Cerberus accuses Daimler of fudging Chrysler’s numbers

Cerberus Capital Management has accused Daimler AG of misleading them about the true value of Chrysler before selling the American private equity group a majority holding in the Auburn Hills carmaker. At this point in time, Cerberus owns 80.1% of Chrysler and Daimler owns the remaining 19.9%, and while the German auto giant is keen to offload its remaining stake to Cerberus, these latest allegations by are hampering the process.

Cerberus has accused Daimler of misleading them in regards to certain underwriting practices, claiming that the true value of Chrysler's lease and loan portfolio was much lower than represented. Underwriting in vehicle financing involves the assessment of whether or not a customer is financially able to pay back the loan, and essentially Cerberus is claiming that Daimler had allowed too many people who didn't meet this standard to be given loans, thus resulting in a major deficit in this part of the portfolio when the credit crunch arrived.

Daimler, of course, has dismissed the allegations as being absurd, but the public airing of Daimler's alleged 'dirty laundry' could be the precursor to a lawsuit from Cerberus, reports the Associated Press. Daimler's alleged misconduct is also prompting Cerberus to make unreasonable demands in their negotiations for the remaining 19.9% stake, but despite this the talks are still ongoing.

Meanwhile, Chrysler, General Motors and Ford are preparing for a second-round of submissions requesting aid from the federal government, and Chrysler CEO Bob Nardelli has confirmed that Cerberus would not be able to receive any benefit from any public funds. This would prevent the company from taking government money and then selling Chrysler to minimize its losses, or other sorts of similar actions. Nardelli also revealed that a major part of Chrysler's strategy to effectuate a turnaround would be to seek alliances with overseas manufacturers and suppliers.