1. Who should be accountable if senior executives order managers to carry out questionable acts in the name of business?
2. Is it right or reasonable that companies can sue former executives for failing to act appropriately and damaging the company's reputation?
3. Should managers be able to sue their current or former employers if they end up in court for "following orders"?

German engineering giant Siemens suffered a huge loss of trust following a bribery scandal, but a determination to face the truth put the rm on the path to recovery .- I. I i 1.4 Siemens' apparent tolerance of corrupt practices brought humiliation to the lm's employees. Photograph: Sean Gallups' Getty Images The problem In November 2006, regulatory investigations of the German engineering giant Siemens revealed that hundreds of employees had been siphoning off millions of Euros into "phoney consultants' contracts, false bills and shell rms" to pay massive bribes to win contracts. A trial judge described it as "a system of organised irresponsibility that was implicitly condoned" (senior managers used removable sticky notes to authorise potentially incriminating documents). The scandal shamed Siemens, not only in the eyes of furious shareholders and investors but also the German public, and brought humiliation to its employees. Its trustworthiness came under intense scrutiny, its integrity was called into question, as well as the benevolence of its senior leaders in appearing to tolerate such practices. One leading group of shareholders questioned the Board's basic competence for its handling of the affair. Yet Siemens' full response to the scandal has been widely praised by many independent anti-corruption and ethics experts, including the Organisation for Economic Co-operation and Development, and US Federal authorities. The initial response At first, Siemens played down the affair as a matter of a few million Euros. Within a month, its own estimate of the sums involved had spiralled to C420m (f350m). Key executives repeatedly denied awareness or involvement. This initial tactic appeared self-serving and did little to protect, let alone enhance, stakeholders' impressions of its integrity. Many viewed it as incompetent. The diagnosis As well as four international investigations, Siemens announced its own rigorous internal inquiry by New York law firm Debevoise & Plimpton. Even so, it was not until the following year that the most serious revelations came to light. This followed the departures of the then-CEO Klaus Kleinfeld and chairman Heinrich von Pierer, and the decision by Kleinfeld's successor, Peter Loscher, to announce a month-long amnesty for employees to come forward, explicitly excluding former directors. Around 40 whistleblowers gave incriminating evidence, which extended the scandal's reach into the previous board. Several systemic elements have been cited as contributing to the scandal, including: an aggressive growth strategy that, arguably, compelled managers to see bribes as a tempting short-cut to hitting tough performance targets; a complex, matrix-like structure that allowed divisions to effectively run themselves, and poor accounting processes. Perhaps above all, Siemens' then-corporate culture seemed openly tolerant of bribes, helping staff to feel they were "not only acceptable but implicitly encouraged". (However, it should be noted that bribes were common practice in German business at the time, and even tax-deductible.) The intervention Early on, Siemens appointed Michael Hershman, co-founder of Transparency International, to serve as its adviser - a shrewd move to affiliate itself with a leading anti-corruption expert. Siemens rolled out strict new rules and anti-corruption/compliance processes. It hired over 500 full-time compliance officers (up from just 86 in 2006), and a former Interpol official to head its new investigation unit. It also establishedcompliance hotlines, and an external ombudsman based worldwide and online. It created a web portal for employees to evaluate risk in their client and supplier interactions. In an attempt to change its internal culture, Siemens launched a comprehensive training and education programme on anti-corruption practises for its employees. By 2008, Siemens had trained more than half its 400,000-strong global workforce on anti-corruption issues. Siemens announced it would avoid competing in certain known hotspots for corruption or unethical practice, such as Sudan a simple gesture, although not materially punishing to the company's nances. More substantial was the decision to voluntarily suspend its applications for funding from the World Bank for two years. It also agreed to a 15-year programme to pay $100m to non-prot organisations ghting corruption. Finally, the rm took over 900 internal disciplinary actions, including dismissals. As well as the staff amnesty, Ibscher replaced Siemens' dauntingly complex matrix structure with a more streamlined one comprising just three divisions, whose MDs sit on the board. Millions of bank account statements, documents and transactions were reviewed. Overall, the scandal cost Siemens 2.5bn, including 2bn of nes. The rm was also barred from dealings with certain clients. The cost to employees of two years of shame under intense public scrutiny, especially in Germany, is difcult to calculate. Iijscher still Siemens\" CEO has been commended for his approach to ending corruption, but he has argued that changing the corporate culture to one driven by ethical standards "is a marathon for us, not a sprint". By June 2008, however, some executives were sufciently condent to declare Siemens "the most squeaky clean company". The lessons learned Unethical behaviour can be very costly. Premature dismissals of developing scandals can appear self-serving and incompetent, and compound the original problem. The trustworthy course of action is to acknowledge the accusations and to share any known facts, and to initiate a full, urgent and independent enquiry. Independent, ideally external, investigations are the most credible indicator of trustworthiness. The painful rigour of such an investigation can be resented, but it must be endured, until the full extent of the failure is laid bare. Discovering the true scale and depth of a trust failure may only be possible when senior leaders leave, and an amnesty is offered to staff to encourage them to come forward. The timescale for a major ethics overhaul is long - measured in years, not months - as it invariably involves cultural change. Has Siemens declared victory prematurely? Structural, procedural and cultural interventions should be adopted concurrently. For example, strengthening compliance monitoring and codes of conduct must be backed up with senior leaders' exhortations and training investment. Voluntary penance is often necessary for effectively restoring trust. It helps to demonstrate that the organisation has learned from the experience, and the willing submission to punishment implies remorse and concern for damaged relationships. This case study is summarised from The Recovery of Trust: Case Studies of Organisational Failures and Trust Repair by Graham Dietz and Nicole Gillespie and published by the lnstitu te of Busi n ess Ethics