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Business

Deutsche Bank Boss Could Be Back in the Dock

Germany's highest court will decide Wednesday whether to re-open the controversial Mannesmann case -- a decision that may see the head of Germany's largest bank, Josef Ackermann, in court again.

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Josef Ackermann might not be so lucky the second time around

Deutsche Bank chief Josef Ackermann could find his future hanging in the balance this week if Germany's highest court decides to re-open the long-running Mannesmann case in which the highly unpopular Swiss banker is one of the main defendants.

Ackermann has long been under fire for brutally slashing thousands of jobs at a time when Deutsche Bank was turning in record profits and he himself was the highest paid chief executive in the country.

And he was heavily criticized for a series of subsequent public relations disasters.

Most recently, he took more flak following the decision by Deutsche Bank's real estate arm to temporarily freeze one of its real estate funds.

Case likely to be re-opened

Despite the seemingly never-ending controversy, Ackermann has so far held on to his seat as head of Germany's biggest bank.

But observers say his position could become untenable if the Bundesgerichtshof or Federal Supreme Court rules on Wednesday that the so-called Mannesmann affair has to be re-opened.

Hauptversammlung Deutsche Bank in Frankfurt

The company has been surrounded by controversy

All the indications appear to point to a revival of the case, in which Ackermann and five other top executives are accused of breach of fiduciary duty when they rubber-stamped multi-million-euro golden handshakes to managers at the end of the fierce Mannesmann-Vodafone takeover battle in 2000.

Ackermann's co-defendants are former Mannesmann chairman Klaus Esser, Mannesmann's former supervisory board chief Joachim Funk, the former head of the powerful IG Metall labour union, Klaus Zwickel, and two others, Jürgen Ladberg and Dietmar Drost.

Judge sceptical of acquittal

In July 2004, the six men were acquitted of breaking the law by approving a total 111.5 million Deutsch Marks (57 million euros, $68 million) in payouts for former Mannesmann executives. Esser himself pocketed 16.4 million euros.

A court in Düsseldorf ruled that while the size of the payouts went against Mannesmann's interests and were therefore not admissible under German stock law, they did not constitute criminal action, as claimed by the prosecution.

The prosecution had been demanding prison sentences of varying length with or without probation for the defendants.

Mannesmann-Prozess - Esser Ackermann p178

The case could take more than one year

But already at the end of October, supreme court judge Klaus Tolksdorf expressed scepticism about the original acquittal.

And if the Karlsruhe court does finally decide on Wednesday to re-open the case, Ackermann will find himself in the dock once again.

A repeat of the original trial, in which Ackermann as the country's most powerful banker was compelled to attend court twice a week over a period of six months, would be unsupportable for a bank of Deutsche Bank's standing, observers say.

The defense argues that the payouts were in line with international practice and reflected the increase in value of Mannesmann shares during the 188-billion-euro takeover battle with Vodafone.

But the prosecution insists the payments were nothing more than "presents" of money that was not the supervisory board's to distribute.

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