Swiss banker faces "trial of the century"

Josef Ackermann said the case would damage Germany's reputation

A marathon trial involving one of the most high-profile Swiss bankers has opened in Germany.

This content was published on January 21, 2004 - 08:12

Josef Ackermann, the chief executive of Deutsche Bank, is appearing before a Düsseldorf court on charges of committing a breach of trust.

The case - which has been described as the most significant business trial in Germany’s post-war history - is likely to have wide-ranging consequences for boardroom practices in the country.

And for Ackermann, considered one of the Swiss banking industry’s leading exports, it is the start of what is expected to be a gruelling six-month legal process.

The banker faces no fewer than 40 court appointments, consuming an average of two days per week of the banker’s time.

Apart from adding to the daily burden of running one of Europe’s biggest banks, the case is also a potential blight on what has long been regarded as an exemplary career.

The accusation

The 55-year-old is a former board member of the German engineering and telecommunications giant, Mannesmann. He is one of six former senior executives and directors to go on trial.

They are charged with breach of trust over the way bonuses were awarded to board members of Mannesman, in a hostile takeover of the firm by Britain’s Vodafone in 2000.

They are accused of unlawfully granting over SFr90 million in “appreciation awards” and accelerated pensions to Mannesmann executives.

There is no suggestion that Ackermann profited personally from the deal - the key question is whether he and other Mannesmann executives abused their duty to protect the company’s assets and the interests of its shareholders.

The buyout, worth €178 billion (SFr280 billion) - helped boost Vodafone's global expansion, but some in Germany saw the takeover as the demise of a long-standing industrial icon.

Prosecutors are particularly interested in why Klaus Esser, the then chief of Mannesmann, pocketed some SFr45 million in awards, even though he had opposed the Vodafone takeover.

There are six other specific accusations, each of which experts say will hinge on the court’s interpretation of a paragraph within the German criminal code.

This relates to the definition of breach of trust, a failure to carry out a “fiduciary duty”.

There is widespread legal disagreement over what the term implies.

High stakes

If found guilty, Ackermann faces up to ten years of imprisonment and the end of his banking career in Germany.

Recently dubbed by Germany’s “Der Spiegel” magazine "the banker with Robert Redford’s smile", Ackermann has built his reputation as an “American-style” executive.

Born in Mels in canton St Gallen, Ackermann was awarded a doctorate in social science and economics at the University of St Gallen, before joining Credit Suisse in 1977, working in the United States, Zurich and London.

He became chief executive in 1993, losing his position when the bank restructured in 1996.

Since joining Deutsche Bank in the same year and rising to chief executive in 2002, Ackermann has become one of Germany’s leading corporate figures.

“He is an industry champion at a time when Germany’s banks are struggling to make money in a market awash with bad debts and structural obstacles,” the Financial Times wrote last week.

Ackermann said recently that the trial would create an image problem for both himself and Germany.

swissinfo, Jacob Greber in Zurich

In brief

Josef Ackermann, 55, is the chief executive and chairman of Deutsche Bank. He is accused of committing a breach of trust.

The case is likely to have wide-ranging consequences for German corporate practices.

The trial relates to a hostile takeover by Britain’s Vodafone of the German industrial conglomerate, Mannesmann, in 2000.

Ackermann and five other former executives at Mannesmann are accused of failing to act in the interests of shareholders when they approved the takeover.

The case will focus on some SFr90 million paid to Mannesmann executives as “appreciation awards” following the SFr280 billion takeover.

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