Current Ethical Issues In Business

Siemens is a German engineering and electronic company that has received a great deal of media attention in the recent past because of accusations of bribery. The corporation is accused of “massive bribery” in order to win contracts for jobs across the globe. The total dollar amount for these bribes is close to two billion dollars (Ewing, 2008). The United States and Germany brought charges against Siemens after discovering the possibility of bribery and these charges were ultimately resolved. Siemens did not escape unscathed from the scandal and was ordered to pay penalties that totaled upwards of eight hundred million dollars.

Siemens agreed to plead guilty to the corruption charges as well as civil charges and pay their fines in order get on with their business (Ewing, 2008). This enormous fine sets a precedent in the business world with regards to ethics. The Siemens fine is higher than any other fine handed down for failing to uphold the Foreign Corrupt Practices Act and sends an important message to global businesses regarding ethical business practices.

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Siemens could have suffered much worse but the United States government did not seek to ban them from continuing to compete for government contracts (Ewing, 2008). However, Siemens’s past cannot disappear as quickly as news about the scandal did. The fact remains that Siemens engaged in serious breaches of ethical behavior and these behaviors are analyzed as they are presented in the article. Discussions of other ethical issues that may apply to this situation are also offered.

The primary ethical issue that Siemens is still struggling to overcome is large scale bribery.

At the height of the bribery scandal, Siemens involved officials from all over the world including far off places such as Nigeria and Norway (Ewing, 2008). This large scale bribery ring suggests that bribery was a fairly common way that Siemens won contracts across the globe (Ewing, 2008). Bribery is an unethical business practice because it relies on money changing hands in order to change the behavior of potential clients.

When Siemens chose to offer bribes in exchange for contracts they were attempting to sway the decisions of many other officials in order to make more money. It is important to remember that bribery is strictly against the law when it is used this way. However, it is equally as important to address the fact that Siemens relied on bribery to make money which is considered a severe breach of ethics within the business world. Finally, bribery encourages corruption between those offering the bribes and those accepting the bribes (Ewing, 2008). Money is a very powerful motivator and can cause people to do things they would not ordinarily do because they are being offered an attractive sum of money.

The Foreign Corrupt Practices Act makes it unlawful for any corporation to offer bribes in order to retain the business of foreign officials. Breaking the law can certainly be considered unethical and when Siemens chose to bribe foreign officials they were breaking the law but they were also engaging in questionable business practices that endangered the success of their competitors. In order to remain competitive, Siemens felt driven to offer bribes rather than rely on a high quality product (Ewing, 2008).

However, in order to act ethically, Siemens could have remained competitive simply by adhering to customer demands and desires. It is true that it would have been much more difficult and time consuming to make as much money the honest way, but in the long run Siemens would have remained competitive because they would not have such a large black mark against their name (Ewing, 2008).

Another example of unethical behavior with regards to bribery concerns the shareholders of Siemens. If a business is acting ethically it is more concerned with the interests of its shareholders than with the interests of anyone else. In this case, Siemens failed to put its shareholders first because it was more interested in how much money outsiders were willing to take in order to retain customers (Ewing, 2008). Shareholders lost a lot of trust in Siemens when the scandal was revealed and it will take a great deal of time to prove to the world that Siemens is once again operating in an ethical fashion (Ewing, 2008).

Further, bribery is unethical because it prevents the shareholders from getting the maximum amount of profit from the company. When the shareholders money is being funneled into other countries and locations in the form of bribery it will cause the shareholders to lose trust in the company (Ewing, 2008). Once again, if Siemens had gone the honest route they would have been better off in the long run even though they did enjoy great financial success in the short term.

A final issue the article presents that is associated with bribery is the behavior of the senior executives and board of management within Siemens (Ewing, 2008). Although not all of these employees actively participated in the unethical bribery behavior, many of them turned the opposite direction and pretended they did not notice what was happening (Ewing, 2008).

These upper level employees chose to stay silent because they realized the potential profit increase that would occur as a result of bribery and even though they did not actually bribe anyone themselves they allowed the behavior to continue by not speaking up. This is a related example of unethical behavior. Ethically speaking, those within the upper levels of the company had a responsibility to notify the authorities regarding the bribery in order to protect the integrity of Siemens as well as the interest of the shareholders. However, this is another example of the unethical business practice of caring more about oneself than the overall interests of the business.

Undoubtedly, there were many other ethical issues that occurred behind the scenes that will never be proven. The first that comes to mind is concerned with the types of products that Siemens produces. They are a very high tech company that makes products that few other companies also offer such as medical scanners, high voltage transformers and wind turbines (Ewing, 2008). Therefore, it is unethical for these companies to engage in business practices that would limit the availability of these products to those who need them.

Corporations have a responsibility to their shareholders but they also have a responsibility to their stakeholders. When Siemens began using bribery to increase profits they were putting the entire company in jeopardy but they were also putting their buyers in jeopardy as well. The old adage, “put others before yourself” certainly applies to business ethics and this case in particular. It is unknown exactly what those engaging in bribery were thinking but it can be assumed that not a lot of thought was put on the interests of others because those involved were much too busy thinking about their own bottom lines.

Treatment of employees with the company is also an issue that was not addressed in the article but it is entirely possible that unethical treatment took place during the course of this scandal. There were many employees who actively spoke against bribery, refused to participate and/or did not know that bribery was occurring. These people cannot be held accountable for the actions of others but it can also be assumed that those engaging in bribery may not have treated these employees in a fair and ethical manner.

One way this may have been done is by bribing employees. Employees that found out about the bribery and wished to go to the authorities may have been bribed to keep quiet. As a result, even more unethical behavior was occurring as bribes were being offered and accepted within the company as well as with outsiders. Unfair firing may have also been used to eliminate the possibility of a leak. Inner office privacy issues may also have arisen in light of the bribery. Employees who were suspected of engaging in bribery may have suffered from breach of privacy rights as others may have searched private property such as desk drawers or computer files.

Similarly, those employees who refused to participate in bribery or did not know about the bribery may have been put under illegal surveillance in order to ensure their silence. Finally, an uneven balance of power was possible within the company as well. Employers who participated in bribery or chose to ignore that bribery was occurring may have used this power to influence other employees to do things they would not ordinarily do. At the same time, employees who discovered bribery could also have used their power of knowledge to personally gain from keeping quiet.

In the end, the reputation of Siemens has suffered a great deal because of the allegations and evidence presented regarding bribery. Siemens chose to behave unethically by allowing the power of money to influence how they chose to operate the business. Bribery took the focus off of the shareholders and stakeholders and allowed certain individuals within the corporation to personally gain from unethical business practice. While the bribery itself was the main issue in this case it is also important to consider other unethical behavior that occurred along with the bribery of foreign officials.

When upper level employees choose bribery over honest business practice they are doing severe damage to the internal structure of the entire business. After a short period of time, the corporation working environment takes on an air of distrust and paranoia and this hurts the overall profit margin of the business as employees spend more time watching the actions of everyone else and not enough time being productive. In the end, many of the senior executives may have walked away with large sums of bribery money but in the long term unethical business practices are just not worth the repercussions.

Siemens paid huge sums of penalty money, eliminated “a whole generation of senior executives” and “much of the company’s board of management” (Ewing, 2008) but their reputation has yet to fully recover. If this case is going to influence the entire business world perhaps a large fine is simply not enough to deter other corporations from avoiding unethical business practice. Perhaps it will take the sight of senior executives wearing orange jumpsuits to finally deter bribery (Ewing, 2008).

Ewing, Jack. (2008). Siemens settlement: relief, but is it over? Business Week, December 15.

Retrieved on May 11, 2009 from http://www.businessweek.com/globalbiz/content/dec2008/gb20081215_941906.htm.