Big victory against global bribery
A record fine against Siemens hints at success in the US and Europe in curbing payoffs.
In the world of business and finance, 2008 ranks as a year of superlatives – and not the good kind. Biggest government bailout of Wall Street. Biggest Ponzi scheme (the Madoff case). Now, the biggest US fine for bribery – $800 million levied against Germany's engineering giant, Siemens AG. But at least there's a silver lining to this one.
When Siemens learned in 2006 that it was being investigated, it began to cooperate. It reported frequently and extensively to US authorities, and reinforced its anti-corruption compliance measures.
Siemens had an incentive, of course. The Justice Department said it could have levied $2.7 billion in fines, but settled with the company on the lesser amount because of Siemens's "extraordinary" efforts to help investigators. Still, the cooperation furthers the global anticorruption effort. The size of the fine – almost 20 times higher than any under the 1977 US Foreign Corrupt Practices Act (FCPA) – shows greater determination to attack this widespread problem.
The trail of Siemens's alleged bribery wound around the world to Argentina, China, Mexico, Israel, and elsewhere. Payoffs were reportedly made to government officials via suitcases stuffed with cash and bogus consulting contracts.
Worldwide corruption amounts to roughly $1 trillion a year, including bribes. But like the investments of Bernard Madoff, who was arrested Dec. 11 for defrauding clients in a $50 billion Ponzi scheme, bribery is built on false promises.