US regulators say Daimler paid at least $56m in improper payments over a period of more than 10 years
German carmaker Daimler AG agreed to pay fines totaling $185m to US authorities to settle allegations of repeatedly paying bribes to government officials in Asia, Africa, Eastern Europe and the Middle East to secure business.
In addition to a $91.4m payment to the Securities and Exchange Commission (SEC) for violations of the Foreign Corrupt Practices Act (FCPA), Daimler agreed to pay a further $93.6m to settle criminal charges with the US Department of Justice.
The regulators allege that Daimler paid at least $56m in improper payments over a period of more than 10 years. The payments involved more than 200 transactions in at least 22 countries. Daimler earned $1.9bn in revenue and at least $90m in illegal profits through these tainted sales transactions, which involved at least 6,300 commercial vehicles and 500 passenger cars, according to the SEC.
Daimler also paid kickbacks to Iraqi ministries in connection with direct and indirect sales of motor vehicles and spare parts under the United Nations Oil for Food Program.
"It is no exaggeration to describe corruption and bribe-paying at Daimler as a standard business practice," said Robert Khuzami, Director of the SEC's Division of Enforcement. "The financial and reputational costs incurred by Daimler as a result are a lesson that should be studied closely by all companies."
Cheryl Scarboro, Chief of the SEC's Foreign Corrupt Practices Act Unit, added, "The bribery was so pervasive in Daimler's decentralized corporate structure that it extended outside of the sales organization to internal audit, legal, and finance departments. These departments should have caught and stopped the illegal sales practices, but instead they permitted or were directly involved in the company's bribery practices."
The SEC's alleged that Daimler used bribes to further government sales in such countries as Russia, China, Vietnam, Nigeria, Hungary, Latvia, Croatia, and Bosnia.
The bribery permeated several major business units and subsidiaries, was sanctioned by members of Daimler's management, and continued during the course of the SEC's investigation, according to the regulator.
