The Bribery Scandal at Siemens AG

Case Code: BECG106
Case Length: 18 Pages
Period: 2006-2009
Pub Date: 2010
Teaching Note: Available

Price: Rs.300
Organization: Siemens AG
Industry: Diversified
Countries: Germany
Themes: Business Ethics Corporate Governance,

Abstract Case Intro 1 Case Intro 2 Excerpts

Introduction

In December 2008, the Munich, Germany-based Siemens AG (Siemens) agreed to pay fines to the tune of €1 billion towards settlement of corruption charges that had hit the company since 2006. This included a record US$800 million fine imposed by the US authorities and another €395 million imposed by German authorities.

This €1 billion was in addition to the billions of euros that it paid in fines, back taxes and late interest charges by 2007

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."

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.

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...

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