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DaimlerChrysler hires ex-FBI head amid probe

The automaker turns to Louis Freeh to monitor an internal investigation of alleged bribery by company employees.

December 27, 2006|From Reuters

DETROIT — DaimlerChrysler has hired former FBI Director Louis Freeh to serve as an independent monitor as it concludes a two-year internal investigation into cases of suspected bribery by company representatives, the automaker said Tuesday.

The hiring of Freeh was first reported by the Detroit News, which said that by bringing on an independent watchdog in Freeh, DaimlerChrysler hoped to minimize any sanctions it might face from federal regulators.

DaimlerChrysler spokesman Han Tjan said Freeh's hiring as a consultant was one step in an effort to investigate the suspected bribery and to take steps to prevent such cases in the future.

"The internal investigation is still ongoing, and we are determined to act to address all of the issues we've identified," Tjan said. "We are taking these matters extremely seriously."

DaimlerChrysler first disclosed in March that it had found evidence that company representatives made improper payments to foreign officials in Africa, Asia and Eastern Europe, but it provided no further details at the time.

The Detroit News quoted unnamed people familiar with the investigation as saying that the probe had uncovered "multiple instances" of bribery by company executives.

The newspaper reported that the findings and related documents had been turned over to federal officials.

The bribery case is the target of a criminal probe by the Justice Department and a civil investigation by the Securities and Exchange Commission.

A spokesman for Freeh, who left the FBI in 2001 and who now works as an independent legal consultant, could not be reached.

The case stems from a lawsuit filed in federal court in Detroit in 2004 in which a former company accountant claimed that he was fired in part because he had complained to superiors about secret bank accounts kept by the company's Mercedes unit.

DaimlerChrysler, which owns Auburn Hills, Mich.-based Chrysler Group, could face charges under a 1977 U.S. law that bars companies from paying foreign bribes. In Germany, bribing foreign officials and even deducting such payments from taxes were legal until 1999.

The Detroit News said DaimlerChrysler's probe had found that the bribes were seen at Mercedes as "an accepted way of doing business in many countries."

In DaimlerChrysler's annual report, which was filed in March, the world's No. 5 automaker disclosed that U.S. financial regulators and criminal investigators were looking into potential violations of anti-corruption laws.

In addition, DaimlerChrysler said then that it faced possible tax liabilities for misclassifying or omitting commissions and other payments and expenses.

It said it had taken charges related to those issues and had reduced its 2005 operating profit by about $21 million.

Aside from the bribery probe, DaimlerChrysler has faced a number of difficulties this year, including weaker U.S. sales, a costly overhang of unsold vehicles and U.S. marketing campaigns that failed to connect with consumers.

Shares of DaimlerChrysler rose 15 cents to $60.95.

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