WILMINGTON, DEL. -- DaimlerChrysler AG chief executive officer Juergen Schrempp, rebutting allegations that could cost his company hundreds of millions of dollars, denied yesterday that he lied when he billed the 1998 linkup between Chrysler and Daimler-Benz as a "merger of equals."

"The description of merger of equals is absolutely correct. And by telling the truth I do not think I did defraud anybody," Mr. Schrempp told a packed U.S. courtroom.

Mr. Schrempp, chief architect of the $36-billion (U.S.) deal creating DaimlerChrysler, testified in the second week of a trial in Wilmington, Del., where billionaire investor Kirk Kerkorian is seeking to prove that the merger was actually a takeover of the No. 3 U.S. auto maker.

The distinction is important because shareholders are entitled to an acquisition or "change of control" premium in takeovers as opposed to mergers.

Mr. Kerkorian, who owned nearly 14 per cent of Chrysler and is seeking more than $1-billion in damages, contends that Mr. Schrempp and other Daimler executives lied about their intentions, pitching one of the biggest deals in automotive history as a merger rather than a takeover to lower the transaction price. Mr. Schrempp denied that he had defrauded Mr. Kerkorian or anyone else and said there was never any secret takeover plan targeting Chrysler.

"I never had a secret plan and I could not have had a secret plan. The chairman of DaimlerChrysler is first among equals, the board does its business on the basis of collective responsibility," he said.

Mr. Schrempp's inflammatory words in an October, 2000, interview with the Financial Times have come back to haunt him, however.

In the interview, the cigar-chomping German auto boss boasted of having obtained Chrysler in a "roundabout way" and said he had always intended to make it a mere "division" of the combined company. He also said he only spoke of a "merger of equals" for "psychological reasons."

Mr. Kerkorian and his privately held Tracinda Corp. filed suit soon after the interview was published.

Ironically, the 59-year-old Mr. Schrempp said under questioning that the interview had been meant to counter media reports at the time that the merger was in fact a takeover.

"I wanted to shift attention away from the continuous talk about the merger, which was done," he said.

Mr. Schrempp also said that from a corporate standpoint, a merger of two equals was exactly what happened five years ago.

Operationally speaking, however, Daimler-Benz and Chrysler have both become "divisions" of the combined company, he said.

Numerous Americans have been replaced by German executives on DaimlerChrysler's top management team since 1998 -- a move that Mr. Kerkorian contends has highlighted the German "takeover" of Chrysler.

But Mr. Schrempp said yesterday that it would have been against his own interests to try to scheme in removing board members. "My interest was in creating the most successful, innovative auto company." He added that he has never spoken with Mr. Kerkorian.

Hilmar Kopper, who heads DaimlerChrysler's supervisory board, said in a taped deposition yesterday that the change in executive ranks came by default rather than design, as the new company struggled with a mushrooming financial crisis at Chrysler.

"Chrysler was sinking like a stone. We took it for granted that Chrysler would always be run by Americans only to find that this did not come true," Mr. Kopper said.

"We were facing such an acute problem that we had to act immediately. There was no American choice," he added. U.S. District Judge Joseph Farnan is trying the case without a jury and it may be months before he reaches a verdict.