Germany’s Most Powerful Banker on Trial
FRANKFURT, Germany (AP) _ Germany’s most powerful banker and five others went on trial Wednesday on charges of improperly approving large executive payments during a high-stakes takeover deal.
As the trial, which is being conducted in Duesseldorf, got underway, the court rejected claims by the defense that the indictment was illegal.
The legal skirmish interrupted the opening session for several minutes and underscored the politically charged nature of the trial, which has focused the nation’s attention on boardroom behavior and could set new standards for German executive pay.
Prosecutors charged that Deutsche Bank chief executive Josef Ackermann and five other executives and board members illegally authorized bonuses and retirement packages totaling 150 million marks ($70 million) to executives of German mobile phone company Mannesmann during its February 2000 takeover by the British telecom giant Vodafone.
Reading the 460-page indictment aloud, prosecutor Johannes Puls alleged that former Mannesmann chief executive Klaus Esser and board chairman Joachim Funk agreed to ``illegally enrich themselves″ at the company’s expense before dropping their opposition to the deal. Mannesmann’s board approved the payments after Vodafone refused to make them, Puls charged.
The payments are considered astronomical in Germany, where top executives rarely earn above euro2 million ($2.5 million) annually.
Ten minutes into the trial, defense attorneys attempted to block the reading of the indictment on grounds that it contained charges the court had already thrown out. Presiding Judge Brigitte Koppenhoefer rejected the motion and the court reconvened after a brief recess.
Ackermann, who was a Mannesmann board member, argues there was nothing illegal about the payments and that they were consistent with the result _ Mannesmann shares jumped 136 percent after the takeover _ and international business practices.
Swiss-born Ackermann appeared relaxed and energetic, talking with other defendants in the courtroom before the trial began. In remarks to reporters, he dismissed the charges.
``This is the only country where those who succeed in achieving a good price (for a company) are dragged before court for it,″ he said.
But it is the practice of making such large payments as much as Ackermann and his co-defendants that are on trial at the Duesseldorf state court.
``It was the first time in Germany that somebody made such a high bonus public,″ Esser told reporters. ``Before it was practice to keep them secret.″
Although he received no money himself, Ackermann could face up to 10 years in prison if found guilty of the criminal charges.
Deutsche Bank has strongly backed its leader. Ackermann has continued his duties as the bank’s chief and will do so through the trial, conducting business from an office near the courtroom on trial dates.
Still, a guilty verdict would almost certainly cost him his job at Germany’s largest bank.
The others facing trial are former Mannesmann personnel chief Dietmar Droste, 44; and former board members Juergen Ladberg, 57, an employee representative, and Klaus Zwickel, 64, the retired head of Germany’s powerful IG Metall industrial union.
Like Ackermann, who plans to make a statement during the trial, Funk, Zwickel and Ladberg are charged with breach of trust. Esser and Droste face charges of abetting a breach of trust.
The takeover, in a stock swap deal valued at $180 billion, was the largest corporate merger ever at the time and the executive payments provoked sharp criticism in Germany.
Esser has repeatedly denied wrongdoing, arguing that the majority of Mannesmann shareholders favored a takeover by the time he gave up the fight. He has acknowledged that the 60 million marks ($28 million) he received could be controversial.
``I will not ask for the case be closed, because I behaved very correctly and we are here to prove that,″ Esser told reporters before proceedings began.