Barter agreement and corruption

On February 15, 2011 the German newspaper „Süddeutsche Zeitung“ (see also here) reported about a potential case of corruption between the two German industry giants Deutsche Telekom and Volkswagen.

In order to win a major contract with Volkswagen, several senior managers of Deutsche Telekom’s business customer segment (T-Systems) allegedly agreed to continue a multi-million Euro sponsoring contract (terminating in mid-2010) with the football club „VfL Wolfsburg“. The football club plays in Germany’s first league and is fully owned and controlled by Volkswagen. The continuation of the sponsoring was obviously perceived to help win a big (several hundreds of million Euro) contract with Volkswagen.

DeutscheTelekom seems to have discovered irregularities and obviously informed the prosecutors actively.

But why should this be considered to be wrong in the first place – as so far none of the involved managers is accused of having done the deal for a personal benefit?

Volkswagen holds 100% of the ownership of the club. So the deal could be considered as another example of a classical barter agreement: Instead of just offering a single product/service for money. You could reconstruct the deal as an agreement on multiple levels – the deal as a give-and-take.

The fundamental principle of reciprocity is deeply ingrained in the human mind and why shouldn’t it apply to business settings if both parties benefit and no individual benefits at the cost of the organization or shareholders?

The ethical dilemma again sits in the stakeholders around the situation.

What was the effect of this deal on other ICT companies bidding for the deal with Volkswagen? Were others in a disadvantaged position just because they could not offer the extension of a sponsoring of VfL Wolfsburg? (The sponsoring contract dated back to the times of gedas – the former IT subsidiary of Volkswagen which was later taken over by Deutsche Telekom.)

And the story also nicely illustrates the massive impact of the recent corruption scandals. Large companies have changed their attitudes with respect to „creative“ deal-making. What would have been perceived as a perfectly correct (or even as particularly positive and creative) deal, now is rather being investigated internally and even actively communicated to government agencies for further legal investigation. Big business seems to have learned its lesson.