Feeds

Vodafone CEO faces Mannesmann merger fraud probe

German authorities not happy

  • alert
  • submit to reddit

High performance access to file storage

Chris Gent, CEO of Vodafone, and a number of high-ranking executives in Vodafone and Mannesmann (the German company bought out by Voadfone in November 1999) are under investigation by the German authorities for fraud.

It is alleged that the huge bonuses paid to the execs on completion of the merger were part of a sweetener to let it go through (Dusseldorf's public prosecutor has already used the word 'bribes'). The facts of the situation would certainly lend credence to that theory.

Vodafone subtly leaked its plans to buy Mannesmann to the press in July 1999 (all the analysts, of course, claimed it was their nous). Then it made a formal £64 billion offer on 15 November. Mannesmann's value at the time was £59 billion.

Mannesmann, and in particular its CEO, Klaus Esser, was extremely dismissive of the bid. It described it as "wholly inadequate" and "extremely unattractive". Esser went rushing off to the press exclaiming that the merger would go ahead over his dead body. He also used some dirty tricks, including putting pressure on Goldman Sachs not to advise Vodafone. Later, a German judge said his and his company's conduct was "totally disgraceful and unacceptable".

Vodafone wasn't to be put off though and a made a huge £79 billion offer four days later. It created a massive stink. Even the German chancellor Gerhard Schroeder got involved, saying a takeover would destroy the "culture" of Mannesmann. This sparked UK prime minister Tony Blair to warn Schroeder off (though he didn't mention BMW's purchase of Rover, ahem).

Then there was lots of patriotic talk about how the German stock exchange had never allowed a hostile bid to go ahead and why should it start now, and so on and so forth.

And then - would you believe it? - Esser decides that actually everything is all right, Vodafone is not so bad and he didn't really mind have the company that he had transformed from nothing to a powerful player being eaten up in front of his eyes and all his powers removed.

The suggestion is that the £30 million given to Esser as a redundancy payment and the £19 million paid out to other Mannesmann execs had something to do with this sudden change of mind. And then there was the £10 million bonus that Gent received for getting the deal through.

Apart from Esser and Gent, the other two key players under investigation are Klaus Zwickel, head of the powerful IG Metall trade union and fromer member of Mannesmann's supervisory board, and Josef Ackermann, also a member of the supervisory board and now a top bod at Deutsche Bank.

Vodafone denies any claims of illegal behaviour, saying it was obliged to pay out bonuses that had already been agreed upon by the Mannesmann board and it had simply inherited.

Gent came under fire just this July for paying himself just under £1 million in bonuses on top of his £7 million salary. ®

Related Stories

Vodafone tipped to buy Mannesmann (July 1999)
Mannesmann rejects Vodafone's £64bn bid (November 1999)
Confusion reigns over Mannesmann bid (November 1999)
Chris Gent's generosity continues - for himself (July 2001)

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.