US bribe scandal rocks Honda: Former car company executives accused of dollars 10m fraud spanning 14 years

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The Independent Online
THE AMERICAN Honda Company, already smarting from the dramatically improved fortunes of Ford, General Motors and Chrysler, has become embroiled in an in- house scandal in which executives are accused of pocketing millions of dollars in bribes and kickbacks.

Federal prosecutors, who say they are unravelling a white-collar fraud that spans 14 years, have announced indictments against five former Honda executives, and say eight others have admitted a variety of charges. According to the authorities, officials received more than dollars 10m ( pounds 7m) worth of bribes and gifts from car dealers who, in return, were given permission to open lucrative dealerships and were allocated scarce but popular Honda models, which they were able to sell for a large profit.

Prosecutors claim that the man who enjoyed the most lavish rewards in return for preferential treatment was the company's top US sales executive, Stanley James Cardiges, who was a senior vice- president of the American Honda Motor Company until his retirement in 1992.

Mr Cardiges, 48, who was arrested at his home in the luxury Californian seaside resort of Laguna Hills on Friday, allegedly funnelled tens of thousands of dollars received from dealers into a furniture store. His predecessor has also been indicted.

Other rewards allegedly enjoyed by some of the executives included bribes of up to dollars 750,000, Rolex watches, luxury cars, property, and in one case college tuition.

The investigation, one of the most extensive ever held into white- collar fraud in the US, involved 30 to 40 of American Honda's estimated 550 dealers. American Honda said it intended to take legal action to recover millions of dollars.

Rumours of corruption among Honda officials have circulated in the US motor industry for years. Such practices appear to have been fuelled by the huge demand for Hondas throughout the 1980s, accentuated by a voluntary restraint agreement between Japan and the US, which limited imports.

Dealers kept long waiting lists of customers wanting Hondas, and were often able to sell models for thousands of dollars above the official price. No dealer has yet been charged with any offence but the Honda executives, who face charges including conspiracy, racketeering and mail fraud, face sentences ranging from five to 35 years.

The inquiry was sparked by a civil lawsuit filed by a disgruntled dealer who alleged bribery and complained that American Honda forced him out of business by failing to deliver all the cars he had been promised.