Kerkorian Seeks Damages for Own Errors, Daimler Lawyers Say

Billionaire investor Kirk Kerkorian was not defrauded by Daimler-Benz in its 1998 combination with Chrysler Corp. and held company shares too long while their value dropped, lawyers for DaimlerChrysler told a judge Monday.

Kerkorian is trying to victimize DaimlerChrysler stockholders by making them pay for his investment error, Jonathan Lerner, an attorney for the world’s fifth-largest carmaker, told U.S. District Judge Joseph J. Farnan Jr. Farnan is presiding over a trial of a suit Kerkorian filed in 2000 alleging that the German automaker deceived him about the transaction’s true nature.

“This case is about DaimlerChrysler’s sagging share prices and an investor who held on to his shares too long,” Lerner told Farnan in opening arguments. The judge is hearing the case in federal court in Wilmington, Del., without a jury, a right Kerkorian waived in a shareholder agreement.

Kerkorian is seeking as much as $3 billion in damages over stock losses tied to the creation of DaimlerChrysler -- more than half the $5.6 billion in earnings the company reported in 2002.

The $36-billion combination hasn’t boosted share values as the company had predicted. DaimlerChrysler’s shares have fallen 55% since the transaction was completed in November 1998.

In their opening statements Monday, Kerkorian’s lawyers said DaimlerChrysler engaged in “plain, old-fashioned fraud” by painting the combination as a merger of equals rather than a takeover.

“Because of their lies, they were able to take control of Chrysler, drive out senior leadership and replace them with Daimler-Benz executives from Germany,” said Terry Christensen, who is representing Kerkorian. Kerkorian was once Chrysler’s largest shareholder, owning as much as 13.75% of what was the No. 3 U.S. carmaker.

DaimlerChrysler officials said Monday that they would be willing to negotiate with Kerkorian to settle the dispute if approached by the investor.

DaimlerChrysler officials counter that the carmaker kept all promises they made to Kerkorian about a merger of equals. The company, for example, established dual headquarters and an evenly divided supervisory board.

The company’s U.S. shares, which have risen 6.4% in the last year, rose 67 cents to $38.71 on the New York Stock Exchange.