Wps.pearsoned.com



Video Title: Global Ethics and Siemens Run Time: 6:30Classroom Application: Instructors will find this video helpful in the study of global business ethics. The video discusses the Siemens bribery scandal and the unethical practices that the company used to help foster its business activities in foreign countries. Providing students with this knowledge will help them understand some of the ethical challenges companies face when doing business in different political and social environments. It will also provide them with an example of how a company can attempt to recover from a bribery scandal. SynopsisIn 2008, after years of investigation, global electronics and electrical engineering giant Siemens agreed to pay more than 1.34 billion euros to settle European and American charges that it routinely used bribes and slush funds to secure huge public works contracts around the world. The video examines the prevalence of bribery and corruption, the reasons Siemens found itself in this situation, the consequences of unethical business practices and how the company is attempting to recover from the scandal.Discussion Questions1.Discuss bribery as a business activity and how companies such as Siemens were able to justify bribery within their own ethical value systems. Businesses commonly use bribery to get decisions made faster and in their favor. It is estimated that every year over $1 trillion in bribes are paid around the world to gain access to important markets and achieve other business objectives. In some cultures, bribery is considered a necessary evil and the cost of doing business in a country. In those places officials may refuse to discuss government contracts and other kinds of business dealings without some kind of pay-off or kickback. In this context, it is understandable that companies would engage in bribery. Ethically, the company could tell itself that it had no choice — it would either offer bribes or be shut out from the possibility of doing business. The key here is that there was little risk in making the bribe. If caught, the company typically would pay a fine and go on to repeat the same behavior. Now that companies like Siemens received enormous punishment for bribery, companies may begin to think twice before engaging in this practice.2.Why was the Siemens bribery scandal unique? Beginning in the mid 1990s, Siemens executives used bribes and kickbacks to foreign officials to secure government contracts like a national identity card project in Argentina, mass transit work in Venezuela and a nationwide cell phone network in Bangladesh. It is assumed that most corporate bribery has been small in size and scope and focused on individual cases rather than a general way of doing business. With Siemens, on the other hand, bribery was widespread and routinized. Bribery was so much a part of the company’s corporate culture that Siemens secured a large slush fund of about $40-$50 million to be used by company managers and sales staff to cozy up to corrupt government officials worldwide. Company employees also had standard ways to create off-the-books transactions using middlemen posing as consultants to cover up their activities, again something that seemed to be part of company policy. So ultimately Siemens was unique because its bribery appeared to be a normal way of doing business rather than an occasional evil.3. Discuss the result of the scandal investigation of Siemens. Do you think Siemens paid enough of a price for its unethical business practices? In addition to the fines, scandals like this are damaging to a company’s global reputation and to its employees’ morale. Siemens made an example of its executives, even the CEO who had not been charged with any wrongdoing. Former executives had to pay damages to the company for not stopping a culture of bribery within the company. The company also created a high-level compliance position to help educate employees and prevent further unethical behavior. However, in settling with both the American and European authorities, the company was able to split legal hairs and admit that it violated the law, but it avoided either a guilty plea or a conviction for bribery. This may seem like a small technicality, but it is an important one. By following this very fine legal line Siemens was able to maintain its critical status as a “responsible contractor” with the American and European governments – enabling the company to continue bidding on highly coveted public contracts in the US, Europe and elsewhere. Ultimately, Siemens perhaps did not pay a large enough price for its transgressions. Siemens was able to build its business using bribes. Now that it is well-established as a global corporate power, Siemens can afford to behave ethically and obtain contracts honestly. However, the lesson of Siemens for other companies still struggling to establish themselves is clear: go ahead and cheat now to gain a foothold on world markets. Become ethical only when you are forced to.Quiz1. The Organization for Economic Cooperation and Development is an example of which of the following types of initiatives striving to slow the pace of bribery and corruption?industry initiativesnational initiativeregional initiativeglobal initiativeAnswer: dExplanation: The Organization for Economic Cooperation and Development includes thirty-four mostly high-income countries from around the world, making it a global initiative. In 1997, the organization signed an Anti-Bribery Convention, establishing legally binding standards to criminalize bribery of foreign public officials in international business transactions and providing recommendations to the thirty-eight signatory countries, which adopted the 2009 Anti-Bribery Recommendation.2.Which of the following is true of the Siemens bribery scandal? a.It seemed to be a long-term pattern. b.It stopped before the investigation began.c.The CEO was involved and condoned it. d.The company never admitted it broke the law with its actions. Answer: aExplanation: Unlike most bribery scandals, which have been smaller in size and focused on one or two projects or countries, bribery at Siemens seemed to be a long-term pattern. There was no information presented to suggest that it stopped before the investigation began. Although the CEO was fired, he was not charged with any wrongdoing. The company did admit that it broke the law but it avoided a guilty plea and a conviction for bribery. 3.The belief that bribery is unacceptable because it goes against a universal standard of behavior that all cultures should follow is an application of which of the following terms?a.relativism b. normativism c.utilitarianism d.skepticismAnswer: bExplanation: Normativism holds that there are universal standards of behavior that, although influenced differently by different cultural values, should be accepted by people everywhere.4.Which of the following is NOT a reason that is commonly used to explain why it is difficult to enforce regulations against unethical business practices? a.Some of the countries in which organizations operate have a history of high levels of public corruption.b.There are no organizations or laws that track illicit behavior so there is no way to know which organizations are behaving unethically. c.Internal business cultures of unethical behavior in a country can be difficult to change. d.American companies complain that they can’t compete with foreign companies that are not restricted from paying bribes to win contracts. Answer: bExplanation: Transparency International tracks illicit behavior like bribery and embezzlement in the public sector in 180 countries. Many global organizations and governments have issued international conventions against bribery, including the anti-bribery convention adopted by the Organization for Economic Cooperation Development and the anti-corruption declaration issued by the United Nations. The US Foreign Corrupt Practices Act (FCPA) makes it illegal for US Firms to offer bribes to foreign parties in order to secure or retain business. However, it can be difficult to track unethical practices due to the long-standing history of bribery and corruption in some countries, the challenges of an organization’s internal imbedded unethical culture and the fact that American companies complain of being at a disadvantage if they cannot bribe officials when competing against foreign countries for lucrative contracts. 5. Which of the following is likely to be the MOST challenging aspect of a company like Siemens to maintain an ethical global culture in the future? a.The company may find it hard to educate its employee work force with respect to ethical business practices. b.The company may find it hard to avoid unethical business practices when it sees foreign competitors still engaging in unethical practices. c.Because ethics are often complicated and legalistic, the company may find adhering to ethical standards to be confusing and difficult from a technical standpoint. d.The company may find that the habit of corruption, like an addiction, is difficult to break. Answer: bExplanation: The most challenging aspect for a company like Siemens is likely to be continuing to behave in an ethical manner despite the competition’s willingness to engage in unethical tactics when competing for business. Educating its work force, understanding ethical rules, and breaking the habit of corruption are all difficult, but surmountable problems. Seeing corrupt competitors obtain contracts using bribes may be difficult for the company to resist. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download