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Chrysler trial spills tales of kickbacks
The former general manager at a Canada subsidiary claims no knowledge of fraud.
Bill Paterson
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WINDSOR -- A seamy story of executive favor trading and fraud -- complete with huge strip club bills, boxes stuffed with cash and free tickets to sporting events -- is emerging from a trial over the firing of an executive from the Canadian unit of DaimlerChrysler AG's Chrysler Group.
Bill Paterson was among at least four DaimlerChrysler Canada Inc. officials terminated in late 2002 after a company investigation found they colluded with Pentamark Worldwide Canada, which handles all of the automaker's Canadian marketing, to bilk DaimlerChrysler out of hundreds of thousands of dollars over a period spanning up to 10 years.
The three weeks of testimony that concluded Wednesday in Ontario Superior Court in Windsor provided a peek into the clubby world of business relationships, where back scratching and gift giving often goes well beyond picking up a lunch tab.
Closing statements are scheduled for early April.
Paterson, 56, former general manager of retail strategies at DaimlerChrysler Canada, has sued the automaker for wrongful termination, claiming he did nothing improper. He is seeking $2.2 million.
"He gets put into a new job, a new department that's newly created and, for the first time in his career, begins to have dealings with Pentamark," Paterson's lawyer, David McNevin, said in an interview Wednesday. "There's this corruption that's been ongoing for 10 years. Paterson happens to be the head of the department."
Chrysler maintains that Paterson not only participated in the illicit activity, he tried to hide the scheme from investigators hired by the automaker, including auditors Deloitte and Touch and a former member of the Royal Canadian Mounted Police.
"The bonds of trust had been severed between us and Mr. Paterson," retired DaimlerChrysler Canada President Ed Brust testified.Testimony by fired Chrysler and Pentamark executives described a pattern where Pentamark officials took Chrysler executives to strip clubs and paid for tickets to sporting events and concerts, then turned around and billed everything back to the automaker through fake invoices. The bill for Toronto strip clubs alone reached $73,000 in a single year. The executives also said that Pentamark paid off credit cards.
Rob Bloomfield, a fired Pentamark executive, testified that the marketing agency handed out "boxes of money" as kickbacks to Chrysler officials and then fraudulently charged the automaker, according to earlier news coverage of the trial.
In its response to the lawsuit, Chrysler said Paterson was "untruthful" during the internal investigation, denying he'd ever attended a strip club as Pentamark's guest. Paterson later explained he was embarrassed to admit where he'd been and claimed he didn't know Pentamark was paying and billing it to his employer. Nor did he know his membership to a Costco store had been paid for by Pentamark.
Also fired were mid-level Chrysler managers Steve Tolton and Lou Spadotto, and senior manager John Levasseur, who reported directly to Paterson.
Levasseur accepted a $40,000 personal loan from a Chrysler dealer, in violation of company policy, according to court documents. A promissory note for the loan was found in a search of Paterson's office. Paterson admitted knowledge of a loan, but denied that he knew the specifics, including the amount and the lender, according to court documents.
In recent years, automakers have tightened policies on accepting gifts from suppliers and other vendors to avoid conflicts of interests and charges of favoritism.
Phil Bezaire, vice president of human resources for DaimlerChrysler Canada, testified that executives are not allowed to accept a gift worth more than $30 from a supplier or a dealer.
Bloomfield testified that he paid Levasseur's credit card bills twice -- amounts totaling more than $8,000. The details were hidden from Chrysler because they were billed through a third firm set up for that purpose.
Bloomfield, who was fired from Pentamark at Brust's request, agreed to testify for Chrysler in exchange for the automaker agreeing not to take legal action against him. Under cross-examination by McNevin, who called him a liar and a "con man," Bloomfield testified that he funneled invoices worth thousands of dollars through Pentamark to DaimlerChrysler Canada.
Bloomfield, well known in Windsor for coaching a local football team to a national title in 1999, testified that he and Paterson discussed ways to cover up the billing scheme. Paterson testified no such discussions ever occurred.
DaimlerChrysler Canada spokesman Stuart Schorr said the automaker did the right thing in investigating the matter and firing the executives.
"We found them out," he said. "We rooted them out. And now we're defending our right to do that."
The automaker still does business with Pentamark, which has undergone a restructuring.
"What's important is that they turn aside graft and corruption -- bang! It's over," said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
Paterson still hopes to clear his name and end the court battle. In an interview Wednesday, he admitted obtaining NHL tickets from Pentamark, but said he always paid for them out of his own pocket.
And a gift he's accused of accepting during a golf tournament was donated to DaimlerChrysler Canada's "Christmas Committee" for a silent auction, court documents said.
"My career, in my humble estimation, was a good one," Paterson said. "And I was proud of it. ... It was a major blow to me, what happened."
You can reach Eric Mayne at (313) 222-2443 or emayne@detnews.com.
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