Fri May 30th, 2008 at 03:17:41 AM EST
The German corporate world is raked by scandals this week.
As Fran reported in the Salon, Deutsche Telekom got in unkind light for espionage: magazine SPIEGEL made public that the telecommunications giant tracked the calls of journalists, to find the source of leaks in the company.
But meanwhile, another case reached the court stage, which may be more important, because it concerns a more systematic practice: the Siemens corruption scandal. Confessing culprits laid bare how bribes and kickbacks were institutionalised in one industry giant.
First more on the Telekom scandal. It was SPIEGEL who revealed to the public that the company tracked thousands of calls by journalists, setting up a high-tech "early-warning" filtering system for the detectives plugged to the headphones. However, the affair was discovered - and relayed to law enforcement - by the present company leadership last year, the phone tappings went on turing their predecessors' tenure in 2002-2006.
But, subsequent revelations show a more extensive and serious spying activity:
- In 2000 (the time of an even earlier company leadership), a detective agency of ex-spies was tasked with observing the chief reporter of Financial Times Deutschland, claims the paper itself. That mission reportedly included the use of hidden cameras.
- In 2005, another detective agency was tasked with sending a mole to work with another business paper, Capital, who was reportedly successful in finding the source of a leak.
- In the first revealed operation, it wasn't just phone calls they were after. Süddeutsche Zeitung reports that the bank data of journalists and suspected leakers among the union-delegated members of the board were acquired, too.
- Furthermore, both SZ and SPIEGEL report that the phone trackers didn't just listen in to calls: the location of the cell phones was tracked, so that eventual meetings between journalists and potential leaker top managers be traced.
- Unions plan to lodge a complaint against persons unknown, suspecting that unionists are among the spied-on.
The present company leadership said that the FTD and Capital cases are new to them.
What I wonder about is why law enforcement didn't inform the public last year. At any rate, after the flood of new revelations in newspapers, they now descended on the Telekom headquarters to look for files.
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A bit of intermission.
Rhineland Capitalism, former West Germany's consensus-seeking, cooperative variant of capitalism, is often praised in contrast to Anglo-Saxon (financial) capitalism for its approach to labour relations. But, the system was also nicknamed "Germany Inc.", for the less savoury cooperation and personal entanglement between its major companies, as well as between those companies and the state.
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Now for the Siemens scandal.
This scandal rolls on for one and half years now, peaking last March in the arrest of a board member (I reported). The first discoveries of black accounts and a system of kickbacks in one branch led to a deep review of the entire company, and the uncovering of similar practices across several branches and the era of successive company leaders.
Things started in the communications branch Com, and it's those responsible in Com who are on trial now, and also making headlines in SPIEGEL.
Two of the men on trial, the men tasked with the management of the black accounts, one between 1994-2001 and the other 2001-2004, cooperated fully: they gave complete confessions and even loads of files to investigators. They hope for lenience for being cooperative, and are making the case that they acted with the knowledge of / upon orders from higher-ups.
Com's money-disappearing system was based on the trick of fake consultancy contracts that were set up in conjuction with big projects. Up to 30% of the value of a project contract was turned into bribes and kickbacks. The money was then laundered through foreign channels, in particular Austrian banks.
The two confessing corruption managers claim that Siemens's own anti-corruption unit knew what was going on, but when bringing it up, only suggested that they should make it in less apparent ways. What's more, one of the duo also claimed that state overseers noticed his practices, but did nothing.
Actually, there appears to be a good news in the story: the corruption activities had to be progressively scaled down over time.
The 1994-2001 black account manager said that he was forced to take over a job with a history apparently going back decades. However, with increasing financial oversight, for example stricter control at Austrian banks, payments went back over the nineties from up to 30% to 5-6%. The state overseers were inactive only because in Germany, bribing people abroad wasn't a punishable crime until 1998.
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Now, is the morale of the story that Siemens is/was one thoroughly corrupt company? I think not. I think Siemens was one thoroughly corrupt company among many that was caught and thoroughly investigated. For the companies, bribes were just another method of competition, and for Germany Inc., just another method of boosting exports. For elites in and outside Germany, the system was one of the many ways to keep riches others worked hard for for themselves.
Maybe I don't go far enough even by accusing Germany Inc.: France and the USA and their major companies have been in this business, too.