Ackermann must face Mannesmann retrial

Josef Ackermann has been the head of Deutsche Bank since 2002 Keystone

The Swiss head of Deutsche Bank and five others are to face a retrial over large payments to executives during a telecom takeover in Germany five years ago.

The German Federal Court of Justice accepted a request on Wednesday by prosecutors in Düsseldorf who had called for Josef Ackermann and his co-defendants to stand trial again.

A retrial will subject Deutsche Bank to the disruption of having its chief executive attending court sessions while also running the country’s largest bank. It could also jeopardize Ackermann’s career, say observers.

Explaining its verdict, the federal court said there was indeed a suspicion that Mannesmann had suffered a breach of trust. Presiding Judge Klaus Tolksdorf said the earlier acquittal was wrong in, “few, but quite decisive points”.

In July 2004, a Düsseldorf court found Ackermann and the others not guilty of charges they illegally engineered payments to executives at mobile phone company Mannesmann after its takeover by Vodafone Group.

The €80 billion (SFr124 billion) deal was the largest corporate merger ever at the time.

In all, bonuses and retirement packages of 150 million marks (€77 million) to executives were approved.

A special severance payment of more than €15 million to former Mannesmann CEO Klaus Esser was “unique in its level” in Germany and was not in the interests of the company, federal prosecutor Gerhard Altvater said at an appeal hearing in October.

Pressure to resign

Ackermann rejects the accusations. He says the charges relate to his activities on Mannesmann’s board, not at Deutsche Bank, and he did not receive money himself.

Analysts say that a retrial will increase pressure on Ackermann to step down.

The Deutsche Bank has made no immediate comment on the decision. But it earlier said that it had been preparing to find an in-house successor to Ackermann, should he have to resign.

“I’ve got my thinking cap on. I very much prefer an internal candidate,” said the head of the bank’s supervisory board, Rolf Breuer, in comments quoted in the Financial Times Deutschland’s online edition on Wednesday. “Only if that option is not feasible would we go outside the bank.”

Observers say the post could go to Rainer Neske, the head of the bank’s retail banking operations.

However, for the time being the bank says its chief executive’s position is secure.

Acquittal

At the 2004 trial, the Düsseldorf state court acquitted all six defendants of criminal charges of breach of trust or abetting a breach of trust. Ackermann and three others were on Mannesmann’s board at the time; the two other defendants were Mannesmann executives.

Prosecutors had sought a two-and-a-half-year prison term for Esser and three years for former board chairman Joachim Funk, saying they had agreed to “illegally enrich themselves” through the deal.

They sought a two-year suspended term for Ackermann and shorter suspended terms for the remaining defendants, former Mannesmann personnel chief Dietmar Droste and two more board members – Jürgen Ladberg, and Klaus Zwickel.

Ackermann’s attorneys argue the payment to Esser was a legitimate reward for increasing the values of the company’s shares leading up to the takeover.

But many questioned the size of the payouts in Germany, where awards of that size are uncommon and top executives’ compensation is generally more modest than in the United States and Britain.

swissinfo with agencies

Key facts

Josef Ackermann was born on February 7, 1948 in Mels, canton St Gallen.
In 1973 he finished his studies in banking and economics.
In 1977 he started at banking giant Credit Suisse.
From 1993 to 1996 he headed the bank.
In 2002 he was made head of Deutsche Bank, the first foreigner to hold this post since the bank was founded in 1870.

In brief

Josef Ackermann, 57, is the chief executive and chairman of Deutsche Bank.

His 2004 trial related to a hostile takeover by Britain’s Vodafone of the German mobile operator, Mannesmann, in 2000.

Along with five other former Mannesmann executives, Ackermann was accused of failing to act in the interests of shareholders when the takeover was approved.

He and his co-defendants were acquitted in July 2004.