Local Mercedes sales unaffected by bribe scandal

The Mercedes bribery scandal has again made headlines, with auto manufacturer Daimler AG finally reaching a settlement with both the US Securities and Exchange Commission and the US Department of Justice (DOJ).

The scandal initially broke at the end of 2004, when David Bazzetta, a former auditor for DaimlerChrysler Corp, filed a complaint after he was fired for raising questions about dubious bank accounts controlled by Mercedes-Benz units in South America. At the time, the DOJ accused the firm of paying tens of millions of dollars in bribes to government officials in at least 22 countries between 1998 and 2008.

As a result, Daimler payed out a total of US$185 million in fines and civil disgorgement.

According to a Mercedes Benz Egypt (MBE) press release, only one such transaction was ever confirmed to have taken place in Egypt. It was made to a government-owned factory that purchased Daimler chassis and parts, to which related payments were made from 1998 until 2004, said MBE.

The incident, however, bore no relation to MBE, but rather to the mother company’s commercial sector. “Those chassis and parts are not for passenger cars but for commercial ones,” said one MBE manager who preferred anonymity.

Mercedes is divided into several departments, including one devoted to passenger vehicles–sold through MBE–and another specialized in the sale of commercial vehicles.

According to the MBE press release, “The wholesaler and distributor for the Mercedes Benz passenger cars and its operations in Egypt has no involvement with regard to the US investigations that occurred with Daimler AG.”

Although there have been rumors that local sales of Mercedes vehicles had been impacted by the scandal, this does not appear to be the case.

According to a sales engineer at Mercedes’ commercial vehicles department–who likewise insisted on anonymity–sales have not been affected for either department. “This issue goes back four years, but was resolved when Karim Ghabbour was proven innocent,” he said.

Ghabbour, president of Mercedes’ commercial vehicles department, was accused of bribery by Daimler in 2006 but was subsequently found innocent in court.

Industry experts, meanwhile, say there has been no noticeable drop in passenger car sales.

“I’ve seen no decrease in sales since the issue came out in the news,” Hatem el-Naggar, sales manager at Cairo National Automotive, told Al Masry Al Youm.

Would-be customers, meanwhile, do not appear to have been affected by the scandal. “I actually don’t care much about this bribery thing since it has nothing to do with the quality of the product,” said 32-year-old marketing manager Tarek Ali. "So I’m buying a Mercedes anyway."

In Egypt, say experts, Mercedes luxury automobiles enjoy a popularity unknown in Germany. “Egyptians associate Mercedes cars with high social standards,” noted el-Naggar.

What’s more, the easy availability of bank loans has allowed many Egyptians to buy luxury vehicles despite the current financial crisis.

Although categorized as a "male brand," Mercedes vehicles have proven popular among Egyptian females, say those in the industry. The Mercedes B240, which retails for LE240,000, is particularly popular among Egypt’s female drivers.

“It’s convenient for ladies, since we’re concerned with spacing, children, durability and shape,” said 38-year-old housewife Noha Magdy.

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