DaimlerChrysler suspends managers in probe

By Richard Milne and Mark Turner 
January 16, 2006
The Financial Times
Original Source: http://news.ft.com/cms/s/7a30e186-86c1-11da-8521-0000779e2340.html

DaimlerChrysler, the German-US carmaker, has suspended at least six of its high-ranking managers following an internal investigation into allegations the company paid kickbacks for contracts under the United Nations’ oil-for-food programme in Iraq.
People close to the carmaker said up to 10 managers had been put on leave. Most of them work in the company’s overseas division.
The suspensions mark one of the first public steps undertaken by one of the several thousand companies accused of taking part in the scandal.
A report by Paul Volcker, the former US Federal Reserve chairman, alleged that companies including Daimler, Siemens, Volvo and the UK’s Weir Group had made illicit payments to Saddam Hussein’s regime. It also criticised French BNP and several politicians and businessmen in countries from France and the UK to India and Russia.
Daimler itself refused to comment about whether any managers had been suspended but said its investigations were under way. It added it had passed information from what it had uncovered to the Securities and Exchange Commission and the Department of Justice in the US, both of whom are investigating the scandal.
The allegations over Daimler stem from the sale of Mercedes trucks and spare parts to the Iraqi government under the auspices of the oil-for-food programme under which Iraq was allowed to use the money to purchase certain goods as well as food. The Volcker report claimed Wolfgang Denk, an area manager at Daimler, agreed in 2001 to pay a DM13,000 kickback on a contract to sell an armoured van to Iraq and submitted an inflated contract price to the UN.
Like Mr Denk, Daimler told the Volcker committee it did not knowingly pay a kickback.
The Volcker report shone an embarrassing spotlight into how complicit businesses were in propping up the Iraqi regime, which allegedly garnered $1.8bn in illicit revenues from more than 2,000 companies.
The suspensions by Daimler will please anti-corruption campaigners who are concerned that the findings of the Volcker committee could be swept under the carpet to avoid embarrassment both to companies and countries.
The carmaker is also under investigation in the US by the SEC and the Department of Justice over allegations it ran slush funds for bribing Latin American officials. This led the company to take a $125m charge in the third-quarter after finding wrongly classified rebates, commissions, warranty costs and salaries.
Top executives for AWB, the Australian wheat exporter, were on Thursday accused of paying bribes to the former Iraqi regime. The accusation concerning haulage fees was made in an opening statement to a commission of inquiry into AWB’s involvement in the Iraq oil-for-food scandal by senior counsel John Agius. AWB has denied any wrongdoing.