TRAVERSE CITY, MI – The payola scandal in Europe that caused French automotive supplierSA Chairman Pierre Levi to resign Aug. 2 does not alarm attendees at this week’s Management Briefing Seminars here.
“I was not surprised,” says David Cole, chairman of the conference organizer Center for Automotive Research. “Different cultures have different traditions.”
He points toCorp., where employees are not allowed to accept as much as a pen.
“There is no tolerance here for any of that at all,” Cole says, referring to bribes in the U.S. “It’s a disadvantage for American companies when they go into certain emerging markets.”
salesmen in Germany, part of the former Sommer Allibert Group that Faurecia acquired several years ago, are under investigation for giving money and expensive gifts to purchasing agents at AG, Audi AG and AG in exchange for contracts.
Levi apparently resigned under pressure afterCEO Bernd Pischetsrieder called Peugeot Citroen CEO Jean-Martin Folz to complain about Faurecia, of which PSA owns 71%.
German prosecutors say millions of euros in bribes have changed hands at the company. The practice allegedly started at Sommer Allibert in 1998 and continued after Faurecia bought the company in 2001.
Levi, who joined the interior supplier in May 2000, reportedly admitted he had been aware of the payoffs in Germany since 2001 but denied direct involvement. The media last week quoted him as saying he resigned his post “to protect as best I can the interests of the company.”
A similar bribery scandal involvingMotor Group has been playing out in South Korea, where Chairman Chung Mong-koo recently was granted $1 million bail by the Seoul District Court on concerns his arrest would have a negative impact on the country’s economy. Hyundai is a major employer.
Chung was indicted May 16 for his role in creating a 96 billion won ($100 million) illegal slush fund by embezzling money from affiliates and for breach of trust. The money allegedly was used to bribe government officials for company favors.
Mark Fields,Motor Co. president-The Americas, says he is not aware of similar scandals in the U.S., and supplier executives at the conference say the same thing.
“I have no sense of this as a growing problem,” says Neil De Koker, managing director of the Original Equipment Suppliers Assn. that started eight years ago. “It only takes one person to do such a thing.”
However, he notes bribery schemes do take place in North America. In Mexico, he says, companies have to pay off government officials to get things done.
In China, payoffs and corruption are rampant, Jack Perkowski, CEO of Chinese supplier ASIMCO Technologies Ltd., says. “But I can look you in the eye and tell you that we have never bribed anyone.”
De Koker says his group currently is developing a code of conduct that U.S. suppliers can adopt to meet demand from auto makers for clean business conduct.
While the code covers such areas as forbidding child labor, it does not mention payola, he says, because U.S. companies already have strict rules against the practice.