The First Annual Bernie Madoff Award for Global Business Chutzpah goes to Siemens, Europe’s largest engineering firm which just copped a plea to bribery and corruption charges involving public officials and politicians on 4 continents.
The multinational agreed to pay $800 million worth of fines in America and another $540 million in Germany. That was in addition to the $280 million it coughed up to settle an earlier, similar charge.
But the size of the fines wouldn’t have, by itself, put Siemens over the top for the Madoff Award. It was the perverse sense of openness with which the process unfolded, as if people throughout the organization knew and accepted this was the way to do business.
According to the Economist, Siemens set up in full view 3 “cash desks” in its offices. Everyone knew employees could tote empty suitcases there and have them filled with cash to be used in paying off public officials for awarding contracts to Siemens.
Managers could pull out as much as $1.3 million at a time in support of efforts to secure contracts for the company’s telecoms-equipment division, according to the US Department of Justice.
Between 2001 and 2004, nearly $67 million was withdrawn in those suitcases, and all tolled according to Justice, Siemens paid foreign officials $805 million over a 6-year period.
No questions were asked, little documentation was required and managers needing money could approve their own requests.
Until 1999 Siemens actually claimed tax deductions for the bribes, booking them as “useful expenditure.”
“There was no complex financial structuring such as you would find among drug smugglers or money launderers,” Mark Pieth, chairman of OECD’s working group on bribery told the Economist. “People felt confident they were doing nothing wrong.”
Now that’s chutzpah!