The chief executive of Deutsche Bank, Josef Ackermann, along with the former Mannesmann CEO Klaus Esser, plus four other board members, are on trial facing fraud-related charges. The other accused men are Klaus Zwickel (former head of IG Metall, Germany’s largest union), Dietmar Droste (former Mannesmann personnel chief), Joachim Funk (Mannesmann’s former chairman), and Jurgen Ladberg (former works council chief).
Ackermann, Funk, Zwickel and Ladberg are charged with breach of trust, which carries a maximum penalty of 10 years in prison. Esser and Droste face charges of abetting a breach of trust.
The charges stem back to the 154bn euro ($188bn) takeover of Mannesmann in 2001 by Vodafone Group Plc. German prosecutors allege that the 57m euros ($69m) worth of executive bonuses tied to the record bid for the German company were excessive and designed to overcome opposition to the takeover.
The men deny the charges and say the bonuses were paid in recognition of the enhanced shareholder value created by Esser and his management team, after their defensive tactics forced Vodafone to increase its offer.
This week the prosecutor completed his two-day summing up and called for Deutsche Bank’s Ackermann to receive a two-year suspended sentence. He also called for the former CEO of Mannesmann (Esser) to be jailed for two and a half years, with Mannesmann’s former chairman Joachim Funk to go to prison for three years. Additionally, he called for the other defendants (Zwickel, Droste, and Ladberg) to receive suspended sentences of 12 to 22 months.
Prosecutor Dirk Negenborn said during his final arguments that Funk and Esser ignored any concerns and sought to enrich themselves during the acquisition. Ackermann’s conduct showed a certain indifference to the assets of Mannesmann, he said.
Funk, aged 70, should receive the longest sentence – three years in jail – because he had the most responsibility as head of the supervisory board, Negenborn said. He also voted on a 4.5m euro ($5.4m) bonus for himself.
The defendants and their lawyers will give final statements starting next week.
The high-profile show trial started back in January, and has been running two days a week. It is widely expected that the defendants will be acquitted, as the prosecution case has looked shaky at best, and was dealt a body blow in late March when the presiding judge, Brigitte Koppenhoefer, concluded that there was no proof of any criminal activity so far, and that criminal charges were unwarranted.
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.
The trial however has been a major distraction for Ackermann, who has continued to run Germany’s largest bank. The judges are due to give their verdict on July 21.
