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Greased wheels

March 24, 2010

German carmaker Daimler is paying a price for allegedly greasing the wheels. US prosecutors say they and their subsidies paid tens of millions in bribes to secure government contracts around the world.

Bundles of money are weighed on a scale
US prosecutors say Daimler paid bribes in 22 countriesImage: AP

German auto manufacturer Daimler will pay $185 million (137 million euros) in fines as part of a settlement for breaking US bribery laws, according to news agencies citing sources familiar with the case.

The company's German and Russian subsidiaries will plead guilty to criminal charges filed by the US Department of Justice and the Securities and Exchange Commission, the sources said. Daimler and its Chinese unit will enter into agreements to suspend prosecution for two years, providing they comply with certain conditions outlined by the authorities.

The sources said that Daimler will not plead guilty or admit wrongdoing as part of the settlement.

Armored cars and kickbacks

A gloved hand picks up a Mercedes hood ornament from a pile of others
Mercedes is one of the brands produced by DaimlerImage: dpa

According to US prosecutors, officials in 22 countries were showered with gifts and cash between 1998 and 2008. Tens of millions of dollars were spent to secure contracts worth hundreds of millions.

"In some cases Daimler wired these improper payments to US bank accounts or to the foreign bank accounts of US shell companies in order to transmit the bribe," court papers said.

Those transactions resulted in more than $50 million in pre-tax profits for the company.

One case outlined in the court documents describes how Daimler and its distributor gave an official in Turkmenistan a Mercedes armored car worth 300,000 euros for his birthday. A Liberian official was given an armored car worth 267,000 in exchange for giving Daimler a contract to provide trucks for a logging operation. In Iraq, Daimler paid 10 percent kickbacks to Iraqi officials so they could sell them vehicles - a violation of United Nations Oil for Food Program rules.

Prosecutors also uncovered corruption in China, Russia, Turkey, Hungary, Greece, Latvia, Serbia and Montenegro, Egypt, and Nigeria, among other places.

Editor: Nancy Isenson