Germany as Sump of Corporate Corruption

The corruption scandals which have been front page news in Germany over the past weeks are now beginning to damage its image abroad.

An article in today's Guardian claims "corporate Germany is in crisis" and sugggests some of the measures which might have prevented the scandals at companies like Volkswagen, BMW, DaimlerChrysler, Infineon and Commerzbank.

Needless to say, the Guardian's line is that an increase in supervision is needed. But the current system is already riddled with supervision. The unions, board, executives and employees are all organised in such a way as to ensure that a nominal and mutual "supervision" is guaranteed. That is the nub of the problem: mutual backscratching will always creep in and corrupt such set-ups, sooner or later.

To make supervision impartial would only work if outside bodies were involved, with no connection to the company aside from their supervisory role. This is hardly an effective recipe to root out fraud. In truth, it would be more effective to dismantle much of the existing system, which pays lip-service to employee and union particpipation, whilst excluding the crucial "stakeholder" - the shareholder, who has been the prime gull in all this corporate bamboozling. Shareholder pressure, in turn, is far likelier to succeed in the fraud-busting role.