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Honda Faces Kickback Suit

Autos: An Ohio dealer resurrects claims that bribes were sought for shipments of key models.

July 16, 2002|From Bloomberg News

Honda Motor Co. is facing a new lawsuit alleging that executives of Japan's second-largest auto maker demanded kickbacks from dealers in exchange for shipments of hot- selling Accords and Preludes.

Officials of Motorcars Inc., a Cleveland Honda dealership, sued last week in state court in Ohio, resurrecting bribery claims that are more than 20 years old. Those accusations led to mail fraud convictions of nearly a dozen executives at Honda's U.S. unit.

Honda already has paid more than $400 million to resolve dealers' suits claiming the company shipped them fewer cars after they refused to pay kickbacks starting in 1975. Officials of the Cleveland dealership opted not to join that settlement.

"The pattern of corrupt activity and the extent of illegal acts and conspiracy was widespread throughout the management of American Honda, Honda North America and Honda Japan," lawyers for the Cleveland dealership said in the suit.

Honda representatives declined to comment, saying they don't discuss pending litigation.

In 1998 a federal judge in Baltimore approved a $316-million settlement of dealers' suits over the kickbacks. It called for dealers to get cash, auto parts, signs and dealership improvements in exchange for dropping their claims about the kickback arrangement.

Honda agreed in 2000 to add $60 million to the class-action settlement after dealers unhappy with it uncovered a memo showing Honda's lawyers hid evidence of management's involvement.

A group of dealers objected, saying $60 million was insufficient to compensate them for Honda's wrongdoing. The firm agreed to provide an additional $21 million in January to win their approval of the deal.

The additional funds brought to more than $400 million the total Honda has paid to settle individual and class-action suits by dealers.

Federal indictments handed down in 1994 estimated that $15 million in bribes were paid to Honda executives for car shipments from 1975 to 1992.

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