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Tuesday, 30 April 2019

The stench of corruption from Germany's businesses

Back in April 2018 we ran a fairly lengthy piece on German corruption. The German government had in effect encouraged widespread business corruption with law changes that made it easy to get away with - and for the past decade, it has been pervasive, deep and substantial. We quoted a report that found
A staggering 43 percent of German business executives polled by EY (formerly Ernst & Young) think bribery and corruption are fairly commonplace in Europe's economic powerhouse. That's a big jump from just 26 percent in 2015.
So who cares if most of German business is bent, the nation's judicial system ranks with Greece in terms of probity, shareholder protection is amongst the lowest in the developed world and there is little creditor protection? Who cares that courts and lawyers are beyond the reach of most victims, who must passively take the hits from German corrupt dealing?  Well, we wrote
This deep and endogenous German economic corruption will not play well in the rest of Europe. The UK, the Netherlands and the Scandinavian nations, with low levels of corruption and high scoring of commercial rectitude and probity, will be feeling fouled by contact with German corruption - and will now be adding up the commercial losses that German crookedness has cost them. The southern nations will be aggrieved that they have been bullied, coerced and hectored by a deeply crooked nation wearing a false disguise of moral superiority. And eastern nations such as Poland and Bulgaria, countries Germany has robbed of billions of Euros in corrupt complicity with Gazprom, will be looking at concrete measures to get their money back.
Yesterday Matthew Lynn broke yet another tale of German corruption in the Telegraph. The latest scandal is fraud at Wirecard - a rapidly ascending start-up that replaced the moribund Commerzbank in Germany's DAX index. The Telegraph and the FT are reluctant to be too specific; one suspects m'learned friends are hovering, and even the linked piece in the Anti-Corruption Digest is careful. Lynn writes
We have an image of Germany as a very law-abiding country, and on one level that is certainly true. The streets are safe, and no one can pay a bribe to get out of a parking fine.... yet right at the top of the country’s biggest companies it is starting to look painfully obvious there is an honesty issue.

The Germans are fond of portraying themselves as the exemplars of responsible, socially conscious capitalism. In truth, however, the hypocrisy is starting to become nauseating. There is clearly something rotten within Germany’s business culture – and even worse, no one seems to want to do anything about it.
It is the sort of casual, 'who cares?' corruption that saw Martin Selmayr's crooked appointment to EU capo shrugged off and Germany's biggest industrial names reduced to international gutter reputations no better than bootlegging prohibition gangsters.

So don't be surprised that when the downturn begins to bite, the entire German commercial edifice comes tumbling down - and the German economy proves as much of a paper tiger as did Soviet military might in 1989.


DiscoveredJoys said...

You can get a lot of insight into the EU by comparing it to the Hanseatic League or Mercantilism. Politics driven by merchants or trade tends to end up trampling over the 'little people'.

Jack the dog said...

Having the German economy held up as an exemplar for years has got rather wearing.

I have written elsewhere about their fondness for fighting the last (economic) war ( and these corruption allegations are really all of a piece.

Winter is coming.

Anonymous said...

This comes as no surprise. I first came across corruption as a young engineer in Namibia and have been aware of it ever since. As long as industry provides the money the govt turns a blind eye, or worse helps out. Take a look at the sale of German submarines to Greece when the crisis struck. This contract had to be paid in full, so bail out money flowed from the EU through Greece and into German pockets.....have a nice day. The submarines were also very expensive indeed, some of the Greeks did quite well I believe.

John Brown said...

I’m not surprised.

In my 40+ years of business life dealing with Swiss, French, German, Italian, Portuguese and Chinese suppliers only the German cheated on the product supplied.

The German government were also quite happy to illegally support German industry by paying companies for false industry “reports”.

And of course we have the absolutely massive German diesel emissions testing fraud.

RAC said...

Well dishonesty is a form of weakness and any weakness can be leveraged. If we cannot get the Brexit we want maybe we can hope that some external actor will bring about a system collapse. If we still live and breath an escape from the smoking ruins is still an escape. Let it happen.

Mark said...

Nicholas Ridley, 30 years ago famously said that the EU was just a German racket to take over Europe. This has been borne out 10 times over in the intervening years.

It's one thing for an efficient, honest Germany to do this. One could perhaps rationalise that its "goodness" could somehow trickle down and the whole of Europe would benefit in the long term.

But a corrupt and cynical Germany deliberately shafting it's economic colonies while looking down it's haughty snot nose at them?

Given the last 100 years and the invented rationale of the EU that it was formed to prevent conflict.

Well, it's not pouring petrol on the flames, but phosphorous and powdered aluminium with a healthy blast of pure oxygen!