U.S. v. DaimlerChrysler Russia - Information

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Criminal Information filed against DaimlerChrysler Russia on March 22, 2010.
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  UNTED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA, Criminal No. Plaintiff, Count One: 18 U.S.c. § 371 Count Two: 15 U.S.C. § 78dd-3 and 18U.S.C. § 2 v. DAIMLERCHRYSLER AUTOMOTIVE RUSSIA SAO, Defendant. INFORMTION i. The United States Departent of Justice, Criminal Division, Fraud Section, charges that, at all times material to this Information (unless specified otherwise): GENERAL ALLEGATIONS 2. The Foreign Corrpt Practices Act of i 977 (hereinafter, the FCP A ), as amended, 15 U.S.C. §§ 78dd-l, et seq., prohibited certain classes of persons and entities from making payments to foreign governent officials to obtain or retain business' or secure an improper advantage. Title 15, United States Code, Section 78dd-3, specifically prohibited any person other than an issuer or domestic concern, while in the territory of the United States, from corruptly making use of the mails or any means or instrumentality of interstate commerce in fuherance of an offer, promise, authorization, or payment of money or anything of value to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person or securing any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person. Case 1:10-cr-00064-RJL Document 1 Filed 03/22/10 Page 1 of 16  3. Daimler AG, formerly DaimlerChrsler AG and Daimler Benz AG (collectively Daimler ), was a German vehicle manufactuing company with business operations throughout the world. Among other things, Daimler sold all manner of cars, trucks, vans, and buses, includig Unimogs, heavy duty all terrain trcks primarily used for hauling, and Actros, large commercial tractor/trailer-style vehicles. Daimler was a major global producer of premium passenger cars, as well as the largest manufactuer of commercial vehicles in the world. As a result of its luxury car and commercial vehicles lines, Daimler had among its customers government and state-owned entities from many countries in which it does business. Daimler sold its products worldwide, had production facilities on five continents, did business in many foreign countries, and employed more than 270,000 people. 4. Defendant DAIMLERCHRYSLER AUTOMOTNE RUSSIA SAO, now known as Mercedes-Benz Russia SAO ( DCAR ), was aMoscow-based, wholly-owned subsidiary of Daimler. DCAR sold Daimler spare parts, assisted with the sale of vehicles from various Daimler divisions in Germany, including in partcular its overseas sales division ( DCOS ), to governent customers in the Russian Federation ( Russia ), and also imported Daimler passenger and commercial vehicles into Russia for sale to customers and distributors. DCAR, a foreign corporation, was a person, as that term is used in the Foreign Corrpt Practices Act, 15 U.S.c. § 78dd-3(f)(1). 5. The Russian Ministry of Internal Affairs, known by its initials in Russian as MVD, was a department and agency of the Russian governent pricipally responsible for police, militia, immigration, and other functions. The Russian traffic police fell under the supervsion of the MVD. 6. The Special Purose Garage ( SPG ) was an instrumentality of the Russian governent, and individuals employed by the SPG were foreign offcials, as those terms are used 2 Case 1:10-cr-00064-RJL Document 1 Filed 03/22/10 Page 2 of 16  in the FCPA, 15 U.S.C. § 78dd-3(f)(2)(A). 7. Machinoimport was a Russian government-owned and controlled purchasing agent for the city ofMoscow. Machinoimport was an instrentality of the Russian governent, and individuals employed by Machinoimport were foreign officials, as those terms are used in the FCPA, is U.S.C. § 78dd-3(f)(2)(A). 8. Dorinvest was a Russian government-owned and controlled purchasing agent for the city of Moscow. Dorinvest was an instrmentality of the Russian government, and individuals employed by Dorinvest were foreign officials, as those terms are used in the FCPA, 15 U.S.c. § 78dd-3(f)(2)(A). 9. Daimler sold passenger cars and commercial vehicles directly from its headquarters in Stuttgar, Germany, to its Russian govemment clients with the assistance of DeAR and Daimler's representative offce in Moscow. Daimler caried out such sales from DCOS with DCAR acting as an agent to assist with such diect sales. DCAR and Daimler sold passenger cars, commercial vehicles, and Unimogs in Russia. 10. Daimler's business in Russia was substantiaL. DCAR and Daimler's governent customers in Russia included the MVD, the SPG, the Russian military, the city of Moscow, the City ofUfa, and the City of Novi Urengoi, among others. BACKGROUND REGARDING DCAR'S BRIERY i L Daimler, through DCAR, made improper payments at the request of Russian governent officials or their designees in order to secure business from Russian governent customers. Payments of this nature were made with the knowledge and involvement of the former senior management ofDCAR and DCOS. 3 Case 1:10-cr-00064-RJL Document 1 Filed 03/22/10 Page 3 of 16  12. DCAR and Daimler sometimes made improper payments to governent officials in Russia to secure business by over-invoicing the customer and paying the excess amount back to the government offcials, or to other designated third parties that provided no legitimate services to Daimler or DCAR, with the understanding that such payments would be passed on, in whole or in part, to Russian governent officials. When payments were made to third parties, the payments were recorded on one of at least nine Daimler debtor accounts. 13. These overpayments were maintained as reserves on Daimler's books and records in certain internal debtor accounts, including debtor accounts that were identified by the name of the government customer with which Daimler and DCAR did business. When requested, Daimler employees wired and authorized the wiring of payments from Daimler's bank accounts in Germany to, among other destinations, U.S. and Latvian bank accounts beneficially owned by shell companies with the understanding that the money, in whole or in part, was for the benefit of Russian government officials. 14. A former senior member ofDCAR's Government Sales and Passenger Car Sales departments (the DCAR Government Sales Executive ) authorized these payments to Russian governent offcials and designated third parties via Daimler's debtor accounts, which payments were intended to induce passenger vehicle sales to Russian governent customers. Daimler and DCAR employees often directed the payments to Russian officials into these officials' Latvian bank accounts that were nominally held in the name of shell companies, some of which were U.S.- registered corporations. 15. Daimler and DCAR employees also made and authorized the making of cash payments to Russian government officials employed at Russian government customers, or their 4 Case 1:10-cr-00064-RJL Document 1 Filed 03/22/10 Page 4 of 16
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