Question
Case Description: Siemens AG is a German multinational conglomerate company headquartered in Munich, Germany. Siemens and its subsidiaries employ approximately 420,800 people across nearly 190
Case Description:
Siemens AG is a German multinational conglomerate company headquartered in Munich, Germany. Siemens and its subsidiaries employ approximately 420,800 people across nearly 190 countries. It is the largest Europe-based electronics and electrical engineering company with activities in the fields of industry, energy and healthcare. It is organized into six main divisions: Industry, Energy, Healthcare, Equity Investments, Siemens IT Solutions and Services and Siemens Financial Services (SFS).
On Dec. 13, 2011, The Securities and Exchange Commission charged seven former Siemens executives with violating the Foreign Corrupt Practices Act (FCPA) for their involvement in the company's decade-long bribery scheme in Argentina to retain a $1 billion government contract to produce national identity cards for Argentine citizens.
According to the SEC's complaint filed in U.S. District Court in Manhattan, the scheme lasted from approximately 1996 to early 2007. Initially, in the 1990s Menem government planned to implement all national electronic ID cards, known as Documentos Nacionales de Identidad (DNI) for every Argentine citizen. In order to obtain the contract which is total of 1.26 billion U.S. dollars, Siemens bribed Argentine government officials with 70 million U.S. dollars through intermediary. Menem government finally signed the contract with Siemens in 1998.
But a change in Argentine political administrations foiled the contract: after the next President Fernando De La Rua came into office, some officials questioned the contract on the ground that the cost of each electronic ID reported by siemens was twice what the government estimated. Therefore, the government announced the suspension and cancellation of the contract. In a political change and economic crisis, Duhalde succeeded De La Rua as the president. During his term of office, Simens was told by the intermediary that a 27 million U.S. dollars bribery could "resurrect the contract". In order to revive the contract, Siemens paid additional bribes in a failed effort to Kirchner government until 2004. When the company later instituted an arbitration proceeding to recover its costs and expected profits from the canceled contract, Siemens paid additional bribes to suppress evidence that the contract originally had been obtained through corruption.
If you were given an opportunity to prevent the incident from occurring again, what would you suggest?
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