Six German business figures, including Deutsche Bank chairman Josef Ackermann, go on trial in Duesseldorf this week in a case examining the bonuses paid out in the spectacular US$230 billion Mannesmann takeover battle four years ago.
While the legal aspects are intricate, the view in the mind of the general public is that the trial, starting Jan. 21, is about a moral issue -- the perceived greed of executives approving huge bonuses for themselves and others.
German prosecutors will be trying to prove that the 111 million marks (US$71 million) in bonuses paid out after the hostile takeover of Mannesmann by British firm Vodafone in early 2000 were exorbitant and a breach of duty toward Mannesmann shareholders.
The defense will argue that, far from being hurt, shareholders actually benefited by the fact that the biggest corporate takeover in history drove the price of Mannesmann shares strongly upwards.
Besides Ackermann, who at the time was on Mannesmann's supervisory board, the most prominent defendants are Klaus Esser, the former chief executive, along with Joachim Funk, who was chairman of the company's supervisory board and Klaus Zwickel, former chief of the metalworkers union IG Metall who also sat on the supervisory board.
Neither Zwickel nor Ackermann received any money themselves, but their votes on the supervisory board helped to approve the bonuses for some of the others.
Two lesser-known figures, Juergen Ladberg who was head of Mannesmann's employees council, and the former personnel director, Dietmar Droste, are also charged.
At the core of the charges is a German word -- untreue -- which in the business sense roughly means "breach of fiduciary duty," the obligation to defend company and shareholder interests.
But defining this term could prove to be difficult in a German court, legal analysts ahead of the proceedings said, noting the differing practices and views about bonuses in the Anglo-American corporate world and those in Germany.
Under the German criminal code's paragraph 266, the breach of fiduciary duty concept could be applied on grounds that the bonuses were money which should have gone to Mannesmann's shareholders and not to individual executives.
Chief among the recipients was Esser, who had bitterly tried to fight off his company's takeover by Vodafone, but who then got a "golden parachute" of more than 60 million marks (US$31 million).
While in popular sentiment this might look like greed, prosecutors will have to prove that the bonuses did actual damage to Mannesmann shareholders in the untreue sense of breach of fiduciary duty.
Further, while bonuses are known to be business-as-usual in the Anglo-American corporate world, laws covering German corporations do not provide for such large-scale payments.
Under German stock corporation law paragraph 87, rewards to executive directors have to be "kept in appropriate relation" to the duties assigned them. This means the Duesseldorf court will have to grapple with what defines "appropriate."
Prosecutors are expected to argue that the bonuses were to the detriment of shareholders and to the Mannesmann company, and that being so much in excess of the usual rewards paid to German executives, the payments were far from being appropriate.
But the defense is expected to point out how Mannesmann shareholders benefited, thanks to Esser's spirited battle trying to ward off the takeover.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2