German authorities and U.S. regulators are investigating allegations that representatives of the Ford Motor Co. participated in an illicit bribery scheme in Russia, according to the newspaper Süddeutsche Zeitung.
The U.S. Securities and Exchange Commission is helping German prosecutors to investigate the alleged payment of bribes by Ford to speed the passage of containers through Russian customs, a source at the U.S. carmaker told the newspaper. Bribes of foreign officials by U.S. companies are explicitly outlawed and can lead to severe penalties.
Ford and Schenker, the freight business of state-owned German rail company Deutsche Bahn, have been under investigation by German authorities since 2013 over suspected bribery and other offenses related to the busy Russian port of St. Petersburg.
The port is Russia’s European gateway with more than 2,000 companies using it for shipments, according to its website, but it is also known among customers for notoriously long delays.
The investigation is centered in Cologne, where Ford’s European headquarters is located, and German authorities have identified two Ford employees, eight current and former workers at Schenker and one staffer from a Russian contractor as persons of interest in the investigation, a spokesman at the Cologne prosecutor’s office told the German press.
“Ford is committed to legal compliance and business ethics in all of our operations around the globe, and we expect the same from our vendors,” Ford officials said in a released statement.
“We fully support and cooperate with any government inquiry. We do not comment on specific matters involving ongoing proceedings.”
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The U.S. carmaker last year cut 700 jobs at its plant near St. Petersburg as it grappled with Russia’s deteriorating economy and a weak ruble. The plant produces Ford’s Focus and Mondeo models.
Berlin-based Deutsche Bahn said it has already dismissed employees over the allegations and is continuing internal investigations of several other employees.
The date of the investigation is significant. When the German authorities started their probe the Russian car market was booming and global carmakers such as Ford were scrambling to put more vehicle and capacity in place to satisfy Russian customers
Since then, the crisis in the Ukraine has led to the European Union and the U.S. leveling sanctions against Russia that have disrupted the Russian economy.
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Russian and international automakers lowered their forecasts for car sales this year after the ruble’s value fell and the economy headed into recession. Even without the sanctions, the Russian economy would have been hammered by the broad drop in global oil prices over the past 12 months.
Russian sales of new cars and light commercial vehicles will probably fall 36% to 1.55 million this year, the Association of European Businesses’ automobile manufacturers committee said Wednesday in a website statement. In January, the group estimated a drop at 24% to 1.89 million.
June sales dropped to 140,161 vehicles, down 30% from a year ago, according to the group’s statistics. That’s less than the median estimate for a 37% slump in a Bloomberg survey, and the smallest drop since January.
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“No reason to relax whatsoever,” Joerg Schreiber, chairman of the AEB car committee, said in the statement. “Market sentiment for the remaining six months of the year remains muted.”
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