Siemens Changes Its Culture: No More Bribes

Wal-Mart remains under a cloud after The New York Times reported the retailers expansion in Mexico involved systematic bribes. To get a sense of how that might play out, Steve Inskeep talks to Peter Solmssen, a managing board member and general counsel for Siemens. The German engineering and electronics conglomerate was involved in its own bribery scandal.

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STEVE INSKEEP, HOST:

Wal-Mart faces many questions after The New York Times reported that the company's expansion in Mexico involved systematic bribery. It is not, however, the first corporation to face this problem.

DAVID GREENE, HOST:

Years ago, Siemens - the giant German manufacturing firm - faced an even bigger scandal. Siemens is a little like General Electric. It seems to make everything everywhere, from security equipment to locomotives.

INSKEEP: And its sales force was accused of paying hundreds of millions of dollars in bribes to get contracts from big companies or from governments around the world.

We called Peter Solmssen, who's a managing board member and general counsel of Siemens to find out what went wrong and what the company did about it.

PETER SOLMSSEN: Well, it was largely a failure of leadership. It seems employees believed that they had to pay bribes in order to get business.

INSKEEP: And so what were the first steps that they took to clean it up? Did they fire a bunch of people?

SOLMSSEN: The first thing they did was that they hired an outside law firm to do a thorough investigation. And they said to the law firm: Go wherever the evidence takes you.

INSKEEP: What did they find?

SOLMSSEN: They found widespread corruption steered out of Germany.

INSKEEP: And so then what did you do, get rid of some of the workforce?

SOLMSSEN: We offered amnesty. We said for anybody who's been involved in this, if you come in and tell us the whole story, we will not fire you. We won't punish you, and we will try and help you with the authorities. And we had about 130 people who came in and told us where the money had gone and what their role had been.

INSKEEP: Hmm.

SOLMSSEN: Now, people who did not ask for amnesty and who were later caught were prosecuted and fired by us - first fired by us, and then prosecuted.

INSKEEP: There was a spokesman for federal criminal investigators who, in a documentary not long ago, was quoted as saying: "Bribery was Siemens' business model." From that quote and from what you said, it sounds like it really was part of the culture at Siemens for a long time.

SOLMSSEN: Until 2007.

INSKEEP: Isn't it really difficult to change the culture of a large organization?

SOLMSSEN: Actually not. It's not that hard, because the employees really respond to this message. They want to do things right. Bribery, corruption is a form of theft, and it's not really acceptable anywhere. And our employees are thrilled not to be part of the problem and to be part of the solution. They live in these countries where they see the effects of corruption. You know, the roads to nowhere, the wells that don't work, the hospitals that don't work, the money siphoned off to Switzerland. And to be part of the solution, to help stamp that out, is actually very energizing in these difficult countries.

INSKEEP: I guess you can point out that in the Arab Spring uprisings, even though those are countries that many of them have reputations for many kinds of corruption, it seemed that people were not happy with that in the end.

SOLMSSEN: You're making a terrific point. It was the right to vote or freedom of the press that brought people out onto the street. It was corruption.

INSKEEP: Now, let me ask another thing: You're clearly proud of what you've done at Siemens. You're clearly proud of your efforts to clear this up, but as you note, people hide this stuff, and it's a global company. Do you ask yourself sometimes late at night: Do I really, really know that we're getting this right?

SOLMSSEN: All the time. We have 400,000 employees. If you estimate that we have the normal distribution of bad apples, we're going to have problems on a regular basis. The question is: What do you do about it? You try to prevent it through training, through controls. You try to detect it through hotlines, through amnesty programs. And then when you find it, you have to respond promptly and thoroughly. It's an ongoing process.

INSKEEP: Is there a story that you've heard in overseeing this from someone who got in a situation where they were asked for money and they said no? And how did that exchange go?

SOLMSSEN: Oh, it happens to us all the time. I heard a story last week.

INSKEEP: Go on.

SOLMSSEN: I'm not going identify the country, but one of my colleagues was asked for a relatively small amount of money. He just said no, and he got what he was entitled to anyway. By and large, if we're asked, we say no, and we get the deal anyway. That's what the numbers show. We're at record levels of market share. We're at record levels of profitability. We're getting at least our fair share of business.

INSKEEP: Is that partly because you're a high-tech manufacturer and there are just certain products that, if they want a locomotive of certain specifications - just to pick something - there are only so many companies they can go to?

SOLMSSEN: That helps. But I've also seen smaller companies in difficult countries that have it as part of their culture that they don't pay bribes, and they do very well. There's one Indian company, when they're solicited, they say we're a vegetarian restaurant. We don't sell chicken. And it works, it works.

INSKEEP: That's code for whatever.

SOLMSSEN: We're not going to pay bribes.

INSKEEP: Oh, gosh. Peter Solmssen is a member of the managing board and general counsel of Siemens. Thanks very much.

SOLMSSEN: Delighted. Thank you for having me.

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