DaimlerChrysler Probed in Oil-For-Food Scandal
August 9, 2005
The growing list of German corporations involved in scandals -- BMW, Infineon, Volkswagen, Commerzbank -- got a little longer after reports surfaced that the United States Security and Exchange Commission (SEC) is investigating whether German carmaker DaimlerChrysler was involved in corrupt deals in the UN oil-for-food program. The company confirmed the SEC probe on German public radio.
"We are working on this matter together with the SEC and will send them the results of our investigations," a company spokesperson said.
Under investigation is whether DaimlerChrysler deliveries to Iraq under then-dictator Saddam Hussein violated US anti-corruption laws. The SEC has demanded files and bank documents from the carmaker.
Vehicles shipped to Iraq via Russia
The UN's oil-for-food program, designed to allow the Iraqi population access to food despite strict UN sanctions, was in operation from 1996 to 2003. It has since come under heavy fire for widespread corruption in its ranks. The accusations range from money laundering to kickbacks and conspiracy.
On Tuesday, a leading figure in the program, Alexander Yakovlev, admitted to money laundering and other charges. An independent panel led by Paul Volcker, former US Federal Reserve Bank chair, has also accused the former head of the program, Benon Sevan, of receiving kickbacks.
The German newsmagazine stern is planning to report in its next issue that the SEC is looking into the sale of DaimlerChrysler Actros trucks (photo). In 2002, Iraq had ordered 150 of the vehicles, 50 of which were delivered via Moscow. The Daimler branch in Russia sold them to the "Russian Engineering Company" which in turn sold them to the Iraqi state-controlled GAMCO.
All sales within the framework of the oil-for-food program were first approved by the UN. Then the Geneva-based company Cotecna arranged both shipment and payment.
A German businessman told stern that the Cotecna was a bottleneck in the transactions and that companies often had to stand in line waiting for execution of their contracts. Reportedly, companies could "buy" their way up to the front of the line.
The SEC wants to know if DaimlerChrysler might have also paid a bribe to move up to the head of the queue. Since DaimlerChrysler is listed on the New York Stock Exchange, the SEC can investigate the carmaker, although it is a German company.
More than one scandal
But the oil-for-food program is not the only worry on DaimlerChrysler's mind.
For over a year, the US Justice Department has been examining the allegations of a former Chrysler accountant that the company maintained secret bank accounts to bribe foreign officials.
German authorities have also joined the investigations into the Stuttgart automaker after the July 22 suicide of Rudi Kornmayer, a 53-year-old managing director of the company's plant in Nigeria who shot himself in Esslingen, Germany. Sources close to the case said that his suicide note made reference to the bribery investigation, which is scrutinizing DaimlerChrysler operations in Latin America and Africa.
Representatives on both sides of the Atlantic have refused to comment on the suicide.