Money-wise, the United States is in a bit of a tough spot. Must create revenue wherever it can. From red light cameras to shaking down foreign companies. On Tuesday, Germany’s Daimler AG was charged with violating U.S. bribery laws “by showering foreign officials with millions of dollars and gifts of luxury cars to win business deals,” as Reuters has it. After asking “how much will it take for this to go away?” Daimler plans to pay $185m to settle charges by the U.S. Justice Department and Securities and Exchange Commission.
And since when does the U.S.A. have jurisdiction over a German company that engaged “in a long-standing practice of paying bribes” to secure deals in Russia, China, Turkey, Egypt, Nigeria, Iraq and at least 16 other countries between 1998 and early 2008, as court papers allege?
Got you right there: It’s fall-out from Daimler’s failed Chrysler marriage. Daimler owned Chrysler from 1998 to 2007. The SEC probe began in 2004 when an auditor complained he was fired for protesting secret bank accounts used to pay foreign officials.
The documents say that Daimler and its distributor gave an unnamed Turkmenistan government official an armored Mercedes S-Class car, valued at more than €300,000 as a birthday present in February 2000. The official didn’t even honor the deal: The final order for Mercedes vans and trucks was lower than promised.
Armored S-Class cars were popular presents at Daimler. A Liberian official received one in 1999.
Prosecutors even allege that Daimler – tsk, tsk – paid 10 percent kickbacks to Iraqi government officials to secure deals to sell vehicles, violating the United Nations’ Oil for Food Program.
Germany’s Autohaus (which has seen a lot) is especially impressed by this deal, recorded in the criminal complaint: Vietnam needed 78 Mercedes-Benz sedans for a conference. Government officials were shocked by the 100 percent tax THEIR Vietnamese government would have charged. Daimler accommodated them by “loaning” the cars, which reduced the tax to 25 percent. After the conference, the cars were sold with a profit of €1.65m. The government officials received $400,000 – which they charged for an “emission study.” Says Das Autohaus: “The charges read like a script for a C movie.”
According to Reuter’s sources, Daimler AG will not plead guilty or admit any wrongdoing in the Justice Department and SEC cases. The company will pay $93.6 million to resolve the Justice Department probe and $91.4 million for the SEC case.
This is not the first shake-down. Siemens agreed in December to pay $1.3 billion to end corruption probes in the United States and Germany.
The anti-bribery campaign is a new field for European companies. Other than the US, which accepts lavish campaign contributions, but hampers the export promotion activities of U.S. companies with severe anti-corruption laws aimed at preventing the lining of the pockets of foreign officials, Europe had a more realpolitikal view of the matter.
Until a few years ago, expenses to grease a deal in a foreign country, where such lubrication is common and essential, were tax deductible. Since 1999, the law in Germany has changed. However, you may not shower someone with lavish gifts to get a future deal. Once the deal is closed, birthday presents of armored vehicles to Turkmenistan etc. are perfectly legal. It’s very hard to prove what came when, and enforcement is lax. Three years ago, Die Welt wrote: “Bribery is a common part in the international business of German companies. Many managers view bribery as an inevitable business practice.”
The U.S.A. obviously wants in on that deal. After greasing the palms of foreign officials, Daimler has to enrich the U.S. treasury and can walk away.