Daimler Probed By Russia After DOJ Shakedown

Have you ever done serious business in Russia? Nyet? If you want to keep your conscience pure, don’t. It’s a “gotta pay to play” country. If you don’t make regular payments, the best that can happen to you is that you are out of business. In more serious cases, you pay with your life – a common currency in that country.

Behind that backdrop, it’s humorous to read that “the Russian Prosecutor-General’s Office has asked the United States to provide information about corruption that reportedly accompanied the sale of Mercedes limousines by Russian law enforcement agencies, Prosecutor-General Yuri Chaika told the Federation Council.” That according to Russia’s news agency ITAR-TASS. (It’s “sale to law enforcement agencies.” Someone with lesser English may have made a payment. See video.)

“When the news was broken that the US Department of Justice exposed corruption that accompanied the sale of Mercedes cars to Russian law enforcement agencies, we called a special meeting at once,” Prosecutor-General Yuri Chaika said. The meeting was most likely about who got how much money, and were the proper amounts forwarded to the higher-ups. Chaika said he sent the letter to DC three weeks ago. No reply has been received in Moscow: “We are waiting for the results from the United States,” Chaika said.

On March 25, the Russian Kommersant newspaper reported that officials may have received more than $5 million between 2000 and 2005 as payoffs. ITAR-TASS’s competition at RIA Novosti says that was “7.8 percent of the total worth of the contracts signed during that period.” The meetings will most likely center on the fact that Daimler got a good deal. The “commission” payments should be higher. The New York Times reported that “ordinary Russians pay more than $3 billion in bribes annually and that businesses paid $316 billion.”

The Russian Defense Ministry already complained that they received no money. “Russia’s Defense Ministry rubbished on Saturday media reports of corruption linked to purchases of Daimler AG vehicles,” says RIA Novosti. (Re “rubbished,” refer to video.) Simple: “The Defense Ministry has never purchased and does not purchase Mercedes vehicles,” a Defense Ministry spokesman said. No sale, no kickback. Vy ponimayete meniya?

The SEC ordered Daimler’s Russian unit to pay $27.4 million in fines, as part of a $185m settlement between Daimler, the Department of Justice (DOJ,) and the Securities and Exchange Commission (SEC).

Is that a case of “Thank you, I already gave in Washington?” That won’t work, it will just make the Russians angrier. Given that the U.S. Treasury made $185m out of a measly $5m payment to the Russians over 5 years, one can have sympathy with the Russians: “Discrimination! Those bleeping Amerikanski got all the money and bought nothing!”

Daimler spokeswoman Ute von Vellberg said the company is willing to cooperate fully with the local authorities. And by now, we should have developed an idea how that works. The cost of doing business is spiraling out of control.