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Deutsche Bank chief in landmark trial

In a landmark court case widely seen as putting German corporate standards in the spotlight, Deutsche Bank chief Josef Ackermann has gone on trial in Duesseldorf over big payments to Mannesmann executives during a takeover four years ago. 

Last Modified: 22 Jan 2004 07:37 GMT
Ackermann (R) says large payments are common practice

In a landmark court case widely seen as putting German corporate standards in the spotlight, Deutsche Bank chief Josef Ackermann has gone on trial in Duesseldorf over big payments to Mannesmann executives during a takeover four years ago. 

Ackermann, appearing relaxed on Wednesday and five other executives were confident they would be acquitted at the end of a trial that could last six months. 

And the defendants denied they broke the law when they approved 111.5 million marks (57 million euros, $71 million) in bonuses to Mannesmann board members during the record-breaking takeover of Mannesmann by British mobile giant Vodafone in 2000. 

But the case is widely seen as a test of the reputation of corporate Germany as a whole, for it is the first time that business leaders have faced prosecution for their supervisory board activities. 

'Illegal bonuses'

"This must be the only country where those who are successful and who create value have to go to court because of it.  That is why this case is an important one for Germany." 

Deutsche Bank chief, Josef Ackermann

The prosecution argues the size of the payouts clearly went against the interests of both Mannesmann and its shareholders and were therefore illegal under German share law. 

"The accused knew that the bonuses were illegal," said Johannes Puls when reading the charges. 

But the defendants argue that such large payments are common practice in other countries such as the United States and that sanctioning the executives would discourage any brave decision-making in German companies in future. 

Facing cameras and a crush of reporters on the opening day of the trial, Ackermann, arguably Germany's most powerful banker, said he could not understand why he was in court. 

"This must be the only country where those who are successful and who create value have to go to court because of it," Ackermann said, smiling and visibly relaxed. "That is why this case is an important one for Germany." 

His co-defendants were similarly adamant they had done no
wrong. 
"I acted perfectly correctly and we are here to prove it," said a slightly more tense Klaus Esser, the former chief of telecommunications giant Mannesmann. 

He was one of the direct beneficiaries of the big bonuses, pocketing a staggering 16.3 million euros during the biggest corporate takeover in German post-war history. 

'Breach of trust'

British giant Vodafone took over
Mannesmann in 2000

Ackermann and the ex-boss of the powerful IG Metall labour union Klaus Zwickel were members of Mannesmann's supervisory board at the time and rubber-stamped the payouts. 

Two other former Mannesmann supervisory board members Joachim Funk and Juergen Ladberg are also in the dock. 

The charge against those four is "breach of trust", which could theoretically carry a prison sentence of up to 10 years, depending on the degree of culpability. 

Esser and Mannesmann's former personnel director Dietmar Droste are charged with aiding and abetting the other four. They could face heavy fines if found guilty. 

Corporate greed

For many critics, the so-called Mannesmann affair encapsulated the greed of corporate bosses during the high-tech boom at the end of the decade. 

Vodafone succeeded in taking over Mannesmann, the former
industrial conglomerate-turned-telecommunications group, in February 2000 after months of fierce resistance by Esser and Mannesmann's management board. 

It quickly emerged that Esser and his cronies had been awarded massive payouts, sparking criticism they had been bribed into submission. 

But Esser and his supporters had argued there was nothing indecent with the size of his golden handshake which should be measured against a manager's success.

Source:
AFP
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