Daimler admits to bribes

DAIMLERCHRYSLER admitted that it had paid bribes, as German prosecutors opened an investigation into the car maker alongside an existing US probe.

State prosecutors in Stuttgart, Daimler's base, started examining alleged bribery of public officials in Belgium and Ghana and a commercial buyer in Poland.

Daimler said "several" employees had been fired or suspended over bribes paid "primarily" in eastern Europe, Africa and Asia. It announced an overhaul of ethics controls and pledged to "foster a culture of openness and honesty".

The admission of "improper payments", after an 18-month internal investigation, could lead to fines and criminal action in the US and Germany.

The US Securities and Exchange Commission and Department of Justice are investigating allegations by a dismissed employee that the company maintained multi-million-dollar slush funds for bribery.

Daimler insiders said new chief executive Dieter Zetsche put his weight behind a campaign for ethical behaviour. "(Bodo) Uebber (chief financial officer) and Zetsche are really cleaning the house," one said. The bribes were paid over the past 12 years.

A person close to the German prosecutors called the bribes relatively small. "In one case, it is less than E100,000 ($162,000). In total, we are talking about far less than E10 million."

Daimler said it had cut E222 million from the published balance sheet for 2003 because of the bribes and underpaid taxes. It also took a charge against last year's net income of E64 million to cover the findings for 2003 and 2004.