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Josef Ackerman
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Josef Ackermann (pictured) says his trial is an "image problem for Germany, for Deutsche Bank and for me – in that order". This is certainly true, but almost underplays its significance. The trial has become a flashpoint for those opposed to attempts to overhaul Germany's creaking economic model.
Ackermann is being tried for breach of trust when he was a supervisory board member of Mannesmann, the telecoms company sold to Vodafone in 2000. The charge is that he betrayed Mannesmann investors by approving large bonuses for Klaus Esser, the company's then chief executive, and other directors.
For Germany, the case is an embarrassment for a number of reasons. First, it makes the law look like an ass. Ackermann's actions didn't harm shareholders. Esser almost doubled their money by selling Mannesmann just before the technology, media and telecoms bubble burst. The payment was actually proposed by the company's biggest shareholder, Hutchison Whampoa, after he created e10 billion of value for it.
Second, the trial has given a public platform to those hostile to economic reform. The government of Gerhard Schröder has been struggling to liberalize labour laws, overhaul the pension system and cut unemployment benefits. The Ackermann case has been seized on by unions and politicians who want to preserve the traditional welfare system.
Schröder's first finance minister, Oskar Lafontaine, a figure who epitomizes the old left wing of the governing Social Democratic Party, has even called the payments "organized crime". These sorts of claims, however ludicrous, resonate in a country where elites and high salaries are looked upon with suspicion.
Lastly, it may harm Frankfurt's already dented image as a European financial centre. International banks are hardly going to be encouraged to site operations in Germany should the country's leading banker be flung into jail.
For Deutsche Bank, the trial itself will be a major distraction. Ackermann will be out of the office for two days a week for the foreseeable future. The bank will be partly deprived of his services at a time when Germany is struggling to emerge from a banking crisis and US banking consolidation is threatening to change the European landscape.
It is hard to see Deutsche embarking on a big acquisition. For one thing, investors would be understandably wary of backing a deal while there were doubts about Ackermann's availability to manage the integration.
And should Ackermann be found guilty, Deutsche might even have to find itself a new chief executive. That process might open up old divisions in the bank between the traditional German bankers and its highly paid investment banking executives.
The trial also threatens to overshadow Ackermann's achievement in reforming Deutsche's culture and cutting its costs. Indeed, one of the reasons there is so much Schadenfreude about it is because he has shaken up Deutsche's old culture so successfully. And what's more, he's not even German, but Swiss.
The Mannesmann trial is really an effort to win back some symbolic ground for Germany's floundering model of consensus capitalism. This may warm the hearts of the anti-capitalists, the envious and the insular. But this is precisely what Germany doesn't need. The Schröder government has, somewhat belatedly and timidly, accepted the need for reform. Anything that blunts its resolve won't help Germany in the long run.
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