Research paper

Siemens AG Bribery Scandal

This paper will focus on the analysis of the well-known and popular bribery scandal in the world, such as Siemens AG Bribery Scandal which occurred in November, 2006. Siemens AG is one of the largest and most popular electrical engineering companies operated in the world. The present company was founded in 1847 in Berlin and is now headquartered in Munich, Germany. The discussion and the proper analysis of this bribery scandal will help to learn many effective lessons from this situation helping organizations and individuals to avoid such cases and experiences in the future. Siemens was considered one of the most powerful and productive companies in the field of electronics and that bribery scandal surely affected its business and popularity in the world greatly.

It was difficult to understand the underlying causes of this bribery scandal, especially on the part of such large, successful and popular company known not only in Germany but also all over the world. In fact, several employees and even executive board members were charged guilty in this scandal and imposed huge monetary fines for illegal and unethical behavior harming the business of the company greatly. Brooks and Dunn stated that the company developed a corrupt organizational culture “in which hundreds of millions of Euros were put into slush funds that were then used to pay bribes in order to obtain lucrative contracts” (Brooks and Dunn 290-291). There were several cases of such bribery scandals within the company affecting its success and efficacy greatly.

Ethical and appropriate behavior of the company’s employees was questioned after those scandals resulting in the firing procedures in the professional environment. The organization surely made several mistakes which resulted in such scandals and affected the future organization of business on the national and international environment. The first bribery scandal occurred in November, 2006 when the senior managers could not simply verify the great number of payments made by the company. The monetary losses at that period of time were associated with nearly $2 billion.

However, that failure was not treated as learning opportunity and the company faced several similar bribery cases involving different individuals and various sums of money. Although Siemens had the proper code of ethics, certain ethical values and regulations guiding employees and the company’s business, this system was not simply properly implemented and controlled within the company. This was the major mistake made by the organization and leading to the chain of bribery scandals in the workplace. People should simply understand this system properly and correctly incorporating those values and principles into the professional environment.

Phillips and Gully stated that “communication was inconsistent within the company, and the firm did not always punish conduct in breach of defined principles and practices” (Phillips and Gully 481). The lack of appropriate punishment system and measures for unethical behavior and practices was another mistake faced by the company and leading to such bribery scandals and cases during a long period of time. This should be a proper lesson for other organizations facing similar situations in the professional environment, as companies should strive to develop and promote appropriate ethical culture among employees, as well as appropriate control measures and systems of punishment.

Only in this case the mistake could be prevented from re-occurring in the future not only in Siemens AG but also in other companies facing similar situations. Although senior executives of Siemens claimed that they were unaware of such illegal payments and bribes, they shared the major part of responsibility for this bribery scandal due to inappropriate control and regulations of the professional activity and behavior of employees. Those scandals did not only affect the company’s business, the professional performance of employees but also the company’s relations with stakeholders and investors.

Internal controls in Siemens were not properly organized and managed enabling employees to get involved into fraudulent activities easily. Deming stated that Siemens AG failed “to have and publicize a system whereby employees and agents could report or seek guidance regarding potential or actual criminal conduct without fear of retaliation (Deming 91). Siemens Company and people working there on a regular basis faced a great number of disadvantages associated with the decisions that led to the bribery scandals.

The major disadvantages included not only great financial losses due to fines and court procedures but mainly the lack of trust and confidence on the part of customers, investors, business partners and other persons. Siemens simply had to re-gain trust and respect in the world trying to remain competitive, successful and productive either on the national or international business arena. These disadvantages surely affect the organization’s values, beliefs, culture, control, and its strategic ways of doing business in the modern competitive environment. Brooks and Dunn stated that “each line of business had a managing director and a separate managing board, and this structure inhibited accountability and allowed corruption to spread” (Brooks and Dunn 291).

The great number of persons was convicted in making illegal payments and being involved into fraudulent bribery activities, such as Andreas Kley, Johannes Feldmayer, Hans-Werner Hartmann, etc. These persons were not only fined for such kind of behavior but some of them were even placed on probation. Such scandals in Siemens AG would surely affect future recruits and employees, as people might not want to work in the company with such negative fame in the world. Thus, the company should simply strive to re-gain its past popularity and success in the market attracting the greater number of customers to its production.

Zagaris stated that the Siemens case “is a fascinating illustration of the enormous scope of the culture of transnational bribery by multinationals” (Zagaris 111). The analysis and thorough investigation of Siemens AG bribery scandals helped to learn many useful and effective lessons about the future organization of business. Thus, the major contributions to the company’s success and efficacy include appropriate ethical culture within the company, the proper awareness on the company’s business and activities on the part of senior executives, and effective internal controlling systems and measures.

This paper focused on the analysis and investigation of Siemens AG bribery scandals started in 2006 and affected the company’s business and reputation rather negatively. Certain employees bribed government officials and even employees from other companies in order to win the most successful and profitable contracts. Although people tried to contribute to the company’s success and efficacy in the market, their activities were still illegal and fraudulent leading to various disadvantages affecting the company’s future and reputation.

Works Cited

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