Bribery & International Operations Cases

Jail and a German Subcontractor (names are fictitious)

Harold Johns found himself in jail in Germany. He was a vice president of Baranca Industries Inc., a U.S. firm that constructs and installs factory equipment. Unfortunately, he was the highest-ranking Baranca official in Germany while he was in Germany overseeing the installation of some equipment. Much to his surprise, there was a problem with the way a subcontractor paid his workers. Apparently, the way the subcontractor calculated the pay was illegal. In Germany, when a subcontractor does something illegal, it is assumed that the company hiring the subcontractor had knowledge and was also guilty. In addition, the highest-ranking officials with the subcontractor and the firms who hired him are held legally responsible. Therefore, Harold and the head of the subcontractor were arrested—as was the head of the enterprise that owned the factory.

Questions

1. Is this a fair law?

2. If you were Harold Johns, how would you ensure that Baranca executives and Baranca itself would never be vulnerable to such problems again?