Mercedes 2004 Annual Report Download - page 158

In 2002, several lawsuits were filed asserting claims relating to
the practice of apartheid in South Africa during different time
periods before 1994: On November 11, 2002, the Khulumani Sup-
port Group (which purports to represent 32,700 individuals) and
several individual plaintiffs filed a lawsuit captioned Khulumani v.
Barclays National Bank Ltd., Civ. A. No. 02-5952 (E.D.N.Y.) in the
United States District Court for the Eastern District of New York
against 22 American, European, and Japanese companies, includ-
ing DaimlerChrysler AG and AEG Daimler-Benz Industrie. On
November 19, 2002, a putative class action lawsuit, Ntsebeza v.
Holcim Ltd., No. 02-74604 (RWS) (E.D. Mich.), was filed in the
United States District Court for the Eastern District of Michigan
against four American and European companies, including Daim-
lerChrysler Corporation. Both cases were consolidated for pretri-
al purposes with several other putative class action lawsuits,
including Digwamaje v. Bank of America, No. 02-CV-6218 (RCC)
(S.D.N.Y.), which had been previously filed in the United States
District Court for the Southern District of New York. The Digwa-
maje plaintiffs originally named DaimlerChrysler AG as a defen-
dant, but later voluntarily dismissed DaimlerChrysler from the
suit. Khulumani and Ntsebeza allege, in essence, that the defen-
dants knew about or participated in human rights violations and
other abuses of the South African apartheid regime, cooperated
with the apartheid government during the relevant periods, and
benefited financially from such cooperation. The plaintiffs seek
monetary and other relief, but do not quantify damages. On
November 29, 2004, the Court granted a motion to dismiss filed
by a group of defendants, including DaimlerChrysler. Plaintiffs
have filed notices of appeal of the Court’s decision. In order to
address certain procedural matters, plaintiffs and the moving
defendants have agreed to withdraw the appeals with the expec-
tation that the notices of appeal would be refiled.
In August 2004, the Securities and Exchange Commission
(“SEC”) notified DaimlerChrysler AG that it has opened an investi-
gation relating to our compliance with the U.S. Foreign Corrupt
Practices Act. The investigation follows the filing of a “whistle-
blower” complaint with the U.S. Department of Labor (“DOL”)
under the Sarbanes-Oxley Act by a former employee of our whol-
ly-owned subsidiary DaimlerChrysler Corporation whose employ-
ment was terminated in 2004. The terminated employee filed a
lawsuit against DaimlerChrysler Corporation in the U.S. District
Court for the Eastern District of Michigan in September 2004
which contains substantially the same allegations as in the DOL
complaint and additional allegations relating to other federal and
state law claims arising from the termination. In November, the
DOL dismissed the complaint because it found no reasonable
cause to believe that the employee was terminated in violation of
the Sarbanes-Oxley Act. DaimlerChrysler is providing information
to the SEC in cooperation with its investigation. In addition, in
response to an informal request from the SEC, DaimlerChrysler is
also voluntarily providing information regarding its implementa-
tion of various provisions of the Sarbanes-Oxley Act, including
those relating to the process for reporting information to the
Audit Committee. This request follows the filing of another
whistleblower complaint with the DOL by a former employee of
DaimlerChrysler Corporation. The terminated employee filed a
lawsuit against DaimlerChrysler Corporation in the U.S. District
Court for the Eastern District of Michigan in November 2004
which contains substantially the same allegations as in the DOL
complaint.
Litigation is subject to many uncertainties and DaimlerChrysler
cannot predict the outcome of individual matters with assurance.
It is reasonably possible that the final resolution of some of these
matters could require the Group to make expenditures, in excess
of established reserves, over an extended period of time and
in a range of amounts that DaimlerChrysler cannot reasonably
estimate. Although the final resolution of any such matters could
have a material effect on the Group’s consolidated operating
results for a particular reporting period, DaimlerChrysler believes
that it should not materially affect its consolidated financial
position.
32. Contingent Obligations and Commercial Commitments
Contingent Obligations. Obligations from issuing guarantees as
a guarantor (excluding product warranties) are as follows:
Guarantees for third party liabilities principally represent guaran-
tees of indebtedness of non-consolidated affiliated companies
and third parties and commitments by Group companies as to
contractual performance by joint venture companies and certain
non-incorporated companies, partnerships, and project groups.
The term under these arrangements generally covers the range of
the related indebtedness of the non-consolidated affiliated com-
panies and third parties or the contractual performance period of
joint venture companies, non-incorporated companies, partner-
ships, and project groups. The parent company of the Group
(DaimlerChrysler AG) provides guarantees for certain obligations
of its consolidated subsidiaries towards third parties. At Decem-
ber 31, 2004, these guarantees amounted to €48.4 billion.
To a lesser extent, consolidated subsidiaries provide guarantees
to third parties of obligations of other consolidated subsidiaries.
All intercompany guarantees are eliminated in consolidation and
therefore are not reflected in the above table.
154
(in millions of €)
At December 31,
Amount recognized
as a liability
355
583
352
109
1,399
2004
At December 31,
Maximum potential
future obligations
2,647
1,957
513
118
5,235
2,334
1,646
464
128
4,572
207
536
360
97
1,200
Guarantees for third party liabilities
Guarantees under buy-back
commitments
Performance guarantees and
environmental risks
Other
2003 2004 2003