• Germany's news in English
 
app_header_v3

Daimler to settle bribery claims with €134 million in fines

AFP · 24 Mar 2010, 08:09

Published: 24 Mar 2010 08:09 GMT+01:00

Daimler is accused of paying out millions in cash and gifts of golf clubs, vacations, and luxury Mercedes armoured cars to officials in 22 countries to win government contracts.

The deal would end investigations by both criminal prosecutors and securities regulators, said the source who spoke on condition of anonymity.

"There is no (official legal) settlement yet," the source said. "That's what the judge is going to decide on April 1" at a hearing.

Spokesmen for Daimler and the US Justice Department declined to comment on the case.

Daimler has previously acknowledged that "improper payments" were made in a number of countries and said it voluntarily shared information from internal investigations with US and German prosecutors.

"Daimler has taken various actions designed to address and resolve the issues identified in the course of its investigation and to safeguard against the recurrence of improper conduct," the automaker said in its 2009 annual report.

The charges filed in US court show there is "no margin for error" when it comes to complying with bribery rules, said high profile corporate lawyer Jacob Frenkel.

"US criminal prosecutors have been on an international rampage enforcing US bribery laws wherever and whenever possible," said Frenkel, a former US Securities and Exchange Commission enforcement lawyer and federal prosecutor.

"The message from US prosecutors is if there is a US connection, then they will seize on it to bring charges."

A criminal complaint filed in Washington accuses Daimler, maker of Mercedes-Benz cars and the world leader in heavy trucks, of engaging in a "longstanding practice of paying bribes" to foreign officials.

It alleges that Daimler made "hundreds of improper payments worth tens of millions of euros to foreign officials" in order to secure contracts with government customers.

The bribes allegedly included:

– More than €3 million in bribes to Russian government officials in order to secure €64.6 million in sales.

– €4.1 million in "commissions," "gifts" and lavish vacation to Chinese government officials.

– A "birthday gift" of a €220,000 armored Mercedes Benz S-class car to an official in Turkmenistan.

– Kickbacks to Iraqi officials and an agreement not to seek compensation for damages incurred during the first Gulf War in order to secure sales of trucks used for humanitarian purposes through the UN's Oil for Food program.

– Golf clubs, wedding gifts and other perks totaling about €30,000 to win contracts in Indonesia.

Story continues below…

Many of these payments were made through "third party accounts" which were supervised by the most senior management of Daimler's sales operations, the complaint alleges. It also allegedly maintained a "cash desk" at a factory in Stuttgart.

That cash desk and most of those accounts were eventually shut down after the German government imposed new rules to curtail foreign bribery in 1998.

But the complaint alleges that Daimler did not seriously crack down on foreign bribes until after the US Department of Justice and Securities and Exchange Commission launched investigations.

Some of those payments were made through US-based shell corporations and "corrupt transactions with a territorial connection to the United States resulted in over 50 million dollars in pre-tax profits," the complaint alleges.

The complaint alleges that the bribes went to officials in: China, Croatia, Egypt, Greece, Hungary, Indonesia, Iraq, Ivory Coast, Latvia, Nigeria, Russia, Serbia and Montenegro, Thailand, Turkey, Turkmenistan, Uzbekistan, Vietnam and other countries.

Your comments about this article

11:56 March 24, 2010 by trottercarriagehorse
I think this is great! Finally something America can be proud of ! This subject was been reported on in PBS's Frontline show 'Black Money' . . that was a few years back. . there was only talk of prosecutions then, but now it has come realy about.. its a fact that some governments act more like a 'mafia' than a nation state when it comes to securing big contracts.
16:53 March 24, 2010 by Prufrock2010
I'm surprised that peschvogel hasn't chimed in to argue that the U.S. has no jurisdiction over Daimler as it is a German corporation.
20:36 March 24, 2010 by peschvogel
German industrials have been bribing countries to buy their products for years. They are just recently getting caught.
01:01 March 25, 2010 by mrsams
don't try to single out this kind of case, bribery is everywhere.

"British directors arrested in bribery inquiry"

http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article7073658.ece
08:33 March 25, 2010 by mixxim
Finally America has something to be proud of? Will those captains of industry and politicians who accepted the bribes now be named and shamed. If the recipients were not so corrupt the company would not need to pay bribes. (Rather like the british laws on fencing, without receivers, thieves would not have an outlet)
14:08 March 26, 2010 by biker hotel harz
If you think you can do business in another country without bribing someone along the way you're very naive
14:15 March 26, 2010 by mixxim
Agreed, most countries politicians and dictators are easily corruptable, none more than the British MPs `and Lords, Why then do we see people punished for bribing? The greater offence is accepting the bribes.
18:39 March 26, 2010 by Asteroid
The article states that US criminal prosecutors have been on an international rampage enforcing US bribery laws wherever and whenever possible. This is probably because they weren't given a new Mercedes.

Bribery of officials is common practice by businesses in countries because the government wants to be bribed. Business tells governments what to do because the governments can get more money from businesses than they can from the individual working taxpayer. For example, can the average factory worker (earning an average of $33,000 in a Western Industrial nation) afford to pay the government $1.2 million to have special consideration to be allowed to have a contract to operate in a country? Daimler can, and so can BMW, and Opel, and GM, and Chrysler, and Toyota, etc.

Go to Greece, Turkey, China, Saudi Arabia, Latin American countries, and any European Banana Republic-type country and you will find that backsheesh and greasing the other's palm is how things get done. Even America is not immune to the corruption virus. Daimler understands this well and that is why they are more successful than other auto manufacturers - they pay up when required.

It is great to moralize in a corrupt system. This makes governments look good. It is good press. This is what people want to hear. Especially in America.

As the guy in Wall Street said, 'Greed is good!'

Asteroid
Today's headlines
Analysis
How Merkel reacts to crises better than other leaders
Photo: DPA

It is of critical importance for a country how a leader chooses to react to an act of terrorism. Chancellor Angela Merkel’s cool head sets an example for the rest of the country.

Turkey demands Germany extradite Gülen supporters
Fethullah Gülen. Photo: DPA

Ankara called on Germany on Thursday to extradite supporters of Islamic cleric Fethullah Gülen, whom the Turkish government accuses of plotting a failed coup earlier this month.

German police raid 'hotbed of radicalization'
Police entering one of the residences. Photo: DPA

A mosque and eight residences were searched.

Germany boasts Europe's best value beaches
This beach just got named Europe's cheapest. Do you know where it is? Photo: DPA

Forget Mallorca or the Costa del Sol - the best beach bargains can be found in Germany. But where?

After rampages, Merkel says again: Wir schaffen das
Photo: DPA

Speaking for the first time after a Syrian refugee blew himself up in southern Germany, Chancellor Angela Merkel reaffirmed her commitment to helping refugees on Thursday.

The Local List
Germany's five most mind-boggling conspiracy theories
What's the point of this mysterious tower at Tempelhof Airport? Photo: DPA.

Think that wacky paranoid types only exist in the USA? Here’s a few crazy German conspiracies to prove you wrong.

Munich shooting
Gunman's friend arrested for 'planning school attack'
File photo: DPA

Police found chemicals and instructions for making explosives, as well as evacuation plans of his school in the youth's possession.

Bremen mall evacuated due to escaped psychiatric patient
Police outside the mall. Photo: DPA

The man had reportedly made worrying statements relating to Isis and last week's shooting in Munich.

German ambassador to Turkey left out in cold
Recep Tayyip Erdogan. Photo: DPA

The Turkish government has been giving German ambassador Martin Erdmann the cold shoulder for weeks, after German parliamentarians passed a bill recognizing the Armenian genocide.

Ansbach suicide bomber was interviewed by Bulgarian TV
Photo: DPA

A Syrian who blew himself up outside a German music festival at the weekend was interviewed twice by Bulgarian television while living there in 2013, footage showed on Wednesday.

Sponsored Article
Why you should attend an international job fair
DPA
Gallery
IN PICTURES: How Munich responded to shooting spree
Sponsored Article
Avoid hidden fees when sending money overseas
Lifestyle
10 rookie errors all Brits make when they arrive in Germany
National
Bavaria train attack: Were police right to shoot to kill?
Sponsored Article
Why Swiss hospitality graduates are in demand
National
How to get German citizenship (or just stay forever)
Sponsored Article
Five things Americans should know about voting abroad
Technology
Brexit will turn Berlin into 'Europe’s startup capital'
Travel
Six soothing day trips to escape the bustle of Berlin
International
'Germany needs to make UK come to its senses'
Features
Six odd things Germans do in the summer
Sponsored Article
Why expats choose international health insurance
Travel
These 10 little-known German towns are a must see
Features
How two gay dads cut through German red tape to start a family
Sponsored Article
Health insurance for expats in Germany: a quick guide
National
Five things to know about guns in Germany
Sponsored Article
Avoid hidden fees when sending money overseas
Culture
10 things you need to know before attending a German wedding
National
Eight weird habits you'll pick up living in Germany
Lifestyle
Six reasons 'super-cool' Berlin isn't all it's cracked up to be
Sponsored Article
Why Swiss hospitality graduates are in demand
Society
Only one country likes getting naked on the beach more than Germany
Lifestyle
23 ridiculously fascinating things you never knew about Berlin
Sponsored Article
Why you should attend an international job fair
Culture
8 German words that perfectly sum up your 20s
Lifestyle
Can't make it past the door at Berlin's most famous club? Help is at hand
Business & Money
Why Frankfurt could steal London's crown as Europe's finance capital
Features
6 surprising things I learned about Germany while editing The Local
Culture
Five sure-fire ways to impress Germans with your manners
10,746
jobs available
Toytown Germany
Germany's English-speaking crowd