Deutsche Bank's Ackermann Cleared in Mannesmann Trial

July 22 (Bloomberg) -- Deutsche Bank AG Chief Executive Officer Josef Ackermann was acquitted of charges he wasted shareholders' money as a Mannesmann AG director, ending Germany's first effort to jail managers for excessive bonuses.

Ackermann, who has spent as many as two days a week since January running Europe's third-biggest bank from a courthouse, was found not guilty of breach of trust charges related to bonuses and pension payments he approved during Vodafone Group Plc's 154 billion-euro ($189 billion) takeover in 2000, the Dusseldorf Regional Court ruled.

``We are only a commercial crime court,'' Head Judge Brigitte Koppenhoefer said, as she also cleared five other defendants including ex-CEO Klaus Esser of charges over more than 57 million euros in payments. ``We don't take any moral or ethical decisions. We don't judge Germany's corporate culture.''

The trial, which examined the conduct of Mannesmann directors and senior executives as they grappled with Vodafone's record bid, may lead to changes in corporate governance in Germany. The defendants argued they were rewarding a 50 billion-euro increase in market value. Prosecutors said it was a bribe to get managers to accept the takeover.

Ackermann's Second Office

During the trial, Ackermann has had to help manage two earnings reports, consider buying Germany's most-popular retail bank and oversee the country's largest initial share sale in more than three years partly from the dock or at an office in Dusseldorf, which is 225 kilometers (140 miles) from the lender's headquarters in Frankfurt.

Today's verdict comes after several other public-relations concerns for the bank in recent months, including takeover speculation, criticism over its handling of last month's Deutsche Postbank AG IPO after the sale raised less than forecast and a lawsuit by a former client, Leo Kirch.

Still, the trial hasn't hurt the bank's shares. Before today, the stock had lost about 6.5 percent during the trial, in line with the 6.3 percent decline on the benchmark DAX index.

Eight Votes

The five-judge panel looked at a total of eight votes between February and June 2000 in which the company's compensation committee -- Ackermann, 56, former Supervisory Board Chairman Joachim Funk, 70, ex-IG Metall union head Klaus Zwickel, 65, and workers' representative Juergen Ladberg, 57 -- approved the bonuses and pension payments.

Esser, 56, who received 16 million euros of the money at issue, and ex-employee Dietmar Droste, 44, were accused of aiding the suspected breach of trust.

The trial combined elements that made it Germany's biggest business case -- millions in executive pay, the fall of a 110 year- old industrial firm to a hostile bid and defendants that included the head of the country's biggest bank and the former head of Europe's biggest industrial union.

``The case disclosed problems in German corporate governance that need to be solved,'' Theodor Baums, a law professor at Frankfurt University, said in a telephone interview before the verdict. ``The consequences for the country are much more important than the case itself.''

Ackermann Focus

Ackermann, a Swiss national, was from the start the focus of the public's attention. A picture of him flashing a victory sign at the first day of hearings in January made the front pages of several newspapers after he criticized Germany as being ``the only country where people who are successfully creating value have to go to court.''

The court in 36 days of hearings questioned 55 witnesses including Hutchison Whampoa Ltd. Managing Director Canning Fok, via video-link from Hong Kong, and former Vodafone CEO Chris Gent.

Some of the witnesses, such as Mannesmann's auditor KPMG, disclosed improper voting procedures by the compensation committee, including one in which Funk, Esser's predecessor, voted on a bonus for himself. That decision was later repeated after Funk left the board.

The payments became front-page news in Germany when they were made public in February 2000 as part of the listing of particulars in a related transaction. Two men from Stuttgart --lawyer Mark Binz and accountant Martin Sorg -- filed a complaint with the prosecutor's office in Dusseldorf, Mannesmann's hometown. The two said they were sick of the ``self-service'' mentality of German managers.