Deutsche Bank CEO Josef Ackermann and five other leading German business executives were acquitted on July 22 of criminal charges that they wasted shareholders’ money by authorizing large payments to senior staff when former industrial and telecom giant Mannesmann was taken over by Britain’s Vodafone, the world’s largest mobile company.
The public prosecutor of North-Rhine Westphalia, Germany’s most populous state, had demanded that Ackermann, who was a member of the Mannesmann supervisory board at the time of the acquisition, should be sent to prison for breach of trust. He alleged that Ackermann, 56, broke his legal obligations to shareholders by sanctioning bonuses and retirement packages worth $95 million for Mannesmann managers.
Such payouts aren’t unusual in the U.S. or Britain. But in consensual, welfare-oriented Germany, the compensation packages’ size horrified many politicians, shareholders, union leaders, and ordinary Germans.
Ackermann’s defendants in the corporate trial of the decade argued that the big bonuses were a justifiable reward because Mannesmann’s market value had rocketed more than $60 billion during the course of takeover negotiations, giving shareholders a huge windfall. Ahead of the trial, Ackermann castigated Germany for being the “only country where people who are successfully creating value have to go to court.”
The chief judge at the trial, Brigitte Koppenhöfer, found the defendants not guilty of any criminal wrongdoing, even though their payments were unusually large. She added that Ackermann and the others were wrong to have agreed to the bonuses after the company’s sale had been concluded — though she said that didn’t breach any criminal law. “We are only a commercial criminal court,” she said. “We don’t make any moral or ethical decisions. We don’t judge Germany’s corporate culture.”
If Ackermann, a Swiss citizen, had been found guilty, he would automatically have lost his license to be a banker and forced to resign as CEO, throwing Deutsche Bank into turmoil. There’s no obvious alternative to Ackermann to run Deutsche, which is Germany’s largest bank and national flagship. Said Ackermann after the verdict was announced: “I am extraordinarily grateful that the court sees the situation the way we have always presented it. An acquittal is an acquittal, and now we can concentrate on the bank again.”