Germany is wrestling with its worst business scandal in generations over allegations that Deutsche Bank brass lined pockets of pals to swing a merger deal.
The giant bank’s head, Josef Ackermann, was charged yesterday with breach of trust over $60 million in perks paid to executives of Mannesmann AG when the German company was bought by Vodafone Group PLC.
Ackermann, who was on Mannesmann’s supervisory board at the time, and four other former managers were charged with awarding excessive severance pay and bonuses using Mannesmann’s money, said German prosecutors.
They face 10 years in prison.
Prosecutors spent two years investigating payouts tied to the $186 billion takeover of Mannesmann, Europe’s biggest ever acquisition, in 2000.
Former Mannesmann CEO Klaus Esser, who at first rejected the Vodafone offer, was paid a total of $33.1 million in severance pay and a so-called appreciation award after he agreed to sell the company.
Deutsche Bank had no comment on the charge against Ackermann.
The scandal sent the banks’ shares tumbling nearly 6 percent, and caused Germany’s stock market to sink to its lowest level since 1996.
The charge against Ackermann comes at the same time Deutsche Bank’s chairman and former CEO, Rolf Breuer, is being investigated for comments in which he trashed the creditworthiness of German media company Kirch Holding GmbH.