Contact l Sitemap

home industries issues reasearch weblog press

Home  » Industries » Transportation

GERMANY: DaimlerChrysler Facing SEC Investigation

by David MchughNational Post (Canada)

Automaking giant DaimlerChrysler AG said Thursday that it was under investigation by the U.S. Securities and Exchange Commission after a fired employee told labour officials he was dismissed for complaining that the company was using secret bank accounts to bribe government officials.

The automaker made the disclosure in its third-quarter earnings statement, without naming the employee or putting a euro figure on the company's possible exposure. "The investigation follows the filing of a whistleblower complaint with the U.S. Department of Labour under the Sarbanes-Oxley Act by a former DaimlerChrysler employee whose employment was terminated earlier this year," the company said.

The automaker released the news in its third-quarter earnings statement. The company said Thursday it earned nearly $1.2 billion US in the third quarter on good performances from its financial services division and its U.S. Chrysler arm, rebounding from a big loss a year ago when it had a large one-time writeoff.

DaimlerChrysler reported it earned 951 million euros in the quarter, reversing a 1.7 billion euro loss last year.

At Chrysler, the company's operating profits, boosted by well-received new models such as the 300C car and Dodge Magnum wagon, rose to 217 million euros, $269 million US, from 147 million euros a year ago. That was another confirmation of the progress of a three-year turnaround at the once-troubled division.

Overall revenue at the German-American carmaker rose 2.3 per cent to 34.9 billion euros, or $43.3 billion.

DaimlerChrysler said in a statement released Thursday evening that the lawsuit and the employee's claims that he was improperly dismissed have no merit. The company said it is co-operating with the SEC's investigation.

David Bazzetta, a former employee in the automaker's corporate auditing department who lives in suburban Detroit, claimed in the lawsuit filed in U.S. District Court in Detroit that he was fired in January after he notified senior company officials about the use of secret bank accounts to bribe government officials.

Bazzetta claims that during a corporate audit executive meeting in Stuttgart, Germany, Hubertus Buderath, DaimlerChrysler's vice-president of corporate audit in Stuttgart, explained that bribery was a common practice dating to before Daimler-Benz's 1998 merger with Chrysler Corp.

Bazzetta claims in the suit that during the meeting he learned business units within DaimlerChrysler continued to maintain the secret bank accounts despite knowing the practice was illegal under U.S. law.

Bazzetta also claimed Buderath said he had told Jurgen Schrempp, then DaimlerChrysler chairman, that 40 secret bank accounts existed and that Manfred Gentz, DaimlerChrysler's chief financial officer, was aware of the practice.

Bazzetta says in the suit that on the day of the meeting, he protested the use of the bank accounts to Charles Struve, the company's American vice-president in charge of corporate audit and Bazzetta's immediate supervisor. Struve instructed him to "forget what was said" and added that "issues that arise in corporate audit must remain in corporate audit," according to the lawsuit.

The suit seeks Bazzetta's reinstatement, back pay with interest, costs and lawyer's fees.

Copyright © 2004 CanWest Interactive Inc. All rights reserved.








This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.