Defendants in the long-running Mannesmann case go back to court after Germany's highest court threw out a previous acquittal, reopening the trial. The move threatens to end the career of Deutsche Bank CEO Ackermann.
Deutsche Bank CEO Josef Ackermann's future is in doubt after the court ruling
Deutsche Bank CEO Josef Ackermann and his co-defendants -- former Mannesmann chairman Klaus Esser, Mannesmann's former supervisory board chief Joachim Funk, the former head of the powerful IG Metall labor union, Klaus Zwickel, and two others, Jürgen Ladberg and Dietmar Drost -- will now face further examination of their roles in the Mannesmann-Vodafone takeover battle in 2000.
The six men were accused of charges of breach of fiduciary duty when they rubber-stamped multi-million-euro golden handshakes to managers at the end of the fiercely contested takeover.
In July 2004, the six men were acquitted of breaking the law by approving a total 111.5 million deutsche marks (57 million euros, $68 million) in payouts for former Mannesmann executives.
Addressing the packed courtroom on Wednesday, Judge Klaus Tolksdorf said, "Such a bonus is nothing other than a waste of money and that runs against their fiduciary duty,"
"There was no incentive to management as a result of the payments."
"Punishable behavior will not go unpunished just because some parties set themselves above the law," Tolksdorf said.
A court in Düsseldorf ruled last year 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 with or without probation for the defendants. But already at the end of October, Judge Tolksdorf expressed skepticism about the original acquittal. The Federal Court of Justice is Germany's highest appeals court for cases of civil and criminal law.
Ackerma n n 's positio n i n doubt after court ruli n g
Mannesmann trial part II: Ackermann and Co. may not be so lucky this time
The court's decision to reopen the case and overturn the Düsseldorf court's acquittal will throw Ackermann's future as head of Deutsche Bank into doubt.
Having survived in his job during the original trial, where he was compelled to attend court twice a week over a period of six months, Ackermann then managed to remain in his post despite coming under sustained fire for brutally slashing thousands of jobs at a time when Deutsche Bank was turning in record profits and committing a series of damaging public relations blunders.
Ackermann's lawyer said the ruling sent the case "back to square one" and insiders at Deutsche Bank admitted that it was a disappointment.
Financial experts see Deutsche Bank chief on borrowed time
Observers have said that Ackermann's return to court would be "unsupportable" for a bank of Deutsche Bank's standing and that the highly unpopular Swiss banker's days could well be numbered.
A German shareholders' protection group suggested in the wake of the ruling that Ackermann should resign. "Deutsche Bank is stumbling from one image problem to the next. This cannot continue," said Jürgen Kurz, a representative of the DSW organization in an interview with Associated Press. He added that the bank needed to find a solution, "but I don't think one is possible with Ackermann."
"Deutsche Bank actually cannot afford to have a boss who will again be in the dock for months," said Ulrich Hocker, DSW's managing director. "Mr Ackermann is increasingly becoming a problem for the company."
Wolfgang Gerke, a banking professor at the University of Erlangen-Nuremberg, told Reuters that he expected Ackermann to step down at the beginning of next year.
Germany's financial watchdog BaFin said it would not push for Ackermann to resign following the ruling, but agreed that the retrial is likely to increase pressure on him to step down.
Deutsche Ba n k supports chief despite successio n pla n
Deutsche Bank already has a contingency plan in case Ackermann quits
A Fi n a n cial Times report Wednesday said that the bank has already put a succession plan into action to find a replacement for Ackermann if he chooses to resign his post.
Ackermann knows that a retrial could further tarnish the reputation of the bank he has led for just three years and may quit if a retrial drags on, a senior Deutsche Bank official had said before the judgment.
Rainer Neske, the head of the bank's retail banking operations is emerging as the most likely candidate if Ackerman quits, senior officials at Deutsche Bank told the paper.
Deutsche Bank, however, has maintained that Ackermann's job is secure and reiterated its stance that he did the "right thing" at Mannesmann.
"We will encourage him to stay, regardless of the personal hardship he would be put through (by a retrial)," Rolf Breuer, the bank's supervisory board chairman, told the FT.