Case Analysis Worksheet: Summary Siemens, the German engineering giant, agreed to pay a record total of $1.6 billion to American and European authorities to settle charges that it routinely used bribes and slush funds to secure huge public works contracts around the world. The company pleaded guilty in federal court in Washington to charges that it violated a 1977 law banning the use of corrupt practices in foreign business dealings. Officials at the Justice Department and at the S.E.C., which also investigated the case, said that some Siemens agents in the United States participated in the schemes. But most of the transactions were in foreign countries. Company employees created off-the-books slush funds, used middlemen posing as consultants and delivered suitcases filled with cash to bribe foreign officials. (Doughety, 2008)
Linda Chatman Thomsen, the head of the S.E.C.’s enforcement division, said that the company paid an estimated $1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and Latin America. She called the schemes “unprecedented in scale and geographic reach.” The United States claimed partial jurisdiction because Siemens, once it became listed on the New York Stock Exchange in 2001, was subject to American financial laws and regulations. Prosecutors in Munich, whose work revealed the outlines of the bribery operation, also announced a deal with Siemens that would cost the company 395 million euros ($540 million). That figure is in addition to $290 million levied by a Munich court last year. (Doughety, 2008) As managers of multinational enterprises, we must recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating and executing the transactions that are part of the greater economy. In this role, multinational enterprises are expected to embrace the highest professional ethical norms and the ethical values implied by their responsibility toward multiple stakeholders. According to the dictionary, ethics has many definitions but the most common one is: the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc. (www.dictionary.com, Date Not Specified)
It is easy to condemn someone for their moral and ethical failings, but we must be careful in our judgment that people in general are not always honest or honorable as they should be. So it easy to determine that the purpose of being ethical is to demonstrate to society that it is important to keep ethics in mind whenever someone is making a decision of right versus wrong in their business dealings. I found that it is also helpful to ask yourself the following questions when facing an ethical dilemma. (Understanding Business, pp. Pgs. 92-94) * Is it legal? Am I violating any law or policy? It is necessary to think about the legal consequences of what you do. * Is it balanced? Am I acting fairly? Would I want to be treated this way? Will I win everything at the expense of the other people? In other words, a person tries to make decisions that will benefit everyone involved. * How will it make me feel about myself? Would I feel proud of my decision or embarrassed by it? Will I have to hide my actions or even keep them a secret? Decisions that go against one’s sense of right and wrong will make us feel bad about ourselves. That is why an ethical person will do the right thing in making their decisions.
Analysis According to the FCPA taking any form of bribe or special gifts in order to get better treatment would not only violate many laws in the United States, but would also violate the ethical norms of doing business. In the ethical norms it says that we must nurture trust in those we deal with in the market. Which means we must be fair and honest in everything we do in the business; this includes deal-making, advertising, pricing, and more. For a company to take a bribe is harmful in many different ways.

Recommendations The main rule to follow in any ethical decision or situation is to refrain from actions that make you, the company, or others feel degraded or put down in any way. Instead use your positive ethical thinking to improve yourself in a positive way. And apply that ethical influence on those around you; after all positive ethics, morals, values, and self-respect are what make you honorable and trustworthy in a society that needs and wants a good role model.

Implications The Foreign Corrupt Practice Act: An Overview
Corruption poses a significant legal and economic risk for Corporations doing business around the world, particularly in developing and transitioning countries. The United States Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) are leading the international fight against corruption by increasing the number of investigations, settlements, and prosecutions for violations of the Foreign Corrupt Practices Act.
Because of this increased enforcement activity, managers and directors who run multinational corporations are rightfully concerned about their compliance efforts. In order to minimize the risks posed by foreign bribery, an organization must have a clear understanding of the practices prohibited by the FCP and other applicable laws, such as u .S. regulations against money laundering, racketeering, and conspiracy. Leaders and legal advisors must also remain up to date on trends in enforcement. Finally, the managers who run the organization must be able to recognize “red flags”—circumstances under which the risk of corrupt practices is high and enforcement authorities expect corporations to be particularly vigilant. With this knowledge and commitment to ethical business practices, an organization can implement an effective compliance pro-gram to avoid the pitfalls of international corruption. (JonesDay, 2010)
a. What are the costs and benefits of bribery?

Corruption occurs at the interface of the public and private sectors. When-ever a public official has discretionary power over distribution to the private sector of a benefit or cost, incentives for bribery are created. Thus corruption depends upon the magnitude of the benefits and costs under the control of public officials. Private individuals and firms are willing to pay to obtain these benefits and avoid the costs. Every state must decide when to legalize such payments and when to label them illegal corruption. The proper link between money and politics is a deep one and will be resolved differently by different countries. Nevertheless, economic analysis can isolate incentives for payoffs to government agents, evaluate their consequences, and suggest reform. (Peterson)
Costs
* Unfair Competition * Though calls on Siemens Leaders who do not “get it” * Obtaining a Bad Reputation * Heavy Fines, Penalties and or Lost Licenses * Business Failure * Loss of Contracts * Criminal Charges * Government Control and Overseeing of Business Activities
Benefits
* Protects our Reputation * Avoidance of regulatory fines, penalties or lost licenses * The rules of the game are clear: do’s and don’ts …black and white---legal & ethical * Disciplined Processes * Early identification of issues * Promotes Growth. It’s a competitive advantage w/ clients * Promotes the rule of law in the countries where we operate * It “raises the bar” * It provides a “safety net” for when formal controls are weak or absent * In the war for talent, it’s a retention tool
b. Is the FCPA unnecessarily harsh or do its provisions dispense the appropriate level of punishment?
Criminal Penalties * For each violation of the anti-bribery provisions, the FCPA provides that corporations and other business entities are subject to a fine of up to $2 million. * Individuals, including officers, directors, stockholders, and agents of companies, are subject to a fine of up to $100,000 and imprisonment for up to five years. * For each violation of the accounting provisions, the FCPA provides that corporations and other business entities are subject to a fine of up to $25 million. * Individuals are subject to a fine of up to $5 million and imprisonment for up to 20 years. * Under the Alternative Fines Act, 18 U.S.C. § 3571(d), courts may impose significantly higher fines than those provided by the FCPA—up to twice the benefit that the defendant sought to obtain by making the corrupt payment, as long as the facts supporting the increased fines are included in the indictment and either proved to the jury beyond a reasonable doubt or admitted in a guilty plea proceeding. ( Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission, 2012)
In my opinion, the FCPA is often viewed as not harsh enough in the public’s view of the organization because of its ability to prove whether or not a company is corrupt do to the lack of evidence. On the other hand, if corruption can be proven, I feel that the punishment is more than adequate to disciplining corruption appropriately.
c. In your view, how heavily should Siemens be fined? In addition to fines, what else can be done?
Crucially, while Siemens admitted violating the United States Foreign Corrupt Practices Act, it avoided either a guilty plea or a conviction for bribery, allowing it to maintain its status as a “responsible contractor” with the federal Defense Logistics Agency. Without that certification, Siemens could have been excluded from public procurement contracts in the United States and elsewhere. German authorities are preparing a similar certification. (Doughety, 2008)
Officials in Germany and the United States said they were still investigating potential wrongdoing by former Siemens employees that could result in criminal charges against individuals, in addition to the company’s corporate plea. (Doughety, 2008)
I feel that Siemens should have been held more accountable for their actions and not let off so lightly. Punishment should have been more severe, for there was more than sufficient evidence of proof of their actions. Also, the countries hurt by their actions deserve justice. Siemens should have had their certification of public procurement contract pulled in addition to fines imposed as well as prison terms imposed on the personnel involved in the corruption.

Bibliography
Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission. (2012, November 14). A Resource Guide to the U.S. Foreign Corrupt Practice Act. Retrieved from FCPA Unit: http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf
Doughety, E. L. (2008, December 15). The New York Times World Business. Retrieved from The New York Times: http://www.nytimes.com/2008/12/16/business/worldbusiness/16siemens.html
JonesDay. (2010, January). The Foreign Corrupt Practices Act: An Overview. Retrieved from FCPA Overview: http://www.jonesday.com/files/Publication/3325b9a8-b3b6-40ff-8bc8-0c10c119c649/Presentation/PublicationAttachment/d375c9ee-6a11-4d25-9c30-0d797661b5ff/FCPA%20Overview.pdf
Peterson, P. G. (n.d.). Corruption in a Global Economy. Retrieved from Institute for Internation Economics: http://www.iie.com/publications/chapters_preview/12/2iie2334.pdf
William G. Nickels, J. M. (2008). Understanding Business (Vol. 8th Edition). New York City, NY: The McGraw-Hill Companies Inc. www.dictionary.com. (Date Not Specified). Ethics | Define Ethics at Dictionary.com. Retrieved July 18, 2012, from http://dictionary.reference.com/browse/ethics