Daimler hits another crisis

Daimler, the parent company of Mercedes-Benz, is in danger of plunging into a second major crisis in three months after allegations of impropriety, unethical behavior and leaking secret government documents by its newly signed chief political lobbyist.

A German newspaper has alleged that Eckart von Klaeden, Chancellor Angela Merkel’s former Minister of State, showed confidential EU documents to Daimler executives before joining the premium car-maker.

He is also under fire for working as Daimler’s chief political lobbyist without resigning from his senior position in Merkel’s Christian Democratic Union (CDU) party, effectively lobbying himself on Daimler’s behalf.

While von Klaeden last week relented to nationwide pressure and finally resigned from the CDU, Der Spiegel claims he is the subject of a criminal investigation, along with at least one other Daimler executive, by the Berlin public prosecutor.

Daimler CEO, Dr Dieter Zetsche, has also been dragged in to the investigation.

“To oppose further speculation about a potential conflict of interest, I have resigned my seat in the CDU’s bureau,” von Klaeden said in a statement, though his job at the car-maker now depends on his ability to influence his former CDU colleagues.

The crisis revolves around prosecution suspicions that von Klaeden allegedly leaked secret EU CO2 reduction proposals to the Daimler board prior to his employment at Daimler, which lead to the successful lobbying campaign (or, as the French called it, “bullying”) from the German government to water down the early introduction of lower limits.

Von Klaeden, whose governmental role was as a Federal-State co-ordinator, was copied on secret government and European Union policy documents prior to joining Daimler on November 1, but had no active role in government decision making about the industry.

The prosecutor moved to investigate von Klaeden after an anonymous complaint over the circumstances of his move from the government to Daimler, even though von Klaeden has repeatedly denied any wrongdoing.

However, coming on the heels of Daimler’s fight with the EU and, in particular, the French government over its refusal to adopt a new air-conditioning refrigerant, the controversy has thrown the industrial powerhouse’s corporate governance into question again.

The air-conditioning battle, eventually won by Daimler in France’s highest court, saw the French government ban the sales of its A-, B- and SL-Class cars in France.

For its part, Daimler refused to use the R1234yf refrigerant, which had been mandated by the EU for its lower greenhouse gas impact, because its testing showed a fire risk no other car maker could reasonably replicate. However, after Daimler’s court win, Toyota also reverted to the old air-conditioning refrigerant.

While its air-conditioning crisis had a direct sales impact in the first year of its A-Class’s production cycle, the von Klaeden crisis has far greater potential for political harm.

The Berlin public prosecutor’s office is on record as saying it suspects advantages were gained by both Daimler and the 47-year-old von Klaeden in the lead up to his move from public office to Daimler.

Daimler has confirmed that it is the subject of an investigation and that it would support the investigation, though a spokesman insisted “those responsible at Daimler AG have acted properly”.

Von Klaeden was made Minister of State in the Chancellery in October 2009, and announced he would resign from government to join Daimler shortly after the September 2013 election. He officially left parliament on October 22 and lost the immunity from prosecution, which protects sitting German cabinet ministers.

The primary allegation is that von Klaeden gave Daimler’s board access to his inside information on the EU’s proposals, giving it time to successfully apply pressure to have the proposals overturned or softened to allow it to continue building higher-emission cars for longer.

Mercedes-Benz and BMW were the biggest beneficiaries of CDU-driven changes to the proposed CO2 limits (now 80 per cent of the fleet to average 95g/km by 2020 and 100 per cent by 2024) during a meeting of European environmental ministers last month.

German observers have also fumed that the German government’s pressure on the EU followed a donation of almost €700,000 to the CDU by the BMW’s major shareholders, the Quandt family.

Stefan Quandt, who owns 17.4 per cent of BMW, his mother Johanna (16.7 per cent) and sister Susanne Klatten (12.6 per cent) each donated €230,000 to the party days after the election and days before the meeting of European Environmental ministers.

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