Daimler bribes lead to a US$185m settlement
Source: Agencies |
March 27, 2010, Saturday
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Print Edition
Print Edition
Car manufacturer Daimler AG will pay US$185 million to settle criminal and civil investigations in which the company is accused of paying tens of millions of dollars in bribes to officials of at least 22 foreign countries over the course of a decade.
Filings in US federal court in Washington said the German-based company and three of its subsidiaries engaged in the misconduct from 1998 to 2008 in countries that included China, Russia, Egypt and Greece.
The payments allegedly were aimed at helping secure contracts valued at hundreds of millions of dollars with government customers for the purchase of Daimler vehicles.
Daimler AG will avoid indictment when two of its subsidiaries enter guilty pleas in federal court on April 1, according to two people knowledgeable about the outcome of the five-year probe. They spoke on condition of anonymity because the deal still must go before a US federal judge.
The settlement includes paying US$93.6 million to the US Justice Department and US$91.4 million to the Securities and Exchange Commission, the two people said.
According to the court papers, Daimler provided a US$300,000 birthday gift to an official in Turkmenistan -- an armored Mercedes Benz S-class passenger car.
The company participated in the oil-for-food program in Iraq, allegedly paying kickbacks to officials of a government ministry in exchange for obtaining business.
Wedding gifts went to the children of a senior official in Indonesia from a local Daimler affiliate, the court papers added.
Among the other countries in which Daimler AG allegedly made improper payments were Hungary, Ivory Coast, Latvia, Nigeria, Serbia, Montenegro, Thailand, Turkey, Uzbekistan and Vietnam, according to the court papers.
Daimler AG and three of its subsidiaries were charged with conspiracy and violating the US Foreign Corrupt Practices Act, which prohibits improper payments to officials of other countries.
Under a previous name in the late 1990s, Daimler AG merged with US-based Chrysler Corp.
DaimlerChrysler several years ago sold Chrysler to private equity firm Cerberus Capital Management.
Daimler engaged in a long-standing practice of paying bribes through the use of offshore bank accounts, deceptive pricing arrangements and third-party intermediaries, according to the court filing.
The bribe payments often were described inside the company as commissions, special discounts or "necessary payments," the court filing said.
Daimler wired the improper payments to US bank accounts or to the foreign bank accounts of US shell companies in order to transmit the bribe, the Justice Department asserted in the court papers filed on Monday.
The papers said that in at least one instance, a US shell company was incorporated for the specific purpose of entering into a sham consulting agreement with Daimler in order to conceal improper payments routed through the shell company to foreign government officials.
The subsidiaries of Daimler AG that were charged are Daimler Export and Trade Finance GmbH, DaimlerChrysler China Ltd and DaimlerChrysler Automotive Russia SAO.
The Russian subsidiary and the German subsidiary will plead guilty to conspiracy.
Daimler and its Chinese subsidiary typically inflated the sales price of vehicles sold to Chinese government customers and then deposited the money in the "819" account -- for the last three digits of the account number -- to make improper payments to Chinese officials, the court papers said.
Filings in US federal court in Washington said the German-based company and three of its subsidiaries engaged in the misconduct from 1998 to 2008 in countries that included China, Russia, Egypt and Greece.
The payments allegedly were aimed at helping secure contracts valued at hundreds of millions of dollars with government customers for the purchase of Daimler vehicles.
Daimler AG will avoid indictment when two of its subsidiaries enter guilty pleas in federal court on April 1, according to two people knowledgeable about the outcome of the five-year probe. They spoke on condition of anonymity because the deal still must go before a US federal judge.
The settlement includes paying US$93.6 million to the US Justice Department and US$91.4 million to the Securities and Exchange Commission, the two people said.
According to the court papers, Daimler provided a US$300,000 birthday gift to an official in Turkmenistan -- an armored Mercedes Benz S-class passenger car.
The company participated in the oil-for-food program in Iraq, allegedly paying kickbacks to officials of a government ministry in exchange for obtaining business.
Wedding gifts went to the children of a senior official in Indonesia from a local Daimler affiliate, the court papers added.
Among the other countries in which Daimler AG allegedly made improper payments were Hungary, Ivory Coast, Latvia, Nigeria, Serbia, Montenegro, Thailand, Turkey, Uzbekistan and Vietnam, according to the court papers.
Daimler AG and three of its subsidiaries were charged with conspiracy and violating the US Foreign Corrupt Practices Act, which prohibits improper payments to officials of other countries.
Under a previous name in the late 1990s, Daimler AG merged with US-based Chrysler Corp.
DaimlerChrysler several years ago sold Chrysler to private equity firm Cerberus Capital Management.
Daimler engaged in a long-standing practice of paying bribes through the use of offshore bank accounts, deceptive pricing arrangements and third-party intermediaries, according to the court filing.
The bribe payments often were described inside the company as commissions, special discounts or "necessary payments," the court filing said.
Daimler wired the improper payments to US bank accounts or to the foreign bank accounts of US shell companies in order to transmit the bribe, the Justice Department asserted in the court papers filed on Monday.
The papers said that in at least one instance, a US shell company was incorporated for the specific purpose of entering into a sham consulting agreement with Daimler in order to conceal improper payments routed through the shell company to foreign government officials.
The subsidiaries of Daimler AG that were charged are Daimler Export and Trade Finance GmbH, DaimlerChrysler China Ltd and DaimlerChrysler Automotive Russia SAO.
The Russian subsidiary and the German subsidiary will plead guilty to conspiracy.
Daimler and its Chinese subsidiary typically inflated the sales price of vehicles sold to Chinese government customers and then deposited the money in the "819" account -- for the last three digits of the account number -- to make improper payments to Chinese officials, the court papers said.
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