Prosecutors Probe DaimlerChrysler

"It's mainly DaimlerChrysler employees that are involved, though other people are affected too," state prosecutors said on Monday.

The Stuttgart-based company would only confirm probes into the activities of three of its managers.

"I can't rule out that this number will increase," a company spokeswoman said on Monday. There are still new tips coming in which have to be checked, she added.

Company insiders have said that the investigations are looking into "a mixture of breach of trust and illegal transactions with new cars."

Company-funded holiday home?

Some of the allegations center on the use of company resources for private purposes. This past weekend, the German news magazine Focus reported that a former Germany sales chief allegedly used company money to build a holiday home for his girlfriend in Spain.

There are also reports of shady deals in which new cars were sold at a corporate client discount rate to unauthorized dealers. DaimlerChrysler employs a selective distribution system, meaning that unauthorized dealers don't receive new cars.

Yet so-called "gray-market" dealers still manage to get hold of new cars, reported Die Welt on Tuesday. The paper gave an example whereby a dealer claims to have a large fleet of cars, and needs 300 new Mercedes for 300 employees. In this way, the dealer qualifies for a special rebate. In reality though, the dealer has only three employees, and sells the remaining 297 Mercedes as new cars -- a punishable offense.

The investigations were sparked by anonymous tips of "irregularities," company spokeswoman Ursula Mertzig-Stein said.

Last month, DaimlerChrysler fired two managers in its German Mercedes sales division -- Jürgen Fahr, head of sales, and Walter Missing, head of the Hamburg sales office -- in connection with the scandal.