Daimler Probe Finds Bribe Deals
A DaimlerChrysler investigation of a whistle-blower’s allegations that the company used slush funds to bribe foreign officials has unearthed dubious deals on three continents, the carmaker said Monday.
U.S. financial regulators and criminal investigators also are looking into potential violations of anti-corruption laws via payments that the world’s fifth-biggest automaker said dealt primarily with “transactions involving government entities.”
“DaimlerChrysler determined that improper payments were made in a number of jurisdictions, primarily in Africa, Asia and Eastern Europe,” it said without giving more details.
“These payments raise concerns under the U.S. [anti-corruption law], German law, and the laws of other jurisdictions,” it added in its 2005 annual report.
In addition, DaimlerChrysler has acknowledged possible tax liabilities for misclassifying or omitting commissions and other payments and expenses, it said.
“DaimlerChrysler is taking action to address and resolve the issues identified in the course of our investigation to safeguard against the recurrence of improper conduct. This includes evaluating and revising its governance policies and internal control procedures,” it said.
DaimlerChrysler said it had taken charges related to these issues that reduced 2005 operating profit by 16 million euros ($19.29 million) and cut 2005 net income by 64 million euros.
It also marked down stockholders’ equity by 222 million euros as of the start of 2003 to correct misstatements from 1994 through 2002.
Daimler had taken a 125-million-euro charge for these tax liabilities in the third quarter of 2005 but has since reversed this by 100 million, which is included in the equity markdown.
The carmaker also said compensation it paid to expatriate staff members was not properly reported for years, which prompted it to take charges that cut 2005 operating profit by 34 million euros and net profit by 25 million euros.
It also marked down shareholder equity as of early 2003 by 84 million euros as a result.
