Bribery isn't what immediately comes to mind when you think about the
German engineering industry. Indeed,
Germany is one of the most uptight and anally retentive countries when it comes
to bribing its own government officials.
But
just scratch the surface and you'll more than likely be offered a bribe to unscratch
the surface and turn away. At least that
was the case just ten years ago.
Until
1990, it wasn't just accepted business practice and perfectly legal for German
companies to bribe foreign officials, governments, and state owned enterprises
-- the bribes were actually tax deductable under the German tax code! Now that's how you turn world-class
engineering into world-class business!!
But
changing a few laws and deleting a clause in the tax code doesn't seem to have
changed the culture of German companies.
Siemens paid a billion euros in quasi-fines to US and German authorities
in 2008, Ferrostaal is under investigation, and now Daimler, the maker of
Mercedes Benz, just settled a suit with the US justice department.
It's
not the fact of the matter, though it's the way they went about it.
The US
Department of Justice alleged that Daimler engaged for years in an elaborate
bribery scheme in 22 countries. And
certainly, until at least 1990, this would be pretty easy to prove with
Daimler's own income tax reports.
A look
at the report shows that Daimler wasn't ever actually charged with paying
bribes. Rather, it was charged with
"conspiracy to commit bribery".
So,
now that Daimler has been charged… all it has to do is either plead guilty or
fight it.
But
there's a bit of a risk involved. If
Daimler fights it, it may lose (given that the prosecutors have tax invoices
for the bribes) and have to pay the fines anyway, and be banned from bidding on
EU government projects because of the strict "debarment" policy on
companies that have paid bribes. And if
Daimler pleads guilty, it will be barred from bidding on public projects
because… etc.
So,
Daimler is in a huge mess right?
Unless... it can bribe its way out of it.
Sure
enough, the US Justice Department isn't above taking a few kick-backs. So instead of a lower fine for admitting to
being guilty, Daimler agreed to pay out a whopping $185 million for the Justice
Department's silence. Sure enough, the
Justice Department agreed to call it a "deferred prosecution
agreement" under which the case is deferred until the statute of
limitations expires in return for $185 million.
Cash.
Not
that this is really bribery. I mean,
it's not like a government giving special treatment to a company for paying it
a bunch of money or anything. That WOULD
be bribery.
Cheers,
Peter.
