Mannesmann bonuses case reopened by court

21st December 2005, Comments 0 comments

21 December 2005, KARLSRUHE - Deutsche Bank AG chief Josef Ackermann is facing pressure to step aside as head of Germany's biggest bank after the nation's top court reopened Wednesday a controversial company bonus payout case.

21 December 2005

KARLSRUHE - Deutsche Bank AG chief Josef Ackermann is facing pressure to step aside as head of Germany's biggest bank after the nation's top court reopened Wednesday a controversial company bonus payout case.

But while shareholder groups called on Ackermann to stand down, Deutsche Bank's board sprang to his defence expressing their "full confidence" in him, saying they "had no doubt that Dr Ackermann will continue his work successfully'".

This followed the ruling by the country's Federal Court of Justice that Germany's most powerful banker along with five others should face a retrial of charges involving bonus and retirement packages totalling about 57 million euros (68 million dollars) paid to departing executives of the German telecoms group Mannesmann AG.

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

In July 2004, a Dusseldorf court found Ackermann and his codefendants, including Esser and retired trade union leader Klaus Zwickel, not guilty of charges that bonuses were overpaid to former Mannesmann executives.

But in its ruling Wednesday, the Karlsruhe-based Federal Court of Justice said it was completely revoking the Dusseldorf court acquittal and saying that Ackermann had failed to protect Mannesmann shareholders. Dusseldorf state prosecutors appealed the Dusseldorf case ruling.

Wednesday's ruling and the prospect of a new lengthy court case has raised questions whether Ackermann will be forced to decide to stand down from his post with speculation already underway of a possible successor for the Deutsche Bank chief.

In the wake of the Karlsruhe court decision, two of Germany 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).

Echoing his comments, Juergen Kurz, a spokesman for the Deutsche Schutzvereinigung fuer Wertpapierbesitz said: "The damage for the bank continues to grow."

However, any announcement by Ackermann about his future is also not expected until early in the new year.

But analysts said that the risk for Deutsche is that should its chief executive decide to stay on in his post while the trial was underway it could open up a power vacuum at the Frankfurt-based bank.

Ackermann was forced to spend long hours in court during the sixth-month long trial in Dusseldorf.

Lawyers for the 57-year-old bank chief said they expected the retrial to last about half the length of the Dusseldorf case, but conceded that the reopening of the trial took the case back to square one.

The Mannesmann 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.

The reopening of the high-profile Mannesmann case brings to an end a rocky year for Deutsche Bank.

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 over the last 12 months.

This included the bank's announcement at the start of the year of job cuts totalling 5,200 while at the same time revealing a steep rise in earnings. Last week it came under fire for its move to temporarily freeze trading in a troubled six billion euros property fund.

In an interview with Wednesday's Financial Times, Deutsche Bank supervisory board chief Rolf Breuer said he had put on his "thinking cap" and would tend towards an internal candidate to replace Ackermann, if he decided to step down.

The Financial Times reported that Deutsche Bank's head of retail banking, 41-year-old Rainer Neske, had emerged as the frontrunner to takeover from Ackermann.

Analysts say other possible candidates include Deutsche's joint investment head, Michael Cohrs and finance director Clemens Boersig.

The Deutsche Bank spokesman insisted that any talk of an Ackermann successor was speculation.


Subject: German news

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