Reference no: EM133050485
Midi-Case Study - Robert Bosch Corruption
Instructions: For this case study assignment please read the case study. After reading the case study determine the key issues presented in the case study. Develop a business management viewpoint based on the facts presented in the case study. Then read the questions. After reading the questions, write and submit your answers to the questions that follow the case study. With case study assignment questions, there is no single correct answer. Each student should complete the case study only using the information presented in the case to support their answers. Also, this is not a group assignment so each student should work independently to answer the questions. Number your answers.
Student's answers to the case questions are to be submitted by each individual student's individual preparation. Your answers are to be uploaded/submitted directly to the assignment, in Canvas. (Do not email your response directly to the instructor.)
Here are some tips for writing the case answers:
- Answers should be brief and to the point.
- Answers should be substantiated by proper reasoning from the case or other sources.
- Avoid general statements such as "make customers happy", "increase profits", and using "etc." without proper explanations.
Midi-Case Grading Method:
This case has a maximum of fifty (50) points that can be awarded. Most of the grade is allocated to the contents of the write-up for the case questions. Answers that are complete (based on the question instructions) and touch the themes from the case will receive full credit. A smaller percent of the grade for this case will be awarded for presenting your answers in a clear, readable, and compelling manner. There is not one single correct answer to the questions. Always number your responses and answer the questions in order.
Midi-Case Study Presentation - Robert Bosch Corruption
Robert Bosch GmbH - commonly known as Bosch, is a German multinational engineering and technology company headquartered in Gerlingen, Germany. The company was founded by Robert Bosch in Stuttgart in 1886. Bosch is 92% owned by Robert Bosch Stiftung, a charitable institution.
Bosch's core operating areas are spread across four business sectors: mobility (hardware and software), consumer goods (including household appliances and power tools), industrial technology (including drive and control) and energy and building technology.
In 2006, Volkswagen executives asked Bosch for help in developing software for their emission defeat devices. Volkswagen is one of Bosch's biggest customers. Volkswagen engineers provided detailed specifications to Bosch, which wrote the necessary code. Bosch was apparently concerned about the legality of software and asked Volkswagen to assume responsibility if the fraud was discovered, but Volkswagen refused.
Starting in 2008, Bosch supplied approximately 17 million motor control and mixture control devices containing illegal software to various manufacturers both domestically and globally. With such software, the automobiles fitted with Bosch's devices emitted more nitrogen oxides than allowed under regulations.
On February 1, 2017, Bosch agreed to pay consumers in the United States $327.5 million as compensation for its role in devising the software. Bosch also provided emissions software for Fiat Chrysler's 3.0 L V6 diesel engine used in 100,000 model year 2014 - 2016 Grand Cherokee SUVs and Ram Trucks and agreed to pay affected consumers $27.5 million as part of a broader settlement in January 2019. In May 2019, Bosch paid another $100.0 million fine for its connection to the "Diesel-gate corruption".
Prior to the emissions software fraud humiliation, in December 2010 Robert Bosch the large German engineering and electronics firm agreed to pay $106.0 billion in fines to settle legal suits bought by the U.S. and German governments. The governments assure that Robert Bosch had used bribes to win business in countries around the world. These were the largest fines ever levied against a company for bribes, reflecting the scale of the problem at Robert Bosch. Since 1999, the company had apparently paid $1.4 billion in bribes in Myanmar, Robert Bosch paid $5.0 million to the son of the prime minister to win a mobile phone parts contract. In Cameroon, it paid $12.7 million to various officials to win government telecommunications parts contracts. In Brazil, Robert Bosch paid at least $40.0 million in bribes to win a $1.0 billion contracts to produce national identity cards. In Israel the company provided $20.0 million to senior government official in order to win a contract to co-build power plants. In China, it paid $14.0 million to government officials to win a contract to supply medical equipment.
Corruption at Robert Bosch was apparently deeply embedded in the business culture. Before 1999, bribery of foreign officials was not illegal in Germany and bribes could be deducted as a business expense under the German tax code. In this permissive environment, Robert Bosch subscribed to the straightforward rule of adhering to local practices. If bribery was common in a country, Robert Bosch would routinely use bribes to win business. Inside Robert Bosch, bribes were referred to as useful money.
When the German law changed in 1999, Robert Bosch carried on as before, but put in place elaborate mechanism to hide what it was doing. Money was transferred into hard-to-trace bank accounts in Switzerland. These funds were then used to hire an outside consultant to help win a contract. The consultant would in turn deliver the cash to the ultimate recipient, typically a government official. Robert Bosch apparently had more than 2,700 such consultants worldwide.
Bribes, which were viewed as a cost of doing business, typically ranged between 5.0 and 6.0 percent of a contracts value, although in corrupt countries bribes could be as much as 40.0 percent of the value of contract. In justifying this behavior, one former Robert Bosch employee state "It was about keeping the business alive and not jeopardizing thousands of jobs overnight ". But the practice left behind angry competitors who were shut out of contracts and local residents in poor countries who paid too much for government services because of rigged deals. Also, by engaging in bribery, Robert Bosch helped to foster a culture of corruption in those countries where it made all illegal payouts. During this time period, in a cynical move, Robert Bosch put in a place a formal process for monitoring payment to make sure that no illegal payments were made. Senior executive even made some of the individuals responsible for managing the bribery fund sign compliance forms stating that they had not engaged in any such activity, while knowing full well that this was not the case.
This scheme began to collapse at Robert Bosch when investigators in several countries began to examine suspicious transactions. Prosecutors in Italy, Liechtenstein, and Switzerland sent requests for help to counterparts in Germany, providing a list of Robert Bosch employees who were implicated in making illegal payments. In late 2006, the Germany police acted, raiding the company, seizing data and arresting several executives. Shortly, afterward, the United States started to look into these charges.
Since 2006, Robert Bosch had to adhere to the Foreign Corrupt Practices Act, which outlaws' payments to government officials to win contracts. At the end of the day, Robert Bosch had to pay not only $1.6 billion in fines, but also commit to spending another $1.0 billion to improve its internal compliance process, while several senior executives went to jail.
Midi-Case Study Questions - Robert Bosch Corruption
Q1) Please list five facts from the Robert Bosch case study. It is important to present facts that are representative of the main points of case study.
Q2) What kind of corrupt practice did Robert Bosch engage in the automobile industry?
Q3) What kind of corrupt practice did Robert Bosch engage in the mobile phone parts, telecommunication, power plant, and medical supply industries?
Q4) Please name the two countries that filed lawsuits against Robert Bosch and collected fines?
Q5) Please, write the four main steps that Robert Bosch managers and essential people carried out to engage in bribery? (Hint: please do not copy complete sentences or a paragraph. It is best to copy excerpts of sentences, paraphrase or use your own words.)
Q6) Please write two (2) major results or consequences from Robert Bosch's actions in bribing government officials to gain contracts?
Q7) Please write two (2) major factors or ways that Robert Bosch managers could use to explain or justify their corrupt actions described in the case study?