5

Judgment

Siemens, the German engineering giant, is one of the oldest, largest, and most prestigious companies in the world. With more than 400,000 employees in 190 countries and revenues in excess of $100 billion per year, the breadth and depth of its operations are impressive by any standard.¹ A global leader in most of its businesses, Siemens makes a wide range of industrial, infrastructure, and consumer products: turbines, energy grids, subway trams, kitchen appliances. Many experts have referred to it as the European counterpart to U.S. powerhouse General Electric.

But in 2007, Siemens was not basking in praise. On the contrary, a series of scandals and uncertain growth metrics had left insiders reeling. Moreover, the international business community wondered if the Munich-based conglomerate had lost its competitive edge. First to emerge were revelations that Siemens had paid hundreds of millions of dollars in illegal bribes and kickbacks to foreign officials. In order to win company contracts, employees and middlemen carried suitcases full of cash to places such as Argentina, Libya, Venezuela, and Bangladesh.² Altogether, nine board members were implicated in the corruption, and the company's two most senior officers resigned amid concerns that Siemens had institutionalized this kind of behavior.