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GERMANY: Germany's Top Banker Faces Retrial

Associated Press
December 21st, 2005

A federal court ordered a retrial for Deutsche Bank CEO Josef Ackermann and five others on Wednesday over large payments to executives during Vodafone PLC's 2000 takeover of rival mobile phone company Mannesmann AG.

Deutsche Bank's supervisory board expressed its ''unrestricted trust'' in Ackermann even as Germany's biggest bank faces the disruption of its top manager in court again. The company said it regrets the ruling.

The Federal Court of Justice upheld an appeal from prosecutors who had challenged the acquittals by a Duesseldorf state court last year. It was unclear when a retrial might start.

Deutsche Bank shares dipped after the announcement but quickly recovered. They were up 0.7 percent at 82.36 euros ($98.95) in late trading on the Frankfurt exchange.

Ackermann himself underlined his intention to stay at the helm, saying he felt bolstered by ''enormous support'' from employees, clients and shareholders, spokesman Ronald Weichert said.

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 managers and board members are ''not masters of property but administrators of property.''

In July 2004, the Duesseldorf court found the six defendants not guilty of charges that they illegally engineered payments to executives at Mannesmann after its takeover by Vodafone. The 180 billion euro deal was the largest corporate merger ever at the time.

In all, bonuses and retirement packages of 150 million marks ($90.9 million) to executives were approved. Prosecutors have argued that a special severance payment of more than 15 million euros to former Mannesmann CEO Klaus Esser was not in the interests of the company.

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

Such cases typically take months to return to court. The proceedings also could theoretically be abandoned in exchange for fines.

Ackermann lawyer Eberhard Kempf told n-tv television that he expected the retrial would last only half the time of the original, six-month proceedings.

A German shareholders' protection group suggested that Ackermann, who has headed the bank since mid-2002, should resign.

''Deutsche Bank is stumbling from one image problem to the next -- this cannot continue,'' said Juergen Kurz, a representative of the DSW organization. He added that the bank needs to find a solution, ''but I don't think one is possible with Ackermann.''

Ackermann ruffled feathers in Germany earlier this year when the bank announced job cuts at the same time as strong 2004 earnings. The bank also drew criticism this month for freezing a real-estate fund in order to revalue its assets.

However, the bank said its supervisory board ''has no doubt that Dr. Ackermann will continue his work successfully and will support him in doing so.''

The board ''thanks him for the responsible manner in which he has faced the proceedings so far and will face the proceedings in future,'' a company statement said. It noted that he has ''devoted his efforts unswervingly and with great success to the interests of Deutsche Bank,'' despite the trial.

The Duesseldorf 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 2 1/2-year prison term for Esser and three years for former board chairman Joachim Funk, saying they had agreed to ''illegally enrich themselves'' with 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 -- Juergen Ladberg, an employee representative, and Klaus Zwickel, the retired head of the IG Metall industrial union.

Ackermann's attorneys say 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 U.S.

Judge Tolksdorf said Wednesday it was unfair to dismiss critics as ''only participating in a debate driven by envy.''



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