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SEC v. Daimler AG

 
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Daimler - Daimler AG
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SEC Civil
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April 1, 2010
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SEC v. Daimler AG
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SEC. v. Daimler AG, No. (D.D.C. 2010)
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With a combined fine of $185 million, the Daimler case is one of the largest FCPA dispositions ever. Daimler's alleged conduct is particularly notable for the wide range of countries involved as well as the numerous different means and methods for making corrupt payments.
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China, Cote d'Ivoire, Croatia, Egypt, Greece, Hungary, Indonesia, Iraq, Latvia, Nigeria, Russia, Serbia, Thailand, Turkey, Turkmenistan, Uzbekistan, Viet Nam
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1998; 1999; 2000; 2001; 2002; 2003; 2004; 2005; 2006; 2007; 2008
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Government officials responsible for the purchase of vehicles in more than 22 countries.
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The SEC alleged that between 1998 and 2008, Daimler AG (“Daimler”) and its subsidiaries made improper payments worth tens of millions of dollars to foreign officials to obtain vehicle contracts in at least 22 countries.  Daimler allegedly made the improper payments by various means, including certain ledger accounts, corporate “cash desks”, deceptive pricing and commission arrangements, offshore bank accounts, inflated fees, and other methods.  The SEC complaint included the following allegations: 

• Daimler used “third-party accounts,” maintained as ledger accounts on Daimler’s books but controlled by third parties outside the company or by Daimler subsidiaries.  Daimler employees misused these accounts to provide improper payments to foreign officials in Africa, Eastern Europe, and the Middle East.  For example, Daimler paid bribes through the accounts to officials in Nigeria and elsewhere.

• Daimler paid illegal kickbacks to the former Iraqi government to obtain contracts for the sale of vehicles to the government of Iraq under the oil-for-food program.  Like other companies that have been prosecuted in oil-for-food cases, Daimler agreed to pay a 10% commission to the Iraqi government by inflating contract prices by 10%.  The payments were characterized as “after sales services fees,” but no services were performed.  Most of Daimler’s oil-for-food contracts involved third-party intermediaries, but Daimler understood its partners would pay the illegal kickbacks to Iraqi ministries.

• Daimler used sham intermediaries and consultants to funnel payments to government officials and Daimler paid bribes through its dealers and distributors.• Daimler provided government officials with lavish travel.The SEC complaint alleged that Daimler violated the anti-bribery, books and records, and internal controls provisions of the FCPA.

Without admitting or denying the SEC’s allegations, Daimler consented to the entry of a court order permanently enjoining it from future.  Daimler agreed to pay $91.4 million in disgorgement to settle the SEC’s charges and to pay $93.6 million in fines to settle charges in separate criminal proceedings with the DOJ.  The court order also required Daimler to comply with certain undertakings regarding its FCPA compliance program, including a provision that requires the company to retain an independent compliance monitor for three years.  The SEC noted that Daimler cooperated with the ongoing investigation, conducted its own substantial internal investigation, and remediated problems as they were identified. 
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Disgorgement
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Disgorgement of $91,432,867.
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91,432,867
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0
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Issuer
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Foreign
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Contract Procurement/Retention
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1,900,000,000
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Cash, Gifts, Travel, Wire/check
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Direct, Sales Agent/Consultant, Subsidiary Company
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56,000,000
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United States
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No