Transnational Public Corruption—DaimlerChrysler

German carmaker DaimlerChrysler, which owns the Mercedes and Chrysler brands, has admitted “it had paid bribes on three continents.”^[1] The manufacturer also said that it had fired “several” employees over bribes paid in eastern Europe, Africa, and Asia, and that German prosecutors had “begun investigations alongside an existing US probe.^[2]

The “improper payments” go back at least 12 years, and the admission of the payments comes after a year-long internal investigation; in the US, the SEC and the USDOJ “are both examining the bribes following allegations by a dismissed employee.”^[3]

The alleged bribes were hidden in a slush fund^[4] used to pay inflated commissions.^[5]

Transnational public corruption, as far as the US is concerned, is primarily covered by the Foreign Corrupt Practices Act [hereinafter FCPA]. Under this law, it is a crime for an issuer of stock—or a domestic concern—to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of giving anything of value to any foreign official for the purposes of

• influencing any act or decision of such foreign official in his official capacity; inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official; or securing any improper advantage;^[6] or
• inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality.^[7]

The punishment for a violation of the FCPA is a fine of up to US$5 million, imprisonment for up to 20 years, or both.^[8] If the violation is seen to attach to the corporation and not merely an individual, the punishment could be as much as US$25 million.^[9]

We have also discussed the FCPA in connection to Viktor Kozeny and his potential extradition from the Bahamas to the United States.

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[1] DaimlerChrysler Admits to Bribes, Fin. Times (via Yahoo!), Mar. 6, 2006.
[2] Id.
[3] Id.
[4] Daimler Slush Fund Probe Unearths ‘Number’ of Deals, Reuters, Mar. 6, 2006.
[5] FT, supra note 1.
[6] 15 U.S.C. § 78dd-1(a)(1)(A)
[7] Id. § 78dd-1(a)(1)(B)
[8] Id. § 78ff(a).
[9] Id.