Stung by a $185 million fine for violating U.S. anti-corruption laws as the result of a global bribery scandal, Daimler AG said its moving to create a new position on the company’s board of management to oversee “Integrity and Legal.”
The new position was created by the German automaker’s supervisory board, which said the role of Chief Integrity Officer will be filled by an executive-level employee hired from outside the company. The job duties will include managing Daimler’s global Legal and Compliance Organization and the related processes, as well as overseeing business ethics inside the company.
“As a matter of principal, Daimler aims to create a corporate culture that not only fulfills the requirements of applicable law, but also meets the highest ethical demands and is regarded as exemplary throughout the industry. To achieve this goal, Daimler will successively take further initiatives in addition to establishing this new Board of Management position,” the company said in a statement.
Earlier this year, the Stuttgart-based company, parent of Mercedes-Benz and Smart, acknowledged a series of ethical breaches occurred despite having put in place an ethical behavior policy back in 1999. Breaches – including the use of bribes to secure business in 22 countries — continued through 2008, according to the U.S. government, and eventually netted the company about $90 million.
In a settlement with the U.S. Department of Justice, last spring, Daimler agreed to pay $185 million, which included a $93.6 million fine and a $91.4 million disgorgement of illegally-generated profits. (Click Here for that story.)
At the time of the settlement, CEO Dieter Zetsche said that bringing the company into compliance with ethics laws “has a high priority.”
That was echoed this week by Manfred Bischoff, Chairman of Daimler’s Supervisory Board, who said, “Compliance and integrity are extremely important to the Daimler Group and we intend to set new standards in this respect. Another aspect is that the requirements placed on a globally active company by regulations and legislation are constantly becoming stricter and more complex. This is why we have decided to create a dedicated Board of Management position for Integrity and Legal.”
The U.S. government’s approach was twofold: to make sure that a company like Daimler wouldn’t profit from illegal activities but also to shame it into preventing a repeat of its actions. That apparently worked.
“No business in the world is worth violating applicable laws, regulations or ethical standards,” Zetsche added.
Zetsche said the management board also has decided to expand its compliance activities – with the inclusion of relations with business partners, the company said. The Daimler Group now operates in nearly 200 countries, either with its own companies or with partner companies.
Daimler, a company not exactly noted for transparency, also plans to devote more resources in order to meet those requirements.
As part of the effort, Daimler plans to establish a new global Compliance Organization, placing compliance managers in various subsidiaries and operating units around the world and to develop an international training program to explain the regulations and procedures employees are required to follow.
In addition, a Compliance Consultation Desk has been established offering Daimler employees individual advice on questions related to the area of compliance at Daimler. Furthermore, a whistleblower station has been established inside Daimler to offer each employee, as well as external personnel, a way to inform the company of any compliance or non-compliance issues.
Daimler, however, has discontinued it listing on the New York Stock Exchange so it no longer has to heed directives from the U.S. Federal Securities Exchange, which brought the original corruption suit, which ultimately proved highly embarrassing to the automaker.
Only the USA justice can touch Daimler.
The rest 21 countries (or “countries”?) will just let it go, as have done in the past.
The fair competition, in this highly competitive car-industry, is a matter of deginition.
There is only a slight fear that the individual-customer will take the violation of anti-corruption laws into consideration.
Manousos Pattakos