[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 26 March, 2004, 10:05 GMT
Gent defends rival's 'sleazy' bonus
By Mary Hennock
BBC News Online business reporter in Duesseldorf

Sir Christopher Gent
Sir Christopher put up a spirited performance
The man who built Vodafone into Europe's biggest mobile phone firm has given evidence in the corporate sleaze trial that has divided Germany.

Sir Christopher Gent came to the rescue of Klaus Esser, chief executive of iconic German engineering firm Mannesmann until Vodafone swallowed it in a bitter takeover battle four years ago.

Mr Esser is among six ex-Mannesmann directors and managers on trial for approving bonus payments totalling 57m euros (£39m; $69m) soon after the takeover with, as Sir Christopher made clear, Vodafone's tacit approval.

The six could get 10-year jail terms if found guilty of breaching their duty to the company.

Mr Esser's co-accused include Josef Ackermann, chief executive of Deutsche Bank - Germany's biggest bank - and Klaus Zwickel, ex-head of the mighty IG Metall trade union, who sat on Mannesmann's board.

'A worthy opponent'

Interest was so intense that the queue for the public gallery stretched down stairs and into the carpark on Thursday morning. Duesseldorf court officials had advised people to turn up at 8am for a seat in court 111.

Sir Christopher told the court that Mr Esser was a worthy opponent "who fought desperately for the independence of his company" and for his own career.

"At no point did he ever ask about a bonus or other compensation payment," said Sir Christopher.

Mannesmann's top boss was more concerned about "what role he might occupy" in future and protecting jobs for his workforce and senior executives.

"I grew to like and respect him. I am sorry that he has been subject to so much unjustified suspicion."

Vodafone's board chose not to query payments to Mr Esser and others because it wanted to "build bridges" after the bruising takeover battle.

Hostile takeover

The bonuses caused controversy in Germany partly because takeovers are much less common there than in the US or UK - and hostile ones almost unheard-of.

Sir Christoper's description of his first meeting with Mannesmann's outgoing chairman Joachim Funk gave a flavour of the mood.

Dr Funk was "very bitter and unfriendly, stating that I had ruined a great German company".

The trial has stirred debate in Germany about whether it needs to globalise its business culture on the one hand, or protect German boardroom traditions on the other.

The defendants have argued that they were worth the money because they increased Mannesman's value.

Critics have portrayed the bonuses as corporate greed and the product of a more predatory, ruthless and globalised Anglo-American style of capitalism.

Underpaid

Giving evidence at the start of the trial, the Deutsche Bank chief said Mr Esser was worth more than the 15m euros he took home, and could have got 1bn euros under international norms of a 10% bonus on value created.

Canning Fok, managing director of telecoms giant Hutchison Whampoa, Mannesmann's biggest shareholder, has testified that he first proposed the bonuses.

The chief judge grilled Sir Christopher about Mr Fok's timing, in particular whether the deal or the bonuses came first in the nail-biting two days of final talks that ended on 2 February 2000.

Vodafone's ex-boss said Mr Fok "made the case for Klaus Esser being appreciated... given that he was most likely to lose his job, given that he'd done a tremendous job for shareholders... and given that he didn't have shares or share options".

In court, he pointed out that the boss of US firm Airtouch had received the equivalent of £250m in parting bonuses when Vodafone bought it in 1999.

"The precedent that we had in our minds was of international capital markets rather than particular to Germany," he said.




SEE ALSO:
Mannesmann boss defends payouts
22 Jan 04  |  Business
Germany awaits Mannesmann trial
21 Jan 04  |  Business
Trial puts business culture in dock
21 Jan 04  |  Business
German bank chief to face trial
19 Sep 03  |  Business
Six charged over Mannesmann bonus
19 Feb 03  |  Business
Vodafone hits back at bonus claims
21 Aug 01  |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific