A 76-page indictment accuses Daimler of a series of charges including the use of secret bank accounts used to bribe foreign officials, false invoices, and phony price surcharges and disbursements originating from a “cash desk” at a Stuttgart factory.
The settlement also includes a related civil investigation conducted by the Securities and Exchange Commision.
reports that the alleged bribes, claimed to have occurred over a ten year period between 1998 and 2008, allowed the securing of contracts in countries including China, Russia, North Korea, Vietnam, Indonesia, and Nigeria. DOJ allegations also include illegal payments through shell companies in the US that helped boost the company’s profits by at least $50m.
Also listed among the numerous allegations is that the company gave a new armoured S-class Mercedes to a “high level” Turkmenistan government official as a birthday present.
Daimler is scheduled to answer the charges at an April 1 hearing. Sources close to the situation have confirmed US reports that the company will agree to pay $91.4m to end an inquiry by the Securities and Exchange commission and an additional $93.6m to settle a criminal case.
Russian and Chinese officials are alleged to have been on the receiving end of deals for supplying four-wheel drive Unimog trucks and commercial vehicles often used for military operations.
Alleged bribes and kickbacks were attached to contracts for city buses supplied to Saigon, used as transport for the 1999 youth soccer world championship in Nigeria. Additional allegations include the shipment of fire engines to Croatia and a supply contract with the Iraqi government that breached the United Nations oil-for-food program.
According to a report in The Wall Street Journal
, the SEC investigation began in 2004, shortly after David Bazzetta was fired for questioning South American bank accounts controlled by Mercedes-Benz. Bazzetta, a former auditor with then-DaimlerChrysler filed a complaint, alleging he was fired for raising the questions.
Daimler’s internal accounting records show the company identifying the bribes as commissions, special discounts, and a German term called “nutzliche Aufwendungen” which translates as “necessary payments.” The DOJ report states that the term “was understood by certain employees to mean official bribe”.
Accusations by US government prosecutors against the German car maker include conducting hundreds of improper transactions worth tens of millions of dollars to secure the foreign contracts. The secret slush funds were supervised within the highest levels of the company, requiring at least one signature from top management for signing off on new secret bank accounts.
Court documents made public on Tuesday show the company was charged with violating the Foreign Corrupt Practices Act. The documents show that the DOJ has accused Daimler of conducting the decade-long scandal through an offshore network of more than 200 bank accounts.