Case Closed?

Prosecutors said in a statement Friday that they had agreed to drop charges against Ackermann in exchange for a financial settlement of 3.2 million euros ($4.1 million) without an admission of guilt. The regional court in Düsseldorf hearing the case was expected to issue a final ruling on Wednesday.

Put forward by the defense and agreed to by prosecutors, the motion, if passed, will mark the end of the long-running Mannesmann trial, a landmark case that put corporate ethics and alleged boardroom greed in the spotlight in Germany.

Charges were also to be dropped against the other five co-defendants, in return for payments, the prosecutors said.

Mannesmann's former chairman Klaus Esser would have to fork over 1.5 million euros, Mannesmann's former supervisory board chief Joachim Funk one million euros, the former head of the powerful IG Metall labor union, Klaus Zwickel 60,000 euros and former works council members Jürgen Ladberg and Dietmar Droste would pay 30,000 euros and 12,500 euros respectively.

An early end to long-running case?

Out of the total payments of 5.8 million euros, 60 percent would be paid into state coffers, while the rest would be earmarked for charitable organizations.

It is common in Germany for defendants to offer a large payment to charity in exchange for charges being quashed. The payment is regarded as a punishment, yet it saves judges' and lawyers' time and avoids the accused having to suffer a criminal record.

Defense lawyers said they had proposed the settlement to prevent the case, which opened back in 2003, from dragging on indefinitely.

The six men had been accused of breach of fiduciary duty for their role in approving huge bonuses following the takeover of German telecom giant Mannesmann in 2000.

They were accused of breaking the law by approving a total 111.5 million German marks (57 million euros, $72 million) in payouts for former Mannesmann executives. Esser himself pocketed 16.4 million euros.

Shareholder association wants closure

The six men were originally acquitted in July 2004. But at the end of last year, the Federal Supreme Court ordered a re-trial, which opened a month ago.

The prosecutors insisted that their decision to agree to drop the charges so soon after the retrial opened was not "horse-trading with justice.

"Neither the severity of guilt nor public interest speak against closing the case in return for a financial settlement," they said.

The DSW shareholder association also welcomed the decision to close the case once and for all.

Business ethics put in spotlight

The case had served its purpose by sensitizing the public and companies to the ethical issues involved, said DSW spokesman Jürgen Kurz.

The Mannesmann case has not only put executive pay in Germany in the spotlight. It also raised ethical questions about what had been the successful transformation of Mannesmann from an industrial conglomerate into a leading mobile telecommunications group.

In the original trial, the court ruled that while the size of the payouts went against Mannesmann's interests and were therefore not admissible under German stock law, they did not constitute criminal action, as claimed by the prosecution.

At the time of the Mannesmann payouts, Ackermann had been a member of the group's supervisory board.

Payouts common in business

Ackermann and his defense team argued that big payouts to executives, common in the United States and Britain, were needed to motivate corporate leaders to take risks.

Esser argued during his trial that the price of shares in the company had doubled during his tenure.

Prosecutors contended that the payments were illegal because they were designed to persuade managers, and Esser in particular, to drop their resistance to Vodafone's bid after a long takeover battle.

Critics saw the bonuses, without precedent by German standards, as evidence of corporate greed, especially because many Mannesmann employees were expected to lose their jobs as a result of the takeover.