IBM Charged With Bribing Korean, Chinese Officials 263
angry tapir writes "The US Securities and Exchange Commission has charged IBM with giving hundreds of thousands of dollars in bribes to South Korean and Chinese officials starting in the late 1990s, according to court documents. IBM has agreed to pay US$10 million to settle the SEC lawsuit."
Bribery fines are funny (Score:5, Insightful)
"We're sorry we bribed these guys over there. How much do we have to pay you guys to make this problem go away?"
Re:Bribery fines are funny (Score:5, Insightful)
Re:Bribery fines are funny (Score:5, Interesting)
I know what you mean, but what else can you do other than levy a fine? It looks like from the article that the problem was with subsidiaries in other countries creating slush funds and IBM simply did not have controls in place to prevent that. I don't know if you could convict any US employee of the actual bribes or even for looking the other way. Some of them might have known about it, but good luck proving that. They could prove the company was liable, but they can't throw anyone in jail for it. They could prove IBM did not have sufficient controls, but they couldn't prove that the reason wasn't that their accounting group just plain sucked. Last I checked you can be fired, but it is much, much harder to convict someone for being bad at their job.
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This is one of the fundamental problems with legal persons, accountability.
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...what else can you do other than levy a fine?
You can throw the top executives who made the decisions in jail with the general prison population. Of course, executive hanging would more effectively reduce recidivism, particularly if done publicly on the nightly news.
Re:Bribery fines are funny (Score:4)
Hanging for bribery? A little harsh don't you think?
Re:Bribery fines are funny (Score:5, Informative)
Hanging for bribery? A little harsh don't you think?
The Chinese don't think so. [aolnews.com]
Well.... They shot him rather than hanged, but I suppose its close enough.
Re:Bribery fines are funny (Score:5, Insightful)
He was shot for getting caught.
Re:Bribery fines are funny (Score:4, Insightful)
Re:Bribery fines are funny (Score:5, Insightful)
It is probably close to impossible to find someone not corrupt in China.
Isn't that too strong for a billion people. Actually I grew up in China but somehow in my childhood I had problems accepting gifts, as for some reason I didn't want other people's stuff. You might say there is a prevailing culture, but a billion people can develop a lot of varieties.
Re:Bribery fines are funny (Score:4, Interesting)
Dissolve companies that are caught doing these things; force receivership and sell off the assets. The executives involved would be jailed, and 95% of the workers would continue wherever their particular business ended up.
Re:Bribery fines are funny (Score:4)
There is no legal or ethical reason the SEC cannot have laws that penalize this kind of bribery with jail time by the people in the corporation who did the illegal acts. There is also no legal or ethical reason the SEC cannot require the kind of auditable bookkeeping that would make "looking the other way" a crime actively committed, rather than merely an obligation passively neglected.
The only reason we do not have those laws and enforce them is that corporations own the legislators and regulators the people put in charge of these consequences. And that the corporations competing with each other accept the unfair competition, instead of using the legislators and regulators they own to make and enforce such laws properly.
And of course the only reason any of that is the situation is because we the people accept it, even insist on it.
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I don't know if you could convict any US employee of the actual bribes or even for looking the other way. Some of them might have known about it, but good luck proving that. They could prove the company was liable, but they can't throw anyone in jail for it.
Why not? If you can't find Joe Fatpockets who handed the cash over, get his boss. Seeing as it was more likely a cheque or transfer of money, I am sure that there is a lovely audit trail of who authorised that and who requested it.
If I can go to jail for bribing someone, I don't see why the same shouldn't apply just because a COMPANY did it. IBM bribed a few (or many) hundred thousand dollars. They likely gained many (or a few) millions from those bribes in return business. A $10 mill fine isn't going to me
Re:Bribery fines are funny (Score:4, Interesting)
You do not have/need a joe fatpockets, what you need is a willingness to have agents whose accounts you do not review..., and that is much harder to prosecute, and moreover many american would not like to loose the salary that the cash obtained this way brings in..
so of course it is "nice" to have the fantasy of punishing the bad CEO's, but changing the way you consume is a more efficient step..
Seize profits and related assets (Score:2)
I know what you mean, but what else can you do other than levy a fine?
1) Seize ALL resulting profit AND
2) Seize ALL assets used in commiting the crime (Why should they be treated any better than drug dealers?) AND
3) Levy a fine on top of that AND
4) Investigate individuals for criminal prosecution with a view to banning them from being in similar positions in the future
In other words make it truly not worth anyone's time if they get caught.
If $10 is nothing to IBM, lets see if they're hurt by $200M
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If that helps to keep my job here in the United States then frankly, I couldn't care less what goes on in Korea.
It is highly unlikely that IBM's goal was or is to keep your - or any other American's - job here in the United States. You cost too much - given currency exchange rates.
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If it benefits you, let the corruption continue? I can see why many people would want to do that, but it doesn't sound all that appealing to people who aren't in that sort of situation...
Re:Seize profits and related assets (Score:5, Insightful)
So they bribed some Korean officials? Who gives a flying f**ck, that's how they do business outside the United States.
So they bribed some US officials to let migrant workers do the job at half the price and fired all their staff? So what!? It's an at will state. Those greedy rich Americans can apply at subsistance wages like I did.
See, it cuts both ways. You allow bribery to thrive to suit a corporation, and they'll turn on you. If you allow bribery justice is never carried out and people suffer - anything from death and injury to virtual slavery. I'm alright screw everyone else is a destructive unenlightened attitude.
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There is a fine line between bribery and being extorted.
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I know what you mean, but what else can you do other than levy a fine?
Set the fines as a % of annual revenue, or some other legally required, stockmarket linked reporting number.
Company A found guilty, earnt a million dollars, fined 85%. $850000 fine.
Company I(B)M, earnt a hojillion dollars - 85% of a hojillion is a lot.
The trick is using the same number that they use to justify their senior exec bonuses.
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if these charges were pressed in China, there'd be more than just fines... people would die.
Re:Bribery fines are funny (Score:5, Insightful)
What, are you fucking ignorant?
Haven't you seen how Congress is controlled yet? Via campaign contributions. And you don't think that it's filtered down to the state and local level?
My town only lets tow truck company with town specific permits pick up cars within limits, they even apply this to the highway which technically is federal and should be illegal, and they only let one company have the permits even though there are many others in the area.
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I'd say its not nearly as bad as in other countries. Generally people are against bribery in the U.S. In other countries, its a way of life.
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Taken a look at Congress any time in the past twenty years? Waaaaay too late.
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Re:Bribery fines are funny (Score:5, Informative)
No, they're hypocritical. US Govt uses bribery and extortion all the time.
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At least they have the courtesy of calling it "campaign donations" and other names.
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Re:Bribery fines are funny (Score:4, Interesting)
Does SEC, or anyone in the U.S. for that matter, have jurisdiction over supposedly illegal acts outside of the country? Is it even SEC's business that officials abroad were bribed? Shouldn't the Chinese slap them with, say, imprisonment of responsible persons?
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Does SEC, or anyone in the U.S. for that matter, have jurisdiction over supposedly illegal acts outside of the country?
Apparently, if the companies or subsidiaries responsible are owned by a US corporation, yes.
Shouldn't the Chinese slap them with, say, imprisonment of responsible persons?
Chinese do what they like in China, but imprisoning foreigners, especially executives, looks bad and is bad for business. It's hard to convince foreigners to invest in your country if you lock them when the set foot on your soil after all.
Re:Bribery fines are funny (Score:4, Insightful)
Chinese do what they like in China, but imprisoning foreigners, especially executives, looks bad and is bad for business. It's hard to convince foreigners to invest in your country if you lock them when the set foot on your soil after all.
One of the things China likes is bribes. Bribes aren't a way to get ahead in business over there, they are the way to do business. Maybe it's changing, maybe its not -- depending on who you ask -- but I'd guess that Intel not only bribed officials a ton, but they were probably expected to bribe a ton, and it probably wasn't looked down upon as long as the culturally-proper chain of bribes was maintained.
I'm not sure about South Korea nowadays, but they also certainly have a history of bribery as a way to do business, and I bet that it was were pretty damn common in the early 90's.
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"One of the things I have always found troubling about Westerners doing business in emerging market countries is that they sometimes take an almost perverse pride in discussing payoffs to government officials. It is as though their having paid a bribe is a symbol of their international sophistication and insider knowledge. Yet,
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"We're sorry we bribed these guys over there. How much do we have to pay you guys to make this problem go away?"
Ya, reminds me when I was in High School and I got kicked out for 3 days for missing too many days and being late.
I was like, cool. Didn't come back to school for 2 weeks, though I did keep up with my work.
So, no, this shit doesn't surprise me in the least bit.
Exactly (Score:2)
They just got caught is all. (Score:5, Insightful)
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I generally refer to them as BribeBM.
That actually sounds more like a laxitive. "Try new BribeMB with prescrption-strength analphlox!"
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If that could actually work, we'd have bribed the hard-core fecal matter out of Congress long ago.
Not to get too political... (Score:3, Interesting)
We should get rid of that law. (Score:4, Insightful)
Why shouldn't corporations be able to do publicly what they do privately?
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Re:Not to get too political... (Score:4, Insightful)
I can't answer for the poster, but I can say YES. I am against what the republicans put forth most of the time because they are bad ideas or puppet proposals for their corporate buddies. The democrats do the exact same thing and when they do I'm opposed to it (**AA anyone?). Allowing open bribery is a bad thing... it isn't doing business and it's just another way for these large concentrations of power to step on other smaller businesses.
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At some point everyone accepts bellwethers. I don't have Republicans or Democrats to lean on, but there are many others.
If Reverend Phelps states something, I don't have to think much to disagree - history has shown we don't have much in common, and most of what he advocates, I disagree with.
Closer to home, the current PM of Canada has a handy habit of coming out on the wrong side of pretty much everything. It saves time, I don't have to read much to know what is right.
I don't think you can blame him if
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I don't think you can blame him if he comes down on the anti-Republican side - they have committed so many heinous crimes from treason to torture, that it is a safe bet to just oppose them. They tend to be wrong.
Politicians tend to be wrong; by this statement you merely show your bias, probably the bias of your news sources as well.
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Haw?
Why is it then that U.S. tax dollars are going to buying homosexual child sex slaves for Afghan warlords [pbs.org] in exchange for getting local police to do their jobs?
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Why include homosexual in that? How is it at all relevant? I'm pretty sure "child sex slaves" should stands on it's own as utterly despicable without having to resort to homophobia as well.
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We are not pushing our ethics, a number of other countries, representing 80% of the world's trade, see bribery as a problem as well. The US signed a treaty with 33 other countries of the OECD [oecd.org] and has "arrangements" with others covering bribery. Our statutes covering this are in International Anti-Bribery Act of 1998 [wikipedia.org] Fines of up to $100,000 and terms of up to 5 years are applicable to individuals found guilty of bribery of officials. If the company you work for does international business your sales depa
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IBM is a multinational. They aren't in "our country" and have no allegiance to it.
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I put it to you: when is bribery ever a good thing?
There is no such thing as a good bribe because the person who accepts the bribe always had the option of acting (or not acting) for free out of some sense of moral or ethical responsibility. (At which point it ceases to be a bribe.) A bribe offer says, "I know you're supposed to do X, but I want to secretly pay you to do Y instead." Bribery is by definition a form of corruption.
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I put it to you: when is bribery ever a good thing?
When you're on the receiving end of the bribe. Duh.
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Bribery is not a good thing, but in some countries, there is no other way to get things done other than bribery. Then for the bribe giver it is not a question of good or bad, but rather whether you want to get anything done or not. Your court requests could be stuck in
Re:Not to get too political... (Score:4, Insightful)
Bribes are an artificial barrier to entry into a market. As a result, they are by definition a drag on the efficiency of a market. Furthermore, because of how bribes work, barriers to entry can be made arbitrarily high, resulting in the richest players in a market being able to extract monopoly rents without having to compete for customers.
You want me to go over basic free market theory again? I can't believe there's even a question why bribes are a bad idea. Next, someone will ask whether ice is cold, and whether water should be wet.
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Re:Not to get too political... (Score:5, Insightful)
Well... why not. The Supreme Court already made it legal to bribe officials domestically.
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Well... why not. The Supreme Court already made it legal to bribe officials domestically.
I bet they got bribed to do it.
Re:Not to get too political... (Score:5, Insightful)
Well, that does sound shitty, but bribery is pretty much how business is done in certain places. The US intelligence community took some slack a little while ago by providing information that Airbus was bribing officials to get contracts in foreign countries. The criticism was that this information would benefit US businesses who were, apparently, not bribing anyone. Go figure.
For every bribery deal that gets caught, there are probably ten or more times that number go right through. Having a law that prevents bribery sounds nice and all, but when no one else seems to care, you start to wonder if there's really a point to it. If bribery is simply the cost of doing business, then so be it. Is it our job to keep civil servants of foreign governments honest? Presumably it is not, since no one really likes having the US show up in their country with their occupations and such.
Corruption is a corrosive influence on any country, and a lot of them suffer from it. However, the changes that are needed to make that happen probably have to begin from within. I'm not against the law in this case, but I can see why some people in government look around at even our Western countries and wonder if everyone is on the same page.
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Willful and systemic disregard for the law by a business like this should lead to the business either being shut down by the feds, or fined so heavily that they have to file for bankruptcy. Who authorized the bribes? No jail time? Sad...
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International business is war. Why should our side have rules when the enemy doesn't?
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Why is this illegal? (Score:2)
I thought bribing foreign officials was a good thing?
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I thought bribing foreign officials was a good thing?
Only if you think that paying off a blackmailer is a good thing. On short term, maybe. On longer term, you encourage a culture of corruption which will make your future dealing be increasingly based of paying bribes. And guess what... the bribes will always go up.
Re:Why is this illegal? (Score:5, Insightful)
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That only works domestically.
I have mod points (Score:5, Funny)
the US Gov is jealous (Score:4, Insightful)
Maybe ... (Score:5, Informative)
Just maybe, that's the normal way to do business with governments in those parts?
Just sayin', based on my experience living in Latin America. Most of the time government offices are so sluggish (sometimes deliberately so), that you HAVE to grease the wheels if you want things done before you lose serious revenue. Clearing customs, currency exchange (where the government controls it), assorted permits... most new providers are shocked to learn how much these things can take.
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That's exactly why not to. (Score:4, Insightful)
Once corruption is legitimized, those conditions become the norm.
Look at all the countries with the lowest standard of living. You'll see that their governments are based upon bribes and favors.
The money is transfered from public works to private individuals and the entire country suffers.
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The money is transfered from public works to private individuals and the entire country suffers.
Your observation about correlation seems accurate. But, even though bribes are factored in the quoted price, the amount of money pilfered is peanuts in comparison to the losses due to inefficiency, abandoned projects, deliverables that were left to rot/obsolescence, white elephants, etc.
That's why they call it "corruption" - it rots the system from the inside.
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Re:That's exactly why not to. (Score:4, Insightful)
You're somehow inferring that bribery by foreign corporations is what's causing the corruption and leading to it becoming the norm. That's (usually) not true. In most of these countries, bribery and graft were already the norm before the foreign business even got there. In that situation, a country has two ideological choices:
A) Isoluation and refusal to do business. You basically tell the country to screw off and prohibit any of your corporations from doing any business in that country. That you won't do business with it until it cleans up its act first. Then you sit and wait, and hope the people of the country will on their own spontaneously revolt, clean up government and business, and establish a system more compatible with your moral ideology. This is the approach the U.S. is taking with Cuba.
B) Acceptance of the different standards. You recognize that things are done differently there than here, and continue to conduct business playing by their rules. You do this with the long-term hope that the extra economic velocity generated by your business will lead to a thriving middle class, which will gain enough economic and socio-political clout that they're able to bend their own government into cleaning up its act. A peasant state where 95% of the wealth is controlled by 1% of the population doesn't need to listen to what 99% of its population says. But a middle class of 50% of the population controling 40% of the wealth is a force to be reckoned with. This is the approach the U.S. is taking with China.
I won't argue which method is better. I'm not even sure myself. I will say this though: Uncompromising ideology makes a good goal towards which you want to steer society. But it frequently makes for a lousy method with which to steer society. If you say corruption is bad so you should never do anything which encourage it, you just end up going out of business and your opinion doesn't matter anymore. It's better to compromise, allow a little corruption, gain more power and influence, then use that power to try to steer things for the better.
Yeah ... (Score:2)
First off, I'm not inferring anything.
I'm straight out SAYING that when you legitimize corruption then ALL interactions with the government or other businesses in that country exhibit the characteristics that arialCo identified.
And totally irrelevant because, as mentioned before, the countries with the most corruption have the lowest standards of living.
There won't be a middle class there because the corr
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There won't be a middle class there because the corruption prevents it from forming. It prevents the middle class from forming by transferring the money from projects that would facilitate the middle class forming into the pockets of those who already have the money and power.
Not every country is Zimbabwe. Every developing and developed Asian nation is an example of a country that started so filthy with corruption you'd want to wash your hands after dealing with them, and each country, on its own pace of development and reform, has been building middle classes and cleaning things up over time.
Japan is an example where corruption is down to first-world levels and the middle class is gigantic.
South Korea and Taiwan are examples of countries where there are still struggles between
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You've never actually managed a large group of people or a company with a large corruption problem, have you? Fighting corruption is not as simple as waving a magic wand and declaring that nobody is allowed to do anything evil again. Often times, the only people skilled enough to continue running a company or a govern
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Once corruption is legitimized, those conditions become the norm.
Those conditions have always been the norm. What you see in the world is not a descent into corruption, but an attempt to ascend out of it. Not everyone is caught up yet. Unless you're willing to say that you'll do no business with 90% of the world, this is how it goes.
I have to sign off on company policies on an annual basis. One of the policies I sign off on is a "no bribery" policy, but it has a fairly fat exception for nations where bri
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Unfortunately, you have to pay one way or the others. Look at some of the cleanest governments in the world -- Singapore and Hong Kong; public servants are given free condos for life; a nice condo there easily worth a million USD or more, thanks to the governments' monopolistic control of land. In the US, we pay government officials with handsome pension benefits; we also make most of that legal by calling the acts "political donation". Money buys cleanness, regardless of political system; at the end, publi
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And that happens in a lot of countries where the standard of living is supposedly higher.
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The money is transfered from public works to private individuals and the entire country suffers.
You mean money confiscated from productive members of society for distribution to the shiftless and lazy is returned to those who actually earned it, rather than waiting for the nanny state to give them goods for free, don't you, comrade ...
How insightful you are today!!!
Everybody knows that the govt bureaucrat who won't do a thing for you (even if you are entitled to) unless you pay "his private tax" is working very hard to earn his money, takes enormous risks just to keep the society going towards the greater good. Such individuals are actually the spine of the society, without them everybody will just lazily bake themselves in the sun, paid from the dole.
Re:Maybe ... (Score:4, Insightful)
Just maybe, that's the normal way to do business with governments in those parts?
Just sayin', based on my experience living in Latin America. Most of the time government offices are so sluggish (sometimes deliberately so), that you HAVE to grease the wheels if you want things done before you lose serious revenue. Clearing customs, currency exchange (where the government controls it), assorted permits... most new providers are shocked to learn how much these things can take.
Yep. And more often than not, a "bribe" is really an extortion payment, especially if you're an American.
It's not that foreign officials are anti-American, they just know who can afford to pay.
Next it will be the Chinese that get forced to pay these "bribes".
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Just maybe, that's the normal way to do business with governments in those parts?
Just sayin', based on my experience living in Latin America. Most of the time government offices are so sluggish (sometimes deliberately so), that you HAVE to grease the wheels if you want things done before you lose serious revenue. Clearing customs, currency exchange (where the government controls it), assorted permits... most new providers are shocked to learn how much these things can take.
Yep. And more often than not, a "bribe" is really an extortion payment, especially if you're an American.
It's not that foreign officials are anti-American, they just know who can afford to pay.
Next it will be the Chinese that get forced to pay these "bribes".
Bribes are "taxes". That's the whole problem here. If they, from the get go, kept saying they were paying local 'taxes', no one would bat an eyelash.
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Just sayin', based on my experience living in Latin America.
And do you like it?
Assuming you would be willing to bribe someone to get something done, would you be happy of somebody from a foreign country just overbidding your bribe by a higher one? (even if, say, what the foreign party will sell to you and your family is 2-3 times as expensive?)
Question (Score:2)
Payments from IBM subsidiaries to South Korean officials in the form of gifts, travel and entertainment
Isn't this how business is handled in the private sector?
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I think the answer there is "not any more".
it used to be, in the time before people became interested in competition law, ethics in business and not supporting corrupt governments overseas.
But now we apparently care about all those things. IMHO that is a very good thing.
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Isn't this how business is handled in the private sector?
Not where I work. Anyone who accepts a gift from a vendor or customer, and fails to report it promptly, is risking getting fired.
Our CFO noticed our shipping costs had gone up, so did an investigation. She found out that more packages were shipping DHL (high rates, crappy service), because the DHL sales rep was buying pizza for the warehouse staff several times a month. The warehouse manager lost his job, and we no longer use DHL at all.
Proportions? (Score:5, Insightful)
Woah, a 10M dollar fine...
Lets see what Wikipedia says about IBM..
Net income US$14.833 billion (2010)
Yeah, that 10M fine will sure show them!
If they really wanted a punishment, they should give IBM's board community service or something. That'd be an interesting way of doing things. Not denying the CEO's paperboy a large tip this week.
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but but but but but the CEO knew NOTHING about what was going on!
He EARNS that multi-million dollar salary, but he knows NOTHING about what is going on!
Wait, wait .... (Score:3, Insightful)
Bringing down Wall St and getting rewarded with a bail out is ok but bribing foreigners with a few thousands here and there is full on illegal? Only in Bizzaro land called the US of A.
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A) IBM didn't bring down Wall Street, so there's little reason to compare them against one another, since they are very different situations.
B) I think we can agree that both are wrong. This doesn't have to be a one or the other thing, though clearly some people got away with crimes, while others didn't get away with theirs.