Alleged Corruption at Diamler-Chrysler
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08-07-2005, 01:02 AM
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Alleged Corruption at Diamler-Chrysler
Berlin drawn into DaimlerChrysler probe
By Sylvia Pfeifer
US regulators have broadened their investigations into alleged corruption at DaimlerChrysler, the German car giant, and asked the authorities in Germany for help.
The Securities and Exchange Commission, the US markets regulator, last week contacted the German Justice Department in Berlin to lodge a formal request for evidence in relation to its ongoing inquiry into alleged corruption.
The SEC's inquiry was triggered by a former accountant at Chrysler in Detroit who alleged in a lawsuit last year that the company kept dozens of secret bank accounts to bribe foreign officials. It also emerged last week that the US Justice Department is pursuing a criminal investigation into the allegations, which include claims that senior executives at the car company may have been aware of the bribery.
A spokeswoman for the German Justice Department confirmed it had received a request from the SEC and that it would respond in due course.
Both the SEC and the US Justice Department declined to comment.
However, a spokesman for DaimlerChrysler at its headquarters in Stuttgart, said the company was working with both regulators in connection with the bribery allegations.
"We are co-operating with the SEC and the Justice Department in the US. We have voluntarily been sharing any relevant information from our own internal investigation," he said.
The widening of the investigation comes at a difficult time for DaimlerChrysler. Last month, Jürgen Schrempp, the chief executive, shocked investors when he announced he would retire at the end of this year, more than two years before his contract was due to expire in April 2008.
Schrempp has been widely blamed for Daimler's ill-fated Smart venture and its disastrous merger with Chrysler in 1998. The news of Schrempp's plans to step down early on July 28 sent the company's share price surging by 9 per cent on the day.
BaFin, the Berlin stock regulator, has since launched an investigation into alleged insider-trading of DaimlerChrysler shares linked to the news of Schrempp's departure. The inquiry, which a spokeswoman described as "routine", is understood not to be directed against any individuals.
The investigations into DaimlerChrysler come amid probes at other high-profile German companies that have put the country's traditional corporate practices under the spotlight. Corruption has recently been uncovered at car manufacturers BMW and VW, chip-maker Infineon, and Commerzbank.
Many industry watchers say the current scandals are just the tip of the iceberg and some believe they are endemic in German corporate culture. Others argue that the scandals are now only coming to light because German companies have been forced to unwind cosy cross-shareholdings and have been made more accountable to shareholders.
Maxim Worcester, the managing director of the German office of Control Risks, the business risk consultancy, commented: "Deutschland AG is no longer owned by Deutschland AG. It's owned by the Fidelitys of this world and they don't stand for this stuff."
-Matt-
By Sylvia Pfeifer
US regulators have broadened their investigations into alleged corruption at DaimlerChrysler, the German car giant, and asked the authorities in Germany for help.
The Securities and Exchange Commission, the US markets regulator, last week contacted the German Justice Department in Berlin to lodge a formal request for evidence in relation to its ongoing inquiry into alleged corruption.
The SEC's inquiry was triggered by a former accountant at Chrysler in Detroit who alleged in a lawsuit last year that the company kept dozens of secret bank accounts to bribe foreign officials. It also emerged last week that the US Justice Department is pursuing a criminal investigation into the allegations, which include claims that senior executives at the car company may have been aware of the bribery.
A spokeswoman for the German Justice Department confirmed it had received a request from the SEC and that it would respond in due course.
Both the SEC and the US Justice Department declined to comment.
However, a spokesman for DaimlerChrysler at its headquarters in Stuttgart, said the company was working with both regulators in connection with the bribery allegations.
"We are co-operating with the SEC and the Justice Department in the US. We have voluntarily been sharing any relevant information from our own internal investigation," he said.
The widening of the investigation comes at a difficult time for DaimlerChrysler. Last month, Jürgen Schrempp, the chief executive, shocked investors when he announced he would retire at the end of this year, more than two years before his contract was due to expire in April 2008.
Schrempp has been widely blamed for Daimler's ill-fated Smart venture and its disastrous merger with Chrysler in 1998. The news of Schrempp's plans to step down early on July 28 sent the company's share price surging by 9 per cent on the day.
BaFin, the Berlin stock regulator, has since launched an investigation into alleged insider-trading of DaimlerChrysler shares linked to the news of Schrempp's departure. The inquiry, which a spokeswoman described as "routine", is understood not to be directed against any individuals.
The investigations into DaimlerChrysler come amid probes at other high-profile German companies that have put the country's traditional corporate practices under the spotlight. Corruption has recently been uncovered at car manufacturers BMW and VW, chip-maker Infineon, and Commerzbank.
Many industry watchers say the current scandals are just the tip of the iceberg and some believe they are endemic in German corporate culture. Others argue that the scandals are now only coming to light because German companies have been forced to unwind cosy cross-shareholdings and have been made more accountable to shareholders.
Maxim Worcester, the managing director of the German office of Control Risks, the business risk consultancy, commented: "Deutschland AG is no longer owned by Deutschland AG. It's owned by the Fidelitys of this world and they don't stand for this stuff."
-Matt-
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08-07-2005, 04:06 AM
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