case Code : BECG106
Case Length : 18 Pages
Period : 2006-2009
Pub Date : 2010
Teaching Note : Available
Organization : Siemens AG
Industry : Diversified
Countries : Germany

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

This €1 billion was in addition to the billions of euros that it paid in fines, back taxes and late interest charges by 2007.4

Peter Loescher (Loescher), who joined as the CEO of Siemens in 2007 following the major bribery scandal that broke out in the company, said, "We regret what happened in the past. But we have learned from it and taken appropriate measures. Siemens is now a stronger company."5

On May 14, 2007, a German court convicted two former managers of Siemens AG (Siemens) for diverting the company's money to bribe employees of Enel SpA6 (Enel), an Italian energy company.7

Both the former managers admitted that they had bribed employees at Enel who had demanded money in return for contracts. They also said that they had not done anything wrong as they did it for the benefit of the company and not for any personal gain. Moreover, there was no other way to win contracts in several countries abroad where bribing for contracts was a common practice, they said...

Excerpts >>

4] Heide B. Malhotra, "Siemens Looks for New Beginning after Bribery Scandals," http://en.epochtimes.com, March 27, 2008.

5] "Siemens Bribery Fines Top 1 Billion Euros," www.dw-world.de, December 15, 2008.

6] Enel SpA (Enel) was Italy's largest power company. Enel produced and sold electricity mostly in Europe, North, and Latin America. Enel was one of the largest distributors and vendors of natural gas in Italy, with a 12% market share. The company's revenues stood at 38.5 billion euros for the year 2006. (Source: www.enel.it).

7] "Former Siemens Managers Convicted of Paying Bribes," www.dw-world.de, May 14, 2007.


 

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