Corruption and bribery have been known to the world for a very long time throughout the history. They took the form of presents, charity and gratitude, however, the main goal of these actions was to gain some benefits or to facilitate the provision of particular kinds of services. Corruption and bribery developed along with the development of commerce, trade and business. It took so many different elaborate forms that an amateur can hardly see anything immoral and illegal in them. It is reported that “the equivalent of $1 trillion is offered in bribes every year” (“The Real Cost of Bribery,” 2013). Corruption and bribery are global phenomena and they happen across the world in one form or another. The idea that some countries in the developed world are completely free from this disease is a myth.
In the age of globalization, involvement in bribery may seem particularly advantageous. Moreover, it is proved that a firm which does not hesitate in giving into bribery grows more rapidly and demonstrate success. This works especially in the case of the countries where bribery seems to be “the expected norm” (“The Real Cost of Bribery,” 2013). The obvious benefits are the following: bribery facilitates entry to the market, provides better conditions compared to the competitors, allows winning a larger market share as well as easily solves some legal issues. However, involvement in bribery and corruption practice may also imply some costs for the firm. One may think that it hinders the firm’s reputation and causes lots of regulatory troubles that the company is obliged to solve immediately, but the main negative impact is a bribery’s effect on ethics and morale of employees in the company. Such conclusion is important because there is a direct relation between employee morale and firm’s performance and its success in the stock market.
However, despite such negative impact, some companies still prefer engaging intsuch illegal practices. In order to prevent this, in 1977 the Foreign Corrupt Practices Act was issued and signed in the U.S. It has become “an enforcement priority for regulators and a major compliance issue for US companies with overseas operations” (“Foreign Corrupt Practices Act,” 2013). The main idea of its provisions is to prevent US companies and their subsidiaries from giving into bribery and other activities of the similar effect as well as to inform what kind of punishment they may encounter. It requires the companies to keep accurate record of its financial transactions that may be checked by the team of 1,000 investigative professionals who work in more than 50 countries in the world. The provisions of this act are very tough and the compliance with them is obligatory in any case. According to the latest reports, this act is the most widely recognized and enforced anti-corruption law that is regularly amended to be in line with the development of the illegal practices.
Siemens has been known for its bribery activities for a long time. The company now tries to clean up its reputation and organizational culture that was damaged by the long-lasting court trials that ended in 2008. During that year, the company agreed to pay around $1.6 billion as a fine to the European and US authorities to settle the legal issue. Due to collaboration with the authorities, this amount was diminished from more frightening $5 billion. The company invited new managers to reform the culture and enhance morality among the employees. It was clear that corruption spread far beyond the top-level management. Siemens was a ‘bad barrel’ rather than its employees were ‘bad apples.’ Almost all employees were aware of the methods the company used and were actively involved in them. Bribes were incorporated into the Siemens organizational culture so much that they used a special collocation, ‘useful money’, for them (Watson, 2013). In a few months they cleaned house by dismissing more than a half of employees from different tiers. Siemens launched active anti-corruption program that became effective with the assistance of former bribers who admitted their role in the company’s previous methods and agreed to collaborate.
However, till now Siemens remains the textbook example of the company which was deeply involved into the corruption activity on every level of its organizational culture. The system worked till and every new employee who was appointed to the position continued to act as his or her predecessor did. The culture and moral side of the company was so much rotten that it could hardly be changed without radical actions and dismissal. Moreover, lots of researchers admit that the fine that the company paid to the European and US authorities which launched the investigation is pretty small. Siemens was lucky to avoid $5 billion fine or even prison for the corruptive top management. The scope of Siemens bribery activity and its expansion within the corporation might have encountered far stricter punishment according to the FCPA.
Therefore, the FCPA is a perfect effort to prevent bribery among the US companies. It may not directly influence them not to engage into illegal activity, but it does make the consequences of it too expensive. In the market economy, the government cannot interfere directly in the business of private companies or multinationals, but it can impact their behavior and make illegal activities too risky and too dangerous. The case of Siemens proves that the company may experience rapid growth based on bribes; it can even avoid paying huge fines and keep every manager out of prison, but once marked as a briber, it loses its reputation and can no longer enjoy sustainable and steady development. Therefore, the main purpose of anti-corruption legislation is fulfilled: the companies see the example and are not eager to repeat its fate.
References
Foreign Corrupt Practices Act. (2013). EY. Retrieved from http://www.ey.com/Publication/vwLUAssets/ey-foreign-corrupt-practices-act/$FILE/ey-foreign-corrupt-practices-act.pdf
The Real Cost of Bribery. (2013, November 5). Forbes. Retrieved from http://www.forbes.com/sites/hbsworkingknowledge/2013/11/05/the-real-cost-of-bribery/#1c8eee987dce
Watson, Bruce. (2013, September 18). Siemens and the Battle against Bribery and Corruption. The Guardian. Retrieved from http://www.theguardian.com/sustainable-business/siemens-solmssen-bribery-corruption
