Daimler bribes: a blown chance to clean up its act

Business Law

At a 1999 meeting in Germany, board members at Daimler, one of the world's largest vehicle manufacturers, took a step that could have saved the company the trouble it will face in a U.S. courtroom on Thursday.

Before a federal judge, Justice Department prosecutors will lay out the dirty laundry of the company best known for its elegant Mercedes-Benz autos: a pattern of bribery that for many decades has helped fuel the company's sales and illicitly added millions of dollars to its profits. As a result, the company has agreed to pay $185 million in fines.

According to court papers filed March 24, the company's board 11 years ago adopted an integrity code with anti-bribery provisions. The problem is, Daimler failed to enforce it; many Daimler executives actively resisted it, and improper payments continued until 2008.

The court papers provide a case study of how executives at one of the world's blue chip companies responded when governments said "no" to bribery.

Of course, Daimler, through its subsidiaries, is hardly the first corporate giant to be caught paying off foreign officials to get contracts.

In December 2008, for example, engineering company Siemens AG agreed to pay more than $1 billion in fines in Germany and the U.S. after being accused of bribing officials with suitcases stuffed with money.

Ten years earlier, Germany ratified an international anti-bribery agreement; an implementing law took effect in early 1999.

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