Allegations centre on DaimlerChrysler's luxury Mercedes range

DaimlerChrysler said it was co-operating fully, and has made all its accounts available.

The criminal probe escalates a civil one by the US market watchdog, the Wall Street Journal reported on Friday.

At issue is whether Mercedes staff paid bribes, and whether senior DaimlerChrysler executives knew.

DaimlerChrysler revealed last year it was being investigated by the US Securities and Exchange Commission.

'Co-operating'

There are now two investigations.

"We are working with the SEC and the Justice Department on the investigation. We have made all our accounts available," said a DaimlerChrysler spokesman following the Wall Street Journal on Friday.

In July, DaimlerChrysler said in its interim financial results statement that it had identified "accounts, transactions and related payments that are subject to special scrutiny".

It said it was "voluntarily sharing....information from its own investigation" after subpoenas from US federal agencies.

DaimlerChrysler said in July that it had not yet reached "any definitive conclusions" about whether the payments it had identified breached the US Foreign Corrupt Practices Act.

Troubled times

The latest embarrassment to hit the carmaker comes one day after the German financial market watchdog launched a probe into possible insider trading in the firm's shares.

DaimlerChrysler's share price surged up 10% last week ahead of chief executive Juergen Schrempp's announcement that he was planning to step down two years early.

Mr Schrempp will step down at the end of 2005.

He had become a target of investor criticism, drawing fire over the firm's global expansion plans and problems at its flagship Mercedes division.

DaimlerChrysler has seen its earnings come under pressure as steel prices have increased and competitors have offered cut-price deals to lure customers.