The chief executive of Deutsche Bank, Josef Ackermann, along with the former Mannesmann CEO Klaus Esser, plus four other board members, are on trial in Dusseldorf facing fraud-related charges. The men are charged with criminally approving severance packages worth a total of $110m for Esser and other managers of the conglomerate.
The others facing charges include Klaus Zwickel (former head of IG Metall, Germany’s largest union), Dietmar Droste (former Mannesmann personnel chief), Joachim Funk (Mannesmann’s former chariman), and Jurgen Ladberg (former works council chief).
German prosecutors allege bonuses tied to the record bid for the German company were excessive and designed to overcome opposition to the takeover. The defendants say it was a reward for boosting Mannesmann’s stock market value.
The long takeover battle for Mannesmann was an emotional issue in Germany, where there was general hostility to one of the cornerstones of the country’s economy being acquired by an overseas mobile phone operator.
Indeed, last week German Chancellor Gerhard Schroeder criticized the high pay of some German executives as not moral.
In other countries, such payments would barely have raised eyebrows as top executives have little incentive to stay on after a takeover. In the Mannesmann case, Vodafone needed Esser’s expertise in particular to mastermind the sale of the German’s company’s core engineering interests.
During his testimony, Gent dismissed prosecutor accusations that bribery played a role in convincing the Mannesmann board to accept Vodafone’s bid. During cross examination, Gent said that Esser had never raised the issue of a bonus. The takeover he said was exceptional and extraordinary, and had been determined by international capital markets and not by compensation payments which were never a requirement for a deal.
The prosecutor, Johannes Puls, had argued during the trial that the size of the bonuses went against the interests of Mannesmann and its shareholders and that they were therefore illegal under German corporate law. The sole reason for the bonuses was the support for the friendly takeover of Mannesmann by Vodafone, he said.
However, Gent personally endorsed Esser’s conduct, despite reports of some ill feeling between the two men during the takeover battle. During the bid and especially afterwards, I grew to like and respect [Esser]. I’m sorry that he is now the object of so much unjustified suspicion and unfair criticism.
Gent then went to add, To my mind, he fought with great determination for his company’s interests and created immense wealth for his shareholders.
Meanwhile, the five-judge panel will hold a closed-door meeting on Wednesday with prosecutors and lawyers to assess proceedings so far. The results of the meeting will probably be made public the same day.
This article is based on material originally published by ComputerWire
