EMERGING MARKETS: EMERGING MARKETS: Review A of Business and Legal I Emerging Markets : A Review of Business and Legal Issues VOLUME 1 | No 1 | APRIL 2009 ssues ssues Articles: The Siemens Corruption Outburst and the CEOs Who Combat It: A Corporate Governance Case Study Wojciech Rogowski Capital Market Supervision in Poland Andrzej Michór Cybercrime Challenges in the Framework of Information-Oriented Society Kseniya Yurtayeva Judicially Legal Forms Of Copyrights Property Protection (Exceptional) According To The Legislation Of Ukraine And EU Burlakov Sergіy Yurievych Report on insurance frauds in Poland (2009) Tomasz Gulla VOLUME1 No| 1 APRIL | 2009 Student notes: Institution of The Crown Witness In Poland On The Basis Of The Crown Witness Act of June 25 1997 Marta Flis Poland as a part of the Eurozone. Current Problems and Discussions Agata Kochman EMERGING MARKETS: A Review of Business and Legal Issues The purpose of the journal is to provide forum Emerging Markets : for international, interdisciplinary work on the A Review of Business and business and legal issues confronting emerging markets. Legal Issues The journal combines theoretical soundness and practical relevance. The articles guide policy makers while also advancing theoretical understanding. Editorial Board Advisory Board Richard Warner Edward Carter Editor In Chief Assistant Illinois Attorney General Professor of Law Supervisor of the Financial Crimes Prosecution Unit Faculty Director, Center for Law and Computers Adjunct Professor of Law Chicago-Kent College of Law Chicago-Kent College of Law, Chicago Visiting Foreign Professor, Director School of American Law, University of Gdańsk, Poland Anna Fornalczyk Director, School of American Law, University of Partner - Założyciel Wrocław, Poland COMPER [email protected] Fornalczyk i Wspólnicy Agnieszka Cenzartowicz David Gerber Associate Editor Distinguished Professor of Law Adjunct Professor Co-Director of the Program in International and Chicago-Kent College of Law Comparative Law Program Manager Chicago-Kent College of Law Partners for Financial Stability (PFS) Program East-West Management Institute Representative Henry Peritt, Jr. Office in Poland Professor [email protected] Director of the Graduate Program in Financial Services Law Lukasz Grzejdziak Chicago-Kent College of Law Associate Editor Wojciech Rogowski Igor Solodovnik Expert, Economic Institute Associate Editor National Bank of Poland Adjunct Professor Assistant Professor Chicago-Kent College of Law Warsaw School of Economic Research Assistant Partners for Financial Stability (PFS) Program Judge Dariusz Sielicki East-West Management Institute Representative Ministry of Justice, Warsaw Office in Poland Adjunct Professor of Law Chicago-Kent College of Law, Chicago Tomasz Gulla Associate Editor Editor In Chief Printpol.pl (legal-insurance service) Disclaimer: Statements of fact and opinion in the articles in Emerging Markets Review are those of the respective authors and contributors and not of the Emerging Markets Review. Emerging Markets Review make any representation, express or implied, in respect of the accuracy of the material in this journal and cannot accept any legal responsibility or liability for any errors or omissions that may be made. The reader should make her or his own evaluation as to the appropriateness or otherwise of any experimental technique described. They are put forward to stimulate discussion. Cover design: Tomasz Gulla Page 2 Volume 1, April 2009 EMERGING MARKETS: A Review of Business and Legal Issues COTETS Articles: The Siemens Corruption Outburst and the CEOs Who Combat It: A Corporate Governance 4 Case Study Wojciech Rogowski Capital Market Supervision in Poland 57 Andrzej Michór Cybercrime Challenges in the Framework of Information-Oriented Society 81 Kseniya Yurtayeva Judicially Legal Forms Of Copyrights Property Protection (Exceptional) According To The 97 Legislation Of Ukraine And EU Burlakov Sergіy Yurievych Report on insurance frauds in Poland (2009) 119 Tomasz Gulla Student notes: Institution of The Crown Witness In Poland On The Basis Of The Crown Witness Act of June 142 25 1997 Marta Flis Poland as a part of the Eurozone. Current Problems and Discussions 153 Agata Kochman Page 3 Volume 1, April 2009 EMERGING MARKETS: A Review of Business and Legal Issues Wojciech Rogowski “The Siemens Corruption Outburst and CEOs Combat It: A Corporate Governance Case Study” Author: Wojciech Rogowski (PhD) is Assistant Professor at the Warsaw School of Economics and expert at the Economic Institute, National Bank of Poland. Dr Rogowski works in the areas of law & economics. His research activity focus on regulation and corporate governance (whistleblowing), industry restructuring, market structures and financial system issues. Educated at University of Warsaw, National School of Civil Services, London School of Economics and PhD graduated from Warsaw School of Economics. He gains experience working with Ministry of Finance, National Investment Fund and Bank PKO BP. He is a member of Centrum C-law.org and European Network for Better Regulation. Author of a several articles in a academic and policy journals, coauthor and coeditor of the book Ocena Skutków Regulacji – Poradnik, Doświadczenia, Perspektywy (Regulatory Impact Assessment – Guidebook, Experience and Prospects) published CH Beck Warszawa 2007. Page 4 Volume 1, April 2009 EMERGING MARKETS: A Review of Business and Legal Issues Article Contents: Prologue 8 An anatomy of corruption 9 Crisis management 17 Trial and punishment 24 Corporate governance at SIEMENS AG 27 The business strategy 34 Conclusions 42 References 53 Page 5 Volume 1, April 2009 EMERGING MARKETS: A Review of Business and Legal Issues The Siemens Corruption Outburst and CEOs Combat It: A Corporate Governance Case Study 1 Wojciech Rogowski 2 ABSTRACT This article presents a case study of a corruption scandal in a transnational corporation (a global corporation). It attempts to expose facts and analyse the causes and mechanisms of wrongdoing by sales and of financial embezzlements which took place in Siemens AG, Germany, and were revealed in autumn 2006. The article also attempts to answer why such a good company as Siemens, which employs the best staff and is famous for its innovative products, has used corruption. Why has the company been involved in corruption? What are the reasons for this? When does corruption become a crime and when is it only an operational technique? Will the means employed to fight it prove effective? The analysis included the information policy of the company as well as the response of markets, investors, and other stakeholders. Furthermore, the analysis covered the company's response to serious crisis and the influence it has had on the company, on its bodies and individuals in management circles. How were corporate governance and enterprise value affected by the suspected corruption? What was the response of the capital market to the revealed corruption and to measures taken to fight it? How did the company communicate with the market, public opinion or with its own 500,000 employees scattered all over the world? The case study of Siemens AG also helps to update the picture of German corporate governance, as well as to get acquainted with the relation between the corporation and the state. 1 The author has never meant to evaluate behaviour of private persons mentioned in the case study; he only wanted to present facts related their occupational activity. It aimed at providing teaching materials for jail- house seminars for MBA, Management and Economics studies. I would like to thank InfoCredit-online.pl and Siemens AG for some data and documents. 2 Ph.D., Warsaw School of Economics (SGH); Economic Institute of the National Bank of Poland (NBP), ul.Swietokrzyska 11/21; 00-919 Warszawa, Poland; phone +48 22 653 23 07, e-mail: [email protected] . The article illustrates the author’s personal opinions and not a position of the institution working with. Page 6 Volume 1, April 2009 EMERGING MARKETS: A Review of Business and Legal Issues Furthermore, the case study can be used to know the company’s achievements related to management, especially the management extensive global structures, knowledge management and risk management. It should be noted that “scandals” and crisises caused by them are often the only opportunity to learn in detail how these complex structures function, as well as what their malfunctions stem from. The case study of Siemens AG forms part of a wider trend to present case studies of international corporations (Mallin 2006; Ruigrok 2004; Probst 2002, etc). These case studies introduce an empirical hint/data to the discussion on the current problems and condition of corporate governance in the biggest and/or most dynamically developing companies of the world’s major economic systems. The structure of the article has been affected by case study methodology. The first part describes the mechanisms and effects of corruption, revealed as a result of an investigation carried out by the Bavarian prosecutor’s office and reported in the press and the company’s publications. In the second part the adopted crisis management method and its effects are analysed. Corporate governance and the strategy of a corrupted organisation are described in the third part. Finally, the summary discusses the determinants of corruption and its relations with corporate governance and enterprise value. Key words : transnational corporation, corruption, corporate governance, reputation,