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Bribery as a Business Model

Last week, National Public Radio ran a news item titled – Siemens Changes Its Culture: No More Bribes.

NPR host Steve Inskeep interviewed Siemens general counsel Peter Solmssen.

Inskeep asked: “Isn’t it really difficult to change the culture of a large organization?”

“Actually not,” Solmssen said. “It’s not that hard, because the employees really respond to this message. They want to do things right. Bribery, corruption is a form of theft, and it’s not really acceptable anywhere. And our employees are thrilled not to be part of the problem and to be part of the solution.”

That interview ran on Tuesday May 1.

Last week, Siemens said it was notified by the Munich public prosecutor of a “request for mutual assistance in criminal matters by a foreign authority.”

Siemens told the Securities and Exchange Commission (SEC) the investigation of the foreign authority involves “a Siemens subsidiary located in North West Europe in connection with alleged payments to employees of a Russian company between 1999 and 2006.”

Siemens said it is cooperating with the authorities.

In 2008, the giant German engineering firm and three of its subsidiaries pled guilty to bribery related charges and paid penalties totaling $1.6 billion.

Bribery was Siemens business model.

It was part of the culture.

Solmssen told Inskeep that there has been a change in that culture.

That Siemens is no longer the poster child for bribery.

We shall see.

Despite the millions spent on corporate compliance programs and training and culture change, you have to wonder about whether it’s all just one giant corporate fig leaf.

And why the Justice Department allows these companies to get away with it.

Take the case of Wal-Mart.

When it came to the Foreign Corrupt Practices Act (FCPA), Wal-Mart was said to have a state of the art compliance program

And then came David Barstow.

Barstow is an investigative reporter with the New York Times.

On Sunday, the Times ran an article by Barstow that makes you wonder about whether anything corporate America tells you about compliance has any validity at all.

The title on Barstow’s article:

“Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle.”

The article alleged that Wal-Mart paid bribes in Mexico to gain market dominance.

No big deal.

Everybody pays bribes in Mexico.

What was a big deal was the utter bankruptcy of Wal-Mart’s state of the art compliance program.

Why?

Wal-Mart corporate headquarters overrode the program.

“Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery,” Barstow reported. “They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Arkansas. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: ‘There is reasonable suspicion to believe that Mexican and USA laws have been violated.’”

“The lead investigator recommended that Wal-Mart expand the investigation.”

“Instead, an examination by The New York Times found, Wal-Mart’s leaders shut it down.”

Ask yourself – would Wal-Mart or Siemens or any other major multinational try and get away with this kind of bribery and cover-up if there were a tough as nails Justice Department on the corporate crime beat?

As James Stewart asked in the New York Times last week – Who is likely to go to jail?

No one.

The corporate crime lobby has castrated the corporate criminal justice system.

It used to be if you were a major corporation and committed a crime, you would be forced to plead guilty to committing a crime.

In 2000, we ran a list of the top 100 corporate criminals of the previous decade. Yes, as recently as the 1990s, major corporations would plead guilty to their crimes.

Then, the corporate crime lobby – led by former corporate criminal defense attorney and current Attorney General Eric Holder – replaced the corporate criminal guilty plea with deferred and non prosecution agreements.

Presto – no fault corporate crime.

Corporate crime lobby one.

Justice zero.

Thank you Eric Holder.

Russell Mokhiber edits the Corporate Crime Reporter.

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Russell Mokhiber is the editor of the Corporate Crime Reporter..

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