Friday, April 27, 2007

Bribery-still a standard business practice?

I raise this topic in the context of a scandal involving Siemens, a Germany company which is currently in the headlines due to bribery prosecutions of some of its employees. An example is "Bribery trial deepens Siemens woes" from the International Herald Tribune where the first sentence in the story states "Two former managers for the engineering conglomerate Siemens told a German court Tuesday that they meted out €6 million in bribes in Italy as part of the company's strategy to anchor itself in the booming market for power generation equipment." The managers defense is described as "Both men also said that they had not violated a German law forbidding bribery of public officials abroad because the Italian utility in question, Enel, was already effectively privatized."

Further along in the article, the IHT states that "In 2002, Germany passed an additional law extending the prohibition on bribery to all employees abroad, whether at public or private companies." Apparently, the bribing of a foreign office-bearer was not punishable in Germany until the late 1990s. Germany passed an "International Bribery Law" in 1998 to rectify that. Also, since the "Tax Exemption Law" became effective on March 24th, 1999, bribe money is no longer tax deductible in Germany.

There is a Bribe Payers Index which rates countries according "to the propensity of firms with headquarters within their borders to bribe when operating abroad."

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