DaimlerChrysler Faces Bribery Probe

The Justice Department is investigating whether DaimlerChrysler 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 [Justice Department] and the SEC information from its own internal investigation of payments from certain accounts” and by complying with subpoenas from both federal agencies.

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

An internal company 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.

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 those decisions validated “our position that his claim was without merit.”

Justice Department spokesman Bryan Sierra declined to comment Friday.

DaimlerChrysler shares fell 31 cents to $49.20 in U.S. trading.