Deutsche Bank chief executive Josef Ackermann walked free from one of the biggest corporate trials in Germany on Wednesday after prosecutors agreed to drop charges in return for a multi-million-euro settlement.
The trial went Ackermann's way
The regional court in Düsseldorf hearing the case announced that the charges against Ackermann and five co-defendants had been formally dropped in exchange for an agreement to pay a total of 5.8 million euros ($7.6 million) in financial settlements.
The deal marks the end of the long-running Mannesmann trial, a landmark case that put corporate ethics and alleged boardroom greed in the spotlight in Germany.
Already on Friday, prosecutors had agreed to drop charges against Ackermann in exchange for a financial settlement for him alone of 3.2 million euros. The Deutsche Bank chief had agreed to pay the money -- which amounts to three months' of his current wages -- out of his own pocket.
Charges were also dropped against the other five co-defendants, likewise in return for cash payments.
No verdict, no criminal record
Mannesmann's former chairman, Klaus Esser, will have to fork out 1.5 million euros, Mannesmann's former supervisory board chief Joachim Funk 1.0 million euros, the former head of the powerful IG Metall labor union, Klaus Zwickel 60,000 euros and former works council members Jürgen Ladberg and Dietmar Droste will pay 30,000 euros and 12,500 euros respectively.
Ackermann, Esser, Funk, Zwickel, from top left, clockwise
Under terms of the settlement, the men will not have a criminal record.
The men had been accused of breach of fiduciary duty for their role in approving huge bonuses following the takeover of German telecom giant Mannesmann in 2000 by British mobile phone giant Vodafone. They were accused of breaking the law by approving 111.5 million marks (57 million euros) in payouts for former Mannesmann executives. Esser himself pocketed 16.4 million euros.
The six men were originally acquitted in July 2004. But at the end of last year, the Germany's supreme court ordered a retrial, which opened just a month ago.
Ethical can of worms
The Mannesmann case has not only put executive pay in Germany in the spotlight. It also raised ethical questions about what had been the successful transformation of Mannesmann from an industrial conglomerate into a leading mobile telecommunications group.
In the original trial, the court 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.
At the time of the Mannesmann payouts, Ackermann had been a member of the group's supervisory board.
The defense said the bonuses were a valid way to motivate company brass
Ackermann and his defense team argued that big payouts to executives, common in the United States and Britain, were needed to motivate corporate leaders to take risks. After all, Mannesmann had been transformed from a heavy engineering group into a telecommunications giant at the beginning of deregulation of telecommunications and the arrival of mobile telephones.
Esser argued during his trial that the price of shares in the company had doubled during his tenure.
Prosecutors contended that the payments were illegal because they were designed to persuade managers, and Esser in particular, to drop their resistance to Vodafone's bid after a long takeover battle. Critics saw the bonuses, unprecedentedly high by German standards, as evidence of corporate greed, especially because many Mannesmann employees were expected to lose their jobs as a result of the takeover.