In a rather interesting case, German car and truck maker Daimler AG (the owners of Mercedes-Benz) was last week charged with violating U.S. bribery laws. The charges allege the company showered foreign officials with millions of dollars as well as luxury cars to win business deals.
According to the court documents Daimler AG had engaged "in a long-standing practice of paying bribes" to win business deals in Russia, China, Turkey, Egypt, Nigeria, Iraq and a further 16 countries from 1998 through to as recently as 2008.
"In some cases, Daimler wired these improper payments to U.S. bank accounts or to the foreign bank accounts of U.S. shell companies in order to transmit the bribe," the court papers said.
Sources say the illegal payments were made through hundreds of internal "third-party accounts". Damiler, which also owned U.S. manufacturer Chrysler until 2007, apparently once gave an unnamed Turkmenistan government official a $450,000 armored Mercedes-Benz passenger car for his birthday in February 2000. The idea was that it would help secure a deal to sell vehicles to the Turkmenistan government.
A similar bribe took place in Liberia in 1999. The German company is also alleged to have broken United Nations' Oil for Food Program by paying 10 percent kickbacks to Iraqi government officials to sell its vehicles.
The whole scandal came to light in 2004 when an auditor was apparently fired for protesting secret bank accounts used to pay foreign officials. A complaint was filed against the company by auditor which shed light on the issue.
Nonetheless it appears as though Damiler wants a swift end to the matter, according to a criminal information filed in U.S. court., the company plans to pay $200 million to settle all charges by the U.S. Justice Department and Securities and Exchange Commission. Additionally Damiler's German and Russian units will plead guilty to the criminal charges.
The fine will be paid almost equally to the U.S. Justice Department and the Securities and Exchange Commission.