Justice, SEC Investigate DaimlerChrysler

Justice, SEC Investigate DaimlerChrysler

By KEN THOMAS, Associated Press Writer
Fri Aug 5, 5:00 PM ET

WASHINGTON - The Justice Department is investigating whether DaimlerChrysler AG paid bribes to foreign officials with the knowledge of its senior executives, the automaker disclosed in its latest financial filings.

The criminal investigation is tied to an inquiry opened last year by the Securities and Exchange Commission after an employee fired by the automaker said he was dismissed for complaining that the company was using secret bank accounts to bribe government officials.

DaimlerChrysler said it was cooperating with the investigations by "voluntarily sharing with the DOJ and the SEC information from its own internal investigation of payments from certain accounts" and complying with subpoenas from both federal agencies.

A DaimlerChrysler spokesman, Toni Melfi, confirmed that the investigation was linked to the SEC probe.

An internal investigation has identified accounts, transactions and payments that "are the subject of special scrutiny," but the company has not reached any definitive conclusions about whether they violate the law, DaimlerChrysler said in its interim report to the SEC on its financial performance in the second quarter of 2005.

The U.S. Foreign Corrupt Practices Act prohibits the payment of bribes to foreign officials.

The inquiries come amid a transitional period for the world's fifth-largest automaker. DaimlerChrysler CEO Juergan Schrempp announced last week that he would step down at the end of the year and be succeeded by Dieter Zetsche, who has led the U.S.-based Chrysler Group. Schrempp will leave two years before the end of his contract.

The disclosure in the SEC filing came about a week after 53-year-old Rudi Kornmayer, the managing director of a Mercedes plant in Nigeria, shot and killed himself in a park in Esslingen, Germany, on July 22. Prosecutors in Stuttgart, Germany, said he left a suicide note but that it provided no details about the bribery claims.

Justice Department spokesman Bryan Sierra declined to comment Friday. The Wall Street Journal first reported on the Justice Department investigation on Friday.

David Bazzetta, a former employee in the automaker's corporate auditing department, claimed in a lawsuit filed last year in U.S. District Court in Detroit that he learned during a corporate audit executive meeting in Stuttgart that payment of bribes was a common practice dating to before Daimler-Benz's 1998 merger with Chrysler Corp.

The suit was settled last month. Terms of the settlement have not been disclosed.

The company noted that Bazzetta's whistleblower allegations were dismissed by a federal judge and the Labor Department. The company said the decisions validated "our position that his claim was without merit."

Several nations have tried to crack down on bribery in recent years. Nearly three dozen countries have agreed to adopt tougher anti-corruption laws, which have imposed criminal penalties on companies found guilty of bribery.

The State Department estimated last year that between May 2003 and April 2004, 47 contracts worth $15 billion may have been affected by bribes paid to foreign officials by non-U.S. companies.

DaimlerChrysler U.S. shares fell 31 cents to close at $49.20 Friday on the New York Stock Exchange.

___

Associated Press writers Mark Sherman in Washington and Matt Moore in Frankfurt, Germany, contributed to this report.

___

On the Net:

DaimlerChrysler AG: http://www.daimlerchrysler.com