DEUTSCHE BANK

When Bankers Bite Back

Der ehemalige Vorstandsvorsitzende der Deutschen Bank, Josef Ackermann, kommt am 18.05.2015 in München (Bayern) in den Verhandlungssaal im Landgericht. Vier ehemalige Manager und der aktuelle Co-Chef der Deutschen Bank Fitschen müssen sich wegen versuchten Betrugs im Kirch-Prozess verantworten. Foto: Sven Hoppe/dpa +++(c) dpa - Bildfunk+++
An honest Joe?
  • Why it matters

    Why it matters

    If former and current Deutsche Bank executives are found guilty of misleading a court, the reputation and businesses of Germany’s largest bank could suffer.

  • Facts

    Facts

    • Alongside Joe Ackermann, current Deutsche co-chairman Jürgen Fitschen, ex-boss Rolf E. Breuer, ex-supervisory chairman Clemens Börsig and former board member Tessen von Heydebreck are on trial.
    • Deutsche Bank and Kirch Group settled a long-running damages case in 2014, agreeing to pay €925 million, or $1 billion, to the heirs of Leo Kirch.
    • Mr. Kirch, and later his heirs, alleged Mr. Breuer intentionally raised doubts about Kirch Media’s financial position to precipitate the media company’s collapse, and then profit from investment banking fees in its ensuing breakup.
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    Audio

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The agenda for the eighth day of a trial against current and former Deutsche Bank executives appeared unspectacular at first, but then the ex-chief executive of Germany’s largest bank decided to speak.

The testimony of Josef Ackermann, Deutsche Bank’s CEO between 2002 and 2012, turned into a verbal broadside against Guido Kotschy, the judge presiding over Deutsche Bank’s €925 million, or $1 billion, civil settlement last year with the heirs of Germany’s once-powerful Kirch media group.

Mr. Ackermann and four other managers, including current Deutsche Bank co-CEO Jürgen Fitschen, are accused of colluding to mislead a previous court about the events leading to the 2002 bankruptcy of Kirch Media. Founder Leo Kirch accused and sued the bank for having a hand in his company’s collapse. The bankers and Deutsche Bank have repeatedly denied the charges.

“My testimony was met with skepticism from the beginning”

Josef Ackermann

The Kirch saga is one of a series of court cases that have been impacting Deutsche Bank’s bottom line in recent years. Germany’s largest bank agreed in April to pay $2.5 billion to U.S. and British authorities to settle accusations of manipulating benchmark interest rates. Thousands more legal cases against the bank are still pending.

The high profile case started at the end of April. Since then, the managers have been forced to appear once a week in a Munich courtroom. A few days ago, Mr. Kotschy, the judge who presided over the bank’s €925 million civil settlement with Kirch last year, caused furor with his testimony against Mr. Ackermann.

Alongside Mr. Ackermann and Mr. Fitschen, ex-boss Rolf E. Breuer, ex-supervisory chairman Clemens Börsig and former board member Tessen von Heydebreck are on trial.

The suit against Deutsche Bank was sparked by an interview in February 2002 with Mr. Breuer, who suggested the Kirch Group couldn’t pay its bills. Three months later, the media group, which owned sports rights and TV channels in Germany, filed for insolvency. One month later, media mogul and founder Leo Kirch filed a claim for damages against both Mr. Breuer and Deutsche Bank.

Mr. Kotschy has been dubbed the “bank terror” in German financial circles for his hard-line approach to the Deutsche Bank case. Mr. Ackermann said the mood in the court at the time was “extremely antagonistic” under Mr. Kotschy’s guidance.

 

The Kirch case

 

“My testimony was met with skepticism from the beginning,” said Mr. Ackermann. “I didn’t expect that at all.”

He said he had always been opposed to Kirch Group becoming one of the bank’s clients, because it would have meant propping up the struggling media empire with more loans. But he denied offering false testimony or colluding with the other defendants in the case.

Mr. Ackermann said there had been no incentive to collude. He argued that Mr. Breuer’s interview was not considered particularly noteworthy inside the bank at the time it was broadcast.

“There was no way to foresee that it would occupy us for more than a decade,” he said.

This assessment led Deutsche Bank to break off early talks with Kirch about possible compensation and was why it also failed to set aside legal provisions for the case until it was settled, he said.

The current criminal trial is partly the result of the bank’s turnaround: After years of fighting, Deutsche Bank agreed a massive out-of-court settlement and paid the heirs of media mogul Mr. Kirch, who passed away in 2011. The Frankfurt-based bank has since been looking for ways to recover at least some of the money.

 

Kerstin Leitel covers banks and insurers from Munich. To contact her: leitel@handelsblatt.com

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