Deutsche Bank Chief faces retrial in bonus case

24th October 2006, Comments 0 comments

24 October 2006, Berlin (dpa) - Germany's most powerful banker is due back in court on Thursday in the latest round of the country's biggest ever corporate crime trial. Deutsche Bank chief Josef Ackermann, 58, is one of six defendants facing a retrial in an executive bonus affair arising from the 2000 takeover of German telecom group Mannesmann by Britain's Vodafone. The six were acquitted by a Dusseldorf court in July 2004 of a breach of fiduciary trust arising from 57 million euros ($72 million) in bonus

24 October 2006

Berlin (dpa) - Germany's most powerful banker is due back in court on Thursday in the latest round of the country's biggest ever corporate crime trial.

Deutsche Bank chief Josef Ackermann, 58, is one of six defendants facing a retrial in an executive bonus affair arising from the 2000 takeover of German telecom group Mannesmann by Britain's Vodafone.

The six were acquitted by a Dusseldorf court in July 2004 of a breach of fiduciary trust arising from 57 million euros ($72 million) in bonuses paid to departing Mannesmann executives.

But last December, the country's Federal Court of Justice ruled that the head of Germany's biggest bank and five other former Mannesmann directors should stand trial again.

The payments, which included 15 million euros for Mannesmann former chief Klaus Esser, followed Mannesmann's hostile 180 billion euros takeover by the British mobile phones giant.

In its 2004 ruling the Dusseldorf court found that Ackermann and his co-defendants, including Esser and retired trade union leader Klaus Zwickel, did not act unlawfully in paying the high bonuses.

But in its December ruling, the Karlsruhe-based Federal Court of Justice overturned the verdict and said Ackermann had failed to protect Mannesmann shareholders.

The federal court said the defendants should not have awarded the extra bonus payments because the men who received them were carrying out tasks in line with their normal duties.

The bonus case triggered a major debate in Germany about executive compensation and corporate greed with big payouts and salaries for top executives having been relatively unknown in the nation, unlike many Anglo-Saxon countries.

Ackermann, who was a non-executive Mannesmann board member when the bonuses were agreed to, did not receive any payout and denies any wrongdoing. The case also involves Mannesmann's former supervisory chairman Joachim Funk, who received a 3-million-euro payout.

The new trial, which is taking place in the same Dusseldorf court where the original one was held, is expected to last until March 2007. It has raised questions about Ackermann's ability to lead Deutsche Bank.

In the wake of the Karlsruhe court decision, two of Germany's leading investor groups called on Ackermann to stand aside, underscoring analysts' concerns that the retrial could be deeply embarrassing for the bank.

"So long the chief executive stays, the Mannesmann case will be a Deutsche Bank case," said Reinhild Keitel a spokesman for Schutzgemeinschaft der Kapitalanleger (SdK).

Analysts had initially feared that if Ackermann decided to stay on in his post while the new trial was underway it could open up a power vacuum at the Frankfurt-based bank.

The banker, who was forced to spend long hours in court during the previous sixth-month trial, has said he will continue to carry out his duties but indicated he could leave in the event of a guilty verdict.

While Ackermann is credited with boosting the bank's earnings and stepping up the disposal of Deutsche's long-held stakes in other companies, the bank has also been hit by controversy.

His policy of closing less-profitable operations and building successful trading and investment banking franchises proved deeply unpopular domestically.

Deutsche Bank had already began a succession plan drawn up by its chairman and Ackermann supporter Clemens Boersig. Frontrunner for the top job is said to be Anshu Jain, co-head of the bank's the London- based investment operations.

Other internal candidates in contention are Rainer Neske, head of the retail bank, and Jain's London associate Michael Cohrs.

Compounding Deutsche Bank's woes is the prospect of another lengthy legal procedure, this time involving former media czar Leo Kirch, who blames the bank for the collapse of his empire in 2002.

Last week, Kirch filed legal papers accusing Ackermann of breaching his fiduciary duties when he appointed Boersig chairman and awarded him compensation for leaving his former job as the bank's chief financial officer.

DPA

Subject: German news

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