Daimler Pays $185 Million in Fines for Bribary

Maker ignored its own anti-bribery provisions enacted in 1999.

by | Apr 1, 2010

Daimler AG has paid a $185 million fine to settle bribery charges in the U.S.

Daimler AG has agreed to a settlement with the U.S. Securities and Exchange Commission and the U.S. Department of Justice to close investigations of the company’s repeated violations of the Foreign Corrupt Practices Act, or FCPA – activities that involved the repeated use of bribes in countries around the world.

Under the terms of the settlements, Daimler will pay a fine of $93.6  million and civil disgorgement of profits of $91.4 million.

“These companies got the message and are taking the right steps to solve the problem,” U.S. District Judge Richard Leon said. “It is an appropriate and just resolution of this matter.”

Daimler officials said that the company has reviewed its business practices to prevent a repeat of what apparently involved at least $56 million in bribes used to secure business deals in 22 countries including Russia, Saudi Arabia and North Korea.  The illegal efforts eventually netted Daimler at least $90 million in profits.

But while the illegal activities continued through 2008, according to the U.S. government, Daimler AG actually had implemented policies designed to present just such actions in 1999.  But the provision enacted by what was then DaimlerChrysler AG went largely unenforced until it was too late, the government investigation revealed.
“Compliance has high priority at Daimler,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG. “We have learnt a lot from past experience. Today, we are a better and stronger company, and we will continue to do everything we can to maintain the highest compliance standards,” Zetsche said.

A statement from Daimler said personnel directly involved in the scandal have retired or otherwise been removed from positions of authority inside the company.   Such steps followed the launch of the bribery investigation, in the fall of 2004.

As part of overall settlement,  Daimler agreed to settle a civil action against it brought  by the SEC for violations of the FCPA.

The German automaker also entered into a deferred prosecution agreement to  resolve charges of violations of books and records provisions of  the FCPA.

Daimler North East Asia Ltd., formerly known as  DaimlerChrysler China Ltd., also entered into a deferred  prosecution agreement with the DOJ to resolve charges of  violations of anti-bribery provisions of the FCPA.

Mercedes-Benz Russia SAO, formerly known as DaimlerChrysler  Automotive Russia SAO, and Daimler Export und Trade Finance GmbH pleaded guilty to charges of violations of anti-bribery  provisions of the FCPA in U.S. District Court in Washington.

The deferred prosecution agreements of Daimler AG and Daimler North East Asia Ltd. are premised upon the requirement that no further FCPA violations occur during the tw- year term of the agreements and that a comprehensive compliance program is maintained.

In addition, Judge Louis Freeh, will serve as a corporate compliance monitor for three years. Judge Freeh will monitor the Company’s FCPA compliance program, among other things. Judge Freeh has served, since 2006, as Independent Compliance Advisor to Daimler concerning issues related to compliance, including organizational and policy changes.

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