Home / World Business
Fri, Oct 27, 2006 - Page 10 News List

Second Ackermann trial on dispute over bonus commences

AP , DUESSELDORF, GERMANY

Deutsche Bank chief executive Josef Ackermann went on trial yesterday for a second time after approving disputed multimillion-euro bonus payments to executives in a 2001 takeover battle at telecoms firm Mannesmann AG.

Ackermann, who helped steer Germany's biggest bank to record profits while cutting costs, has said that he will resign if found guilty.

The bank's board of directors has stood behind him -- as they did in his first trial, which ended in acquittal.

The charges do not relate to the activities of Ackermann at Deutsche Bank. Ackermann did not receive money himself, and has rejected the accusations.

But his style has often drawn criticism in Germany -- the bonuses paid to departing executives at Mannesmann were considered by many as excessive in a business culture that has not caught up with the big-money pay practices prevalent in US and British banking.

Deutsche Bank at one point drew heavy criticism for announcing a healthy profit together with hefty job cuts.

In 2004, Ackermann -- a former member of Mannesmann's board -- and five others were acquitted of breach of trust over allegations that they illegally engineered payments to executives at Mannesmann after its takeover by rival Vodafone Group PLC. The US$226 billion deal was the largest corporate merger ever at the time.

In all, bonuses and retirement packages of US$97 million to executives were approved. Prosecutors have argued that a special severance payment of more than US$18.9 million to former Mannesmann chief executive Klaus Esser was not in the best interest of the company.

After prosecutors appealed, the case was revived last December when Germany's Federal Court of Justice ordered a retrial.

The protracted legal proceed-ings have been a distraction as the bank strives to become more international in its reach while shoring up its position at home.

In Germany, awards of the size made to the Mannesmann managers are uncommon and top executives' compensation is generally more modest than in the US.

This story has been viewed 1673 times.
TOP top