Scandal Not Alarming

The payola scandal in Europe that caused French automotive supplier Faurecia SA Chairman Pierre Levi to resign in August does not alarm attendees at a recent automotive conference in Michigan.

“I was not surprised,” says David Cole, chairman of the conference organizer Center for Automotive Research. “Different cultures have different traditions.”

He points to General Motors Corp., where employees are not allowed to accept as much as a pen.

“There is no tolerance here for any of that at all,” Cole says, referring to bribes in the U.S. “It's a disadvantage for American companies when they go into certain emerging markets.”

Faurecia salesmen in Germany, part of the former Sommer Allibert Group that Faurecia acquired several years ago, are under investigation for giving money and expensive gifts to purchasing agents at Volkswagen AG, Audi AG and BMW AG in exchange for contracts.

Levi apparently resigned under pressure after Volkswagen CEO Bernd Pischetsrieder called PSA Peugeot Citroen CEO Jean-Martin Folz to complain about Faurecia, of which PSA owns 71%.

German prosecutors say millions of euros in bribes have changed hands at the company. The practice allegedly started at Sommer Allibert in 1998 and continued after Faurecia bought the company in 2001.

Levi, who joined the interior supplier in May 2000, reportedly admitted he had been aware of the payoffs in Germany since 2001 but denied direct involvement. He was quoted as saying he resigned his post to protect the interests of the company.

“I have no sense of this as a growing problem,” says Neil De Koker, managing director of the Original Equipment Suppliers Assn. that started eight years ago. “It only takes one person to do such a thing.”

But he notes bribery schemes do take place in North America. In Mexico, he says, companies sometimes have to pay off government officials to get things done.

In China, payoffs and corruption are rampant, Jack Perkowski, CEO of Chinese supplier ASIMCO Technologies Ltd., says. “But I can look you in the eye and tell you that we have never bribed anyone.”