German automaker Daimler AG, one of the biggest manufacturers of premium cars, pleaded guilty and agreed to settle a corruption case by paying $185 million fine to the US government for bribing foreign officials to secure business.

Two units of the Stuttgart-based Daimler, maker of the premium Mercedes-Benz cars, pleaded guilty to violations of the US Foreign Corrupt Practices Act, in a case bought on by the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ).

US-listed companies and its employees are barred from bribing foreign officials in order to secure business under the US Foreign Corrupt Practices Act.

Two units of Daimler, DaimlerChrysler Automotive Russia and Germany-based Daimler Export and Trade Finance, were accused of paying bribes to Russian and Croatian government officials to secure orders for the company's cars and trucks and thereby making millions of dollars in profits.

A US district court in Washington accepted guilty pleas from the company for an agreement on deferred prosecution that will allow it to avoid criminal prosecution as long as it cooperates with regulators.

The charges against Daimler's two units and a Chinese subsidiary, DaimlerChrysler China Ltd, now known as Daimler North East Asia Ltd, would be dropped if the company does not violate the same law in the next two years.

DaimlerChrysler China used US-based agents to bribe Chinese government officials in the form of commission and gifts to get orders for commercial vehicles from various Chinese state-owned companies.

When Daimler merged with Chrysler in 1998, David Bazzetta, an auditor at Chrysler, found out during a 2004 audit executive meeting at Daimler headquarters in Germany, that the company paid bribes to secure order overseas and that it was a standard norm in the company.

Bazzetta blew the whistle on the company to the US Labor Department, which made the SEC and the DOJ start an investigation.

According to court documents, Daimler, whose shares trade on multiple exchanges in the US, engaged in a long-standing practice of paying bribes to foreign government officials through a variety of mechanisms, including the use of corporate ledger accounts known internally as third-party accounts (or TPAs), corporate (cash desks), offshore bank accounts, deceptive pricing arrangements and third-party intermediaries.

Daimler and its subsidiaries made hundreds of improper payments worth tens of millions of dollars to foreign officials in at least 22 countries, including China, Croatia, Egypt, Greece, Hungary, Indonesia, Iraq, Ivory Coast, Latvia, Nigeria, Russia, Serbia and Montenegro, Thailand, Turkey, Turkmenistan, Uzbekistan, Vietnam and others in order to secure contracts with government customers for the purchase of Daimler vehicles.

The contracts were valued at hundreds of millions of dollars. In some cases, Daimler or its subsidiaries wire transferred the bribe money payments to the US bank accounts or to the foreign bank accounts of US shell companies.

Daimler admitted that it earned more than $50 million in profits from corrupt transactions and also admitted that it agreed to pay kickbacks to the former Iraqi government for contracts to sell vehicles to Iraq under the UN's `Oil for Food' programme.

As part of its settlement with the government, Daimler pleaded guilty to the charges and agreed to pay a fine of $93.6 million to the US DOJ and $91.4 million to the SEC.

"Compliance has high priority at Daimler, said Dr Dieter Zetsche, chairman of the board of management of Daimler. We have learnt a lot from past experience. Today, we are a better and stronger company, and we will continue to do everything we can to maintain the highest compliance standards."

Bodo Uebber, Daimler's chief financial officer and a member of the company's board of management said, "We have reviewed all areas of our business and consequently improved our business practices, Accounting, financial reporting, internal control systems and compliance. For the future, we are positioned very well."