DUESSELDORF, Germany (XFN-ASIA) - Deutsche Bank Chief Executive Josef Ackermann went on trial Thursday for a second time after approving disputed multimillion-euro bonus payments to executives in a 2001 takeover battle at telecom company Mannesmann AG.
Ackermann, who helped steer Germany’s biggest bank to record profits while cutting costs, has said that he will resign if found guilty. The bank’s board of directors has stood behind him -- as they did in his first trial, which ended in acquittal.The charges do not relate to Ackermann’s activities at Deutsche Bank. Ackermann did not receive money himself, and has rejected the accusations.
Ackermann is scheduled to take the witness stand on Nov. 2 and the court has scheduled 23 days of hearings through the end of February.
The others being retried include former Mannesmann CEO Klaus Esser, former board chairman Joachim Funk, Mannesmann personnel chief Dietmar Droste and former board members Juergen Ladberg and Klaus Zwickel.
During the first day of the retrial, Zwickel defended the board members’conduct, saying Esser deserved a reward for all he had done for Mannesmann and its employees.
“For me, it was no gift to Mr. Esser,” he said.
Ackermann listened quietly to the questioning and smiled from time to time. He said nothing publicly.Ackermann’s role has often drawn criticism in Germany -- the bonuses paid to departing executives at Mannesmann were viewed by many as excessive in a business culture that has not caught up with the big-money pay practices prevalent in U.S. and British banking. At Deutsche Bank, he drew criticism for announcing a healthy profit together with hefty job cuts.
In 2004, Ackermann -- a former member of Mannesmann’s board -- and five others were acquitted of breach of trust over allegations that they illegally engineered payments to executives at Mannesmann after its takeover by rival Vodafone Group PLC. The 180 billion euro ($226 billion) deal was the largest corporate merger ever at the time.
In all, bonuses and retirement packages of 150 million Deutsche marks ($97 million) to executives were approved. Prosecutors have argued that a special severance payment of more than 15 million euros ($18.9 million) to former Mannesmann CEO Klaus Esser was not in the best interest of the company.
After prosecutors appealed, the case was revived last December when Germany’s Federal Court of Justice ordered a retrial.
The protracted legal proceedings have been a distraction as the bank strives to become more international in its reach while shoring up its position at home.
In Germany, awards of the size made to the Mannesmann managers are uncommon and top executives’ compensation is generally more modest than in the U.S. Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
