What are the costs and benefits of bribery to a business?
Siemens gives the best illustration of the costs of bribery to a business. Bribery has got both ethical and monetary costs to a business that engages in it. For instance, when it was found to have engaged in bribery, Siemens paid a fine of $1.6 billion in order to settle the allegations of corruption. These allegations of bribery were leveled against Siemens by the United States of America and the European authorities (Lee & Laigaie, 2010). Therefore, the company incurred a very huge loss as a consequence of engaging in bribery. Siemens was accused of having paid out over 1 billion dollars in bribes meant to win itself contracts around the world. This act was a breach to the Foreign Corrupt Practices Act. A violation of this law normally attracts a very huge fine for the offender, regardless of their financial status. Therefore, the first cost of bribery to a business is that a company loses a lot of money when it is discovered to have breached the Foreign Corrupt Practices Act.
The second cost of bribery to a business is basically loss of the ethical reputation of the company. For instance, in the case of Siemens, it lost credibility in terms of ethics in the entire globe. When customers in the market perceive a given company as devoid of good ethics, they avoid associating with it (Shapiro, 2009). Therefore, it is vital to note that Siemens was able to lose most of its valuable clients because of the resultant loss of ethics.
Delegate your assignment to our experts and they will do the rest.
The sentencing given to Siemens was lenient because the company did not admit the misconduct of bribery. The officials of this company were given a lesser fine because they denied the charges against them. Pleading guilty would have caused the company bigger losses since it would have been barred from accessing the United States of America contract market in addition to the huge monetary fine.
The major benefit of bribery is that it gives companies undeserved opportunities for doing business deals. Bribery is like short-cut for many business organizations. The fruits of bribery are always quite encouraging and attractive. Bribery sometimes acts as a key to securing lucrative business deals even when not qualified for them.
Is the FCPA unnecessarily harsh or do its provisions dispense the appropriate level of punishment?
The FCPA has provisions that are in accordance with the trends existing in the modern business world. It is true that the FCPA punishments have become quite harsher today. However, this harshness is in response to the need to have stern actions against bribery, which is also extremely lucrative for the offenders. By using very harsh punishments, the FCPA seeks to have people in the business world fear to engage in bribery based on the consequences of such an action (Peng, 2011). The federal law enforcement is simply quite determined in fighting against bribery, particularly within the business world.
Before the dispensation of this harsh FCPA law, the punishments given to the bribery offenders was something that they could easily take and still continue with their habits. However, with this present law that has harsh fines, the vice of bribery is now a feared one within the business world.
In your view, how heavily should Siemens be fined? In addition to fines, what else can be done?
The fine given to Siemens was just suitable considering their not-guilty plea. The company was accorded a fair deal based on the guidelines for sentencing. Had Siemens admitted the charges, then the right fine would have been locking the company out of the United States market in addition to the monetary fine. Therefore, fining the company more than this, in this situation, would have amounted to unnecessary harshness from FCPA.
However, apart from the fine, it was important for the FCPA to consider revoking all the benefits that this company benefited from its business deals globally. As it stands, Siemens may still use the money got from the lucrative business contracts it got through bribery across the world to settle the fine. To make sure the company feels the pain for its misconduct in business, it has to be denied all benefits got from its dubious deals. The fine should come from its other resources, but not the same money earned from corruption. This would make Siemens regret its actions and serve as a good example for other players within the business world.
Are some of Siemens employees “bad apples” or is Siemens a “bad barrel”?
The policies of good ethics in any organization are similar to the management’s devotion to entrenching a culture of ethical behavior in the company. Siemens has been able to become a global powerhouse with a total of about 360,000workers. It is true that in a business organization that has such a large a number of workers, there are bound to be bad apples. Despite this reality, it is imperative for the company to ensure it does not keep all of its bad apples in a bad barrel, where bribery thrives. It is important to encourage ethical behavior in the entire company. As it stands out from this case of Siemens, it is evident that it is a bad barrel because it allowed corruption to thrive and be the order of all its activities and business deals globally.
References
Lee, S. & Laigaie, D. (2010). FCPA Violators Beware: Harsh Sentences May Become the Norm . Retrieved January 30, 2017 from http://www.dilworthlaw.com/portalresource/lookup/wosid/cp-base-4-10120/media.name=/201061004Dilworth.pdf
Peng, M. W. (2011). Global business . (2nd ed.). Mason, OH: South Western Cengage Learning.
Shapiro, A. (2009). Siemens Hit With $1.6 Billion Fine in Bribery Case . Retrieved January 30, 2017 from http://www.npr.org/templates/text/s.php?sId=98317332&m=1
