Executive payments 'did not influence takeover' - phone chief

Vodafone’s former chief executive testified today that his company’s takeover in 2000 of mobile phone firm Mannesmann was determined purely by market pressures, and was not influenced by executive payments under scrutiny at the trial of the German mobile operator’s former head.

Chris Gent told a state court in Duesseldorf that Klaus Esser, the Mannesmann chief executive, never pushed for a payoff for himself – supporting Esser’s defence against charges that he benefited improperly from the takeover.

The merger was determined by the pressures of capital markets, and payments to Mannesmann executives “were never a condition for the deal,” Gent said.

Esser “fought with great determination for the company – the independence of his company was the strongest motive of his action,” Gent said.

“I’m sorry that Klaus Esser is now subject to unjustified suspicion and unfair criticism.”

Esser and board chairman Joachim Funk are accused of agreeing to “illegally enrich themselves” at the company’s expense before dropping their opposition to the deal.

Prosecutors allege that Deutsche Bank chief executive Josef Ackermann and three others who sat on the Mannesmann board illegally authorised bonuses and retirement packages totalling €53.5m to Mannesmann executives.

The payments are considered astronomical in Germany, where top executives rarely earn more than €1.9m.

Defence lawyers argue there was nothing illegal about the payments and that they were consistent both with the result – Mannesmann shares jumped 136% after the takeover – and international business practices.