Jump to content
Sign in to follow this  

Daimler slush fund probe unearths number of deals

Recommended Posts

Daimler slush fund probe unearths 'number' of deals

Reuters / March 6, 2006 - 11:00 am

FRANKFURT -- A DaimlerChrysler investigation of a whistleblower's allegations that it used slush funds to bribe foreign officials has unearthed dubious deals on three continents, the carmaker said on Monday.

U.S. financial regulators and criminal investigators are also looking into potential violations of anti-corruption laws via payments that the world's fifth-biggest automaker said deal 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.

It said it had taken charges related to these issues that reduced 2005 operating profit by $19.3 million (16 million euros) and cut 2005 net income by $76.9 million (64 million euros).

It also marked down stockholders' equity by $266.6 million (222 million euros) as of the start of 2003 "to correct accumulated misstatements in the periods 1994 through 2002..."

Daimler had taken a $150.2 million (125 million euro) charge for these tax liabilities in the third quarter of 2005, but has since reversed this by $120.1 million (100 million euros), which is included in the equity markdown.

The carmaker also said compensation it paid to expatriate staff was not properly reported for years, which prompted it to take charges that cut 2005 operating profit by $40.8 million (34 million euros) and net profit last year by $30 million (25 million euros).

It also marked down shareholder equity as of early 2003 by another $100.9 million (84 million euros) as a result, and informed tax authorities in several places about the measures.

A company spokesman declined to give any more details about the incidents other than to say that its auditors, accountants and lawyers had reviewed them and concluded the steps it now revealed were the best action to take.

Bribing foreign officials and even deducting such payments from taxes was legal in Germany until 1999. Bribing foreign companies was banned from 2002.

Anti-corruption group Transparency International says German state prosecutors have launched several investigations of such corporate bribery but no one has yet been convicted.

The United States has outlawed foreign bribes since 1977, so the Securities and Exchange Commission could levy heavy fines or even bar trading of DaimlerChrysler stock on U.S. exchanges should the allegations be confirmed.

Under the U.S. Sarbanes-Oxley legislation, company executives can be held personally liable for illegal acts.

The case arose when a former employee, whom Daimler has said was sacked for falsifying financial information, alleged the company kept secret accounts to bribe foreign officials.

Link: http://www.autonews.com/apps/pbcs.dll/arti...G/60306010/1003

Share this post

Link to post
Share on other sites

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Who's Online   0 Members, 0 Anonymous, 88 Guests (See full list)

    There are no registered users currently online

About us

CheersandGears.com - Founded 2001

We ♥ Cars

Get in touch

Follow us

Recent tweets


  • Create New...