Mannesmann Deal

"The little guys always pay while the big guns get off free" is the sort of comment that will likely be bandied about in the wake of Deutsche Bank CEO Josef Ackermann's legal coup. Indeed, Ackermann is one of the most prominent, highly paid and influential managers in Germany. The other five defendants in the closely watched Mannesmann trial were also at home in the highest echelons of German business. And a lot of money was at stake on Europe's most expensive takeover battlefield.

Seven years ago, when British mobile phone company Vodafone absorbed Germany's massive Mannesmann -- active in both steel and cell phones -- the defeated Mannesmann executives who had finally agreed to the deal were reimbursed nearly 60 million euros for their troubles (which included severe job losses at the company.)

Since then it has been the job of the courts to decide whether, or to what degree, the managers who approved these payments were in breach of fiduciary duty or guilty of abetment.

Price of freedom

An original acquittal was handed down in 2004, but at the end of last year Germany's highest court ordered a retrial, which opened a month ago. That trial has now ended without a sentence, the defendants having used the opportunity to buy their way out of the hot seat.

Freedom has cost them considerable sums -- a total of 5.8 million euros. Ackermann alone has agreed to a fine of 3.2 million euros, which will go to the state and to charities.

And that was that.

Luminaries from ex-Chancellor Helmut Kohl to tennis star Steffi Graf have used the same cash-payment method to end trials. But it isn't entirely true that rich, powerful and prominent people are immune to from earthly justice. Each year around 300,000 mostly smaller cases are solved according to paragraph 153 a of the German legal code if to do so means "dispelling public interest in the criminal proceedings" of a smaller claims case.

In this case, it speaks in favor of the head of Germany's biggest bank that he approved the big payoffs while on Mannesmann's board, but didn't take any money himself. For his part, former union chief Klaus Zwickel agreed to payments, but didn't receive any. And as the main recipient, former Mannesmann Chairman Klaus Esser could point to the fact that he didn't ask for any payoff.

Caretakers of the estate

In the appeal, Germany's Federal Court of Justice wrote that, as employees, the defendants were not owners of the estate, but merely its caretakers. The court concurred that they were irresponsible with other peoples' money -- in this case the money of the stockholders who own Mannesmann. But they could not prove that the defendants intentionally broke the law. And thus a modern version of an ancient practice in the Catholic church -- the selling of indulgences – became the appropriate way to bring legal proceedings to a close.

For the defendants, this had the advantage of getting them out of the trial without a criminal record -- for Josef Ackermann, a prerequisite for keeping his high-paying Deutsche Bank job. The 3.2 million euros he has been ordered to pay amount to a mere two months' salary for Ackermann -- a pain easy enough to bear.

The trial ended without an admission of guilt, and without a verdict -- but all was not for naught. The appeals trial led the Federal Court of Justice to shed some light on a legal area that was, up to now, buried in shadow. And the court laid down important principles pertaining to one-off payments made to managers.

Influencing the law

Moreover, the trial sensitized high-paid executives to the concepts of service versus self-service. Or so we hope. In any case, future wrongdoers are not going to find it so easy to dodge charges by claiming they weren't aware their actions were illegal.

The trial did its part to prop up the stability of the law. But given that it also seems to officially sanction defendants buying their way out of justice, it still leaves a bad taste in the mouth.

Karl Zawadzky is DW-RADIO's business editor (jen)