In the country of horse-trading …
After previously having written in my last two articles (1 and 2) about what generally happens, I will now continue this small series on corruption by relating to you two things that actually happened to me. Here is one example of what I experienced.
As most of you know, I founded an enterprise more than thirty years ago and was its managing director and board member.
Even as early as in the 1980ies, cars were highly subsidized in the FDR as business vehicles. Since in those days it was a matter of course that everybody went places by car, we offered our employees to get a so-called business car as part of their salary if that was what they wished. If you buy a “business car”, you save the entire added value tax, you can deduce all (!) costs, such as the purchase of the car, repair parts, tyres, additional gadgets, insurance, maintenance and repairs, service and the entire cost of gas as normal business expenses. This is how you can economize on the entire added value tax and more company taxes (income, trade).
Calculated over the entire life of a vehicle, you can save an enormous amount of money in taxes, even with a medium-size car. The sum is considerably higher than the money the employee has to pay in taxes for “money-worth advantages”. Especially if the employee has only a short way to go from his home to his work place. And “prudent” employees usually have a short way from their home to the work place, even if sometimes only on paper.
The subsidized profit (difference between the added value tax you saved and the tax the employee has to pay for “money-worth advantages”) can easily be divided between the employee and the enterprise, which means both sides will profit from the car-industry subsidy. And since in those days I was still rather naïve when it came to driving cars, I used the incentive “you will get a business car” frequently when looking for new employees.
Thus, the number of business cars grew as massively as the number of employees in our firm. After a short time, the term “small fleet” was actually adequate when we talked IF cars. And it kept growing in size (10, 20, 30 …). If you have a fleet, the car salesperson will come and talk you into a fleet contract, pointing out the many advantages of same. So I also signed said contract.
Well, now I believed that, since we had a fleet contract, we would get the cars cheaper than private buyers. But as it turned out, this was not the case. Again and again, I heard from friends who had “privately” bought a car, that they had been granted a higher individual discount – after long and intense negotiations, but still – than I got for the fleet. This annoyed me.
Additionally, the fleet contract salesperson made all kinds of promises, but the service was abominably poor. Consequently, I sometimes changed suppliers, once even the brand. The negotiations were always a disgrace, because the salespersons always used their entire sales repertory in an offensive way, which, to me, was very disagreeable.
And when I absolutely refused to continue, the super salesperson came to see me. He entreated me to remain with him as a supplier and with his brand. Everything was going to get better. And he also offered me a special extra treat, one he only offered to his very best customers:
He offered to pay 5% of the value of every car I would buy in the course of the fleet contract into an account of my personal choice!
I was shocked and replied that I had no account for this kind of purpose. His reply was that he could help me when it came to starting such an account – preferably abroad. Did he mean a letter-box company?
This was a time when InterFace had high growth rates. We always renewed our car fleet early and consequently ordered 10 cars for the year. I am sure that the total value was more than 250,000 DM. Consequently, the 5 % he had offered would have easily equalled 12,500 DM. Well, that was 12.5 times the bill you see on the picture – and in those days you actually got quite some material for this kind of money. And it was all tax free and would have had a tendency towards growing in the future. …
I declined, because for me such behaviour would not only have been bribery, but also fraud against my partners and employees. Today, I am very happy to have refused the then very seriously made offer. I will not tell you the brand and the supplier, because I assume that this was not usual business behaviour but the individual activity of one person. But then: who knows?
RMD
(Translated by EG)
P.S.
I took the picture from Wikipedia.
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