Mercedes faces US investigation over corruption claims

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The Independent Online

Until the practice was banned by legislation in 1999, many German corporations kept a slush fund to bribe foreign officials to secure export orders.

Now US prosecutors have opened a criminal investigation into Mercedes following the suicide in late July of Rudi Kornmayer, Mercedes's managing director in Nigeria. Mr Kornmayer, 53, shot himself in a park near Mercedes' Stuttgart headquarters.

Corporate bribes have been banned by the US for decades and officials are now investigating claims that Mercedes - a subsidiary of the US based DaimlerChrysler - paid bribes to foreign officials across at least two continents.

The Wall Street Journal reported yesterday that the bribes may have gone to at least a dozen countries and that senior Mercedes executives may have been aware of the practice.

It is the third corruption scandal in four weeks to hit Germany. On 9 July Peter Hartz, personnel chief at Volkswagen and the architect of Germany's recent labour market reform, resigned over a scandal at Volkswagen, which involved bribery and prostitutes. Mr Hartz was an adviser to Germany's Chancellor Gerhard Schröder, and his resignation also caused a sharp drop in popularity for the ruling Social Democrats, who are struggling in the polls ahead of September's general elections.

Only days later, Andreas von Zitzewitz, member of the board of the German chip firm Infineon, resigned over corruption allegations. The firm is Europe's second-biggest chip maker.

A spokesman at DaimlerChrysler's headquarters did not want to comment on the allegations that the former DaimlerChrysler CEO Jürgen Schremp, among other executives, was aware of the existence of about 40 secret accounts. "We have been co-operating with the US Justice Department as well as the Securities and Exchange Commission,' he told The Independent yesterday.

The US investigation follows a lawsuit by the Securities and Exchange Commission, which was disclosed in August last year. A former Chrysler accountant in Detroit, David Bazetta, "alleged the company kept dozens of secret accounts to bribe foreign officials", The Wall Street Journal said. Mr Bazetta and DaimlerChrysler recently achieved an amicable private arrangement.

Mr Bazetta asserted "the chief executives of the business unit not only favoured this practice but believed it was a necessary cost of doing business", the newspaper said.

If the Justice Department or the SEC determine that violations of the US Foreign Corrupt Practices Act have occurred, DaimlerChrysler could face criminal or civil sanctions.