Iran General NewsDaimlerChrysler Iran Truck Sale Faces German Probe

DaimlerChrysler Iran Truck Sale Faces German Probe

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Bloomberg: DaimlerChrysler AG, the world’s largest truckmaker, is being investigated by German authorities after a Saudi affiliate delivered 270 Mercedes-Benz commercial vehicles worth $22 million to Iran without government approval. Bloomberg

DaimlerChrysler AG, the world’s largest truckmaker, is being investigated by German authorities after a Saudi affiliate delivered 270 Mercedes-Benz commercial vehicles worth $22 million to Iran without government approval.

Officials are trying to determine how much DaimlerChrysler knew about the 2003 sale to Iran by Jeddah, Saudi Arabia-based National Automobile Industry, said Tomke Beddies, a prosecutor in Stuttgart, Germany, involved in the investigation. The probe, following a Nov. 30 raid on DaimlerChrysler offices, may last another two to three months, she said in a phone interview today.

German regulations require the Federal Office of Economic and Export Control to approve sales to certain countries of products that may be used for both military and civilian purposes. DaimlerChrysler may be fined or executives may be imprisoned for as much as five years if the Stuttgart-based carmaker is found guilty of breaking German export laws, Beddies said.

Spokespeople at DaimlerChrysler and National Automobile, which assembles Mercedes-Benz trucks from kits provided by the carmaker, said the sale was arranged without the German company’s knowledge.

“We would never have made the delivery if we knew where they were going,” Ursula Mertzig-Stein, a DaimlerChrysler social and political affairs spokeswoman, in a phone interview Feb. 17. The German company notified regulators in February 2004 as soon as it was aware of the transaction, she said.

Cooperating

The company is cooperating with prosecutors, said Thomas Froehlich, DaimlerChrysler spokesman, who declined to provide information about what models were delivered.

DaimlerChrysler shares rose as much as 22 cents, or 0.6 percent, to 35.68 euros at 3:16 p.m. in Frankfurt, valuing the company at 36.1 billion euros ($47 billion). The stock is up 1.2 percent this year.

The sale was a “one-time deal” under a 2002 contract with an Iranian trader in Dubai, United Arab Emirates, said National Automobile Chief Financial Officer Haitham Shadi, who replaced the executive involved in the transaction and declined to identify him. The dismissed CFO, an Australian national, forged shipping documents giving the final destination of the vehicles as Saudi Arabia, Shadi said in a phone interview from Jeddah yesterday.

The four-wheel-drive trucks could be used for military purposes such as tank transport, Shadi said. Each vehicle cost at least $80,000, he said. That would value the contract at least $22 million.

Second Contract Dropped

It’s not illegal under Saudi law to trade in any type of vehicle with Iran, Shadi said. National Automobile, which is 26 percent owned by DaimlerChrysler, pulled out of a second contract with the trader after managers became aware of a possible dual use, he said.

The case has “strained” relations between DaimlerChrysler and National Automobile, he said.

“DaimlerChrysler had no idea where these vehicles were going and was an innocent victim in this,” Shadi said.

National Automobile has operated a Mercedes-Benz truck assembly plant in Jeddah, Saudi Arabia’s second-largest city, since 1977, and can produce as many as 8,000 vehicles, according to the Web site of E.A. Juffali & Brothers, which owns the company.

The Juffali family set up a joint venture with Mercedes-Benz in 1959, becoming their sole distributor in the kingdom, according to the Web site. Juffali also has joint ventures with Siemens AG, Ericsson AB and International Business Machines Corp., according to the Web site.

Export Restrictions

Iran is among five countries where exports of goods with potential military uses needs approval under Germany’s Foreign Trade and Payments Law, according to the Office of Economic and Export Control Web site. The country is also one of 10 requiring approval for nuclear-industry exports.

The DaimlerChrysler investigation “is not a unique case,” said Leonhard Bierl, a spokesman for the Cologne, Germany-based customs crime office, which is also working on the probe. “One doesn’t get licenses for exports of dual-use goods to sensitive countries such as Iran and North Korea.”

Fewer than a dozen preliminary proceedings are pending at the office, involving sales to nations such as Iran, North Korea and India, Bierl said.

Iran and North Korea are on both lists, while India is only on the nuclear-products list.

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