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Daimler pays up

April 2, 2010

German car manufacturer Daimler, which makes Mercedes-Benz, has agreed to pay fines totalling around 136 million euros to settle corruption charges in the US. It admitted using cash and gifts to secure global contracts.

A model of a Mercedes-Benz and a dollar bill
Daimler has admitted to having violated US bribery lawsImage: picture alliance/dpa

Lawyers representing the giant German car manufacturer, Daimler, and three of its subsidiaries, appeared before a US judge in Washington DC Thursday and agreed to pay fines totalling some 136 million euros ($185 million) to settle bribery charges.

The US Justice Department and the Securities and Exchange Commission had accused the makers of the famous Mercedes-Benz car range of systematically using large cash payments and extravagent gifts to secure lucrative contracts around the globe.

Daimler's German and Russian units each agreed to plead guilty to two counts of violating US anti-bribery laws.

Charges relate to 22 different countries

The car giant and biggest manufacturer of trucks worldwide was accused of giving some 41 million euros in bribes related to more than 200 transactions in 22 countries between 1998 and 2008. The deals earned the company 1.4 billion euros in revenue and at least 69 billion euros in allegedly illegal profits.

The Mercedes "star" under storm clouds
The US case may damage the Mercedes imageImage: AP

The systematic kickbacks were made in spite of a 1999 decision by the company's board to adopt an integrity code and abide by an international anti-bribery agreement, which had been ratified by the German government.

The US court deal came after positive reports from prosecutors that Daimler and two of its Russian subsidiaries had fully cooperated with the investigation.

Prosecutors said that Daimler had regularly presented its findings to the court, fired 45 employees implicated in the bribery and reformed its practices.

Deal closes case

By paying the substantial fines, Daimler will avoid any further criminal prosecution, but the company will remain subject to a two-year deferred prosecution agreement and oversight by an independent monitor.

Although the fines are significant, the 136 million euro deal is far less that the 736 million euro ($1 billion) penalty inposed on another global Germany company, Siemens, by US courts in 2008.

Editor: Rob Turner