Prosecutions of Business Corruption Soar in Germany

By Carter Dougherty

Published: February 15, 2007 in the International Herald Tribune

This article is about the rising instance of white-collar, corporate crime in Germany. Wolfgang Schaupensteiner is the head of the financial crime department in Frankfurt, Germany’s financial capital. He reports that this week, his agents raided a multiple locations of the offices of Siemens, one of the country's most well-known companies, on suspicion of corruption. DaimlerChrysler, BMW and Volkswagen have also been raided, put under investigation, or even had employees arrested.

Schaupensteiner believes that globalization of the German economy is the cause behind the rise of this type of crime. “Corporate profits have surged across sectors ranging from finance to autos to energy, as German executives have turned the country into one of the world's largest exporters over the last five years. Illicit dealings helped create their success.” he claims, “and that in turn has encouraged many executives to believe that crime does pay.”

“Globalization has become a motor for corruption in Germany,” asserted Schaupensteiner. “It creates dangerous potential if you do not control it.”

I think this article is important because one of the major arguments against globalization is the theory that it spreads corruption. The idea is that globalizing markets can increase profits for companies very rapidly, which may be much more tempting to company officials than slowly earned profits. Also, with globalization companies spread out often to multiple areas with varying laws, which makes it easier for officials to hide money, launder money, or accept bribes.

I think that the anti-globalizationists are probably right in that globalization does make corruption more attractive and easily accomplished for companies. However, if a country can create a regulatory body or laws, then I don’t think the problem will be so common. Evidence of this is seen in other European countries, where globalization is happening but most countries have a relatively low instance of financial crime due to regulation.