Corruption in Germany Harvard Case Solution & Analysis

Do supervisors become tainted? Does corruption ever pay? When do favorable relations cross into bribery? How can CEOs handle and prevent outbreaks of corruption? These and other questions are raised by three brief case studies of corruption in Germany: the automaker VW at the international engineering firm Siemens, and the chemical giant BASF BASF. While German law let foreign bribery but even made it tax deductible until 1999, it was not welcomed in some countries where Siemens did business for example the United States-or in Germany after 2000-but old practices continued.

Cooperative management-labor relations, frequently seen as essential to the post-World War II German industrial power station, went sour at VW, as a top supervisor ensured vital concessions by paying for union leaders' munificent foreign travel and visits to prostitutes. After vitamin costs sagged in the late 1980s, BASF and the Swiss chemical firm Hoffmann-La Roche plotted a global cartel that survived a decade and increased the prices of many vitamins 50 percent or more. Finally, even after record criminal fines and jail time for some executives, some observers contended, such practices were likely to recur.

PUBLICATION DATE: July 30, 2008 PRODUCT #: 709006-HCB-ENG

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