Daimler employees fired over bribery scandal

DaimlerChrysler has fired a number of employees after an internal inquiry into bribery claims discovered "improper payments" were made in emerging markets on three continents.

The US-German car maker admitted yesterday its employees had paid bribes in Africa, Asia and Eastern Europe.

The revelations came as German prosecutors opened an investigation into the issue, and the company launched a shake-up of its internal ethics controls to try to head off big fines.

It said it had fired or suspended a number of employees after its investigation into allegations of improper payments stretching back 12 years. The US financial regulator, the Securities and Exchange Commission, has been investigating the allegations since a former employee came forward in August 2004.

A criminal investigation was launched by the Department of Justice last year, shortly after the suicide of Rudi Kornmayer, the managing director of DaimlerChrysler's Mercedes division for Nigeria. The inquiry centres on allegations of multimillion-dollar slush funds for overseas bribes and on whether senior Mercedes executives knew of their existence.

DaimlerChrysler's annual report, released yesterday, restated last year's earnings by $77m (£44m) to reflect the discovery of illegal payments, and cut €222m from the its 2003 balance sheet. The company said the payments appeared to breach the Foreign Corrupt Practices Act (FCPA), introduced by the US in the 1970s to stamp out overseas bribery by American companies.

"We have determined that improper payments were made in a number of jurisdictions, primarily in Africa, Asia and Eastern Europe," the company said in its filing. "These payments raise concerns under the US FCPA, German law and the laws of other jurisdictions."

DaimlerChrysler did not reveal how many employees had been sacked, in which countries the bribes had been paid, or the total sums involved. It did say it was shaking up its internal controls to make sure the payments stopped. It is assisting all the regulatory and legal inquiries, it said, and had supplied documents to the Department of Justice.

DaimlerChrysler also admitted yesterday that it had improperly recorded the tax affairs of some overseas employees, taking another €25m charge.