German Executives Cleared Over Vodafone Payments

A court today cleared Germany's leading bank chief and five others of illegally overpaying executives following Europe's biggest corporate takeover.

In a packed courtroom in Dusseldorf, the judge told Josef Ackermann, the chief executive of Deutsche Bank - Germany's biggest bank - and his co-defendants they were free to leave after one of the most closely followed trials in German corporate history.

"In this criminal process, it is not up to the court to make management decisions or moral or ethical judgments," Judge Brigitte Koppenhoefer said. "We are not judging German corporate culture although the evidence we saw was puzzling at times."

Mr Ackermann and the other defendants had denied charges of criminal breach of trust in approving €60m(£39.9bn) in payments to executives when Mannesmann was taken over by Vodafone, the British mobile phone operator, in 2000 for £97.6bn, one of the largest mergers ever at the time. The deal was engineered by Sir Christopher Gent, then the chief executive of Vodafone, who testified during the trial.

Though hardly unusual in many other countries, the payments were considered astronomical in Germany, where top executives rarely earn more than €2m annually.

On trial along with Mr Ackermann were Klaus Esser, the former chief executive of Mannesmann, Joachim Funk, the former board chairman, Dietmar Droste, the head of personnel, and two other board members - Juergen Ladberg, an employee representative, and Klaus Zwickel, the retired head of the IG Metall industrial union.

Although he received no money himself, Mr Ackermann, who was on the Mannesmann board at the time and signed off on the payments, was charged with breach of trust along with the others.

Defence lawyers had called for acquittals, saying that prosecutors failed to prove actual economic damage to the companies and that the payouts were appropriate compensation for increasing Mannesmann's value. Mannesmann shares jumped 136% after the takeover, they said.

Mr Ackermann criticised the investigation, questioning whether judges should be setting guidelines for executive compensation.

"This is the only country where those who succeed in achieving a good price [for a company] are dragged before court for it," Mr Ackermann said at the start of the trial in January.

Today's acquittal removed a major distraction for Deutsche Bank and Mr Ackermann, who has been tied up with the trial two days a week since it began. Deutsche Bank strongly backed Mr Ackermann, who continued as chief executive during the trial.

The trial aroused strong emotions amid concern that Germany had become "infected" by free-market excess, more commonly associated with the US and Britain. In an indication of the intense feelings triggered by the case, Judge Koppenhoefer said she had received threats and harassing phone calls related to the trial.