Sat, Apr 03, 2010 - Page 10 News List

Daimler pleads guilty to charges of bribery in US

‘A VERY COMPLEX CASE’A US prosecutor said the German manufacturer ‘showed excellent cooperation’ in an investigation into the firm’s global sales practices

AFP , WASHINGTON

German automaker Daimler has pleaded guilty to US charges of bribery and agreed to pay US$185 million to settle the affair, the US government said on Thursday.

The Justice Department said Daimler and three of its subsidiaries had resolved charges related to a Foreign Corrupt Practices Act (FCPA) investigation into the company’s worldwide sales practices.

US District Court Judge Richard Leon approved the settlement at a hearing on Thursday in Washington.

“Daimler AG’s Russian subsidiary DaimlerChrysler Automotive Russia SAO [DCAR], now known as Mercedes-Benz Russia SAO, and its German subsidiary, Export and Trade Finance GmbH [ETF], each pleaded guilty to criminal informations charging the companies with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of violating those provisions,” the Justice Department said in a statement.

As part of the plea agreements, DCAR and ETF agreed to pay criminal fines of US$27.3 million and US$29.12 million, ­respectively, part of the US$93.6 million in criminal fines and penalties that Daimler and its subsidiaries paid in total, it said.

“These are significant and widespread violations,” said prosecutor John Darden, speaking in federal court on behalf of the US government.

Darden said the sentence was clearly below federal sentencing guidelines.

“Daimler showed excellent cooperation,” Darden said. “The company has undertaken an effort to clean its own house. That reflects a serious change of mind on part of Daimler. This deserves credit.”

Judge Leon acknowledged that it was “a very complex case” as he accepted the plea agreement.

IMPROPER PAYMENTS

In a separate, related civil case, Daimler agreed to pay US$91.4 million to settle a case filed by markets regulator the US Securities and Exchange Commission.

Daimler had earlier admitted to making hundreds of improper payments worth tens of millions of dollars to foreign government officials in at least 22 countries between 1998 and 2008, according to a deferred prosecution agreement filed in a Washington court.

The kickbacks of cash and gifts of luxury armored cars, golf clubs and vacations helped secure government contracts worth millions of US dollars in China, Russia, Thailand, Greece, Iraq and other countries.

MENDING ITS WAYS

Prosecutors recommended that the judge impose the US$93.6 million fine and accept the guilty plea of two Daimler subsidiaries. They said that Daimler had mended its ways and cooperated fully with the investigation.

Daimler regularly presented its findings to prosecutors, fired 45 employees implicated in the bribery and reformed its practices, prosecutors wrote.

The fines are significantly smaller than the US$800 million German industrial giant Siemens paid in 2008 to settle a US investigation into its bribery of officials to secure contracts in Argentina, Bangladesh, Iraq and Venezuela.

The bribery first came to light in 2004 when a former Daimler employee filed a whistleblower complaint saying he’d been fired for voicing concern about secret accounts maintained to pay the bribes.

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