Deutsche Bank Faces Breuer Trial as Leo Kirch Legacy of Lawsuits Lives On

Leo Kirch’s death a month ago hasn’t laid to rest his legal fight with Deutsche Bank AG (DBK) and its former chief, Rolf Breuer. The man Kirch blamed for the downfall of his media group faces claims he lied to judges in a trial that began today and was adjourned only shortly after.

The Munich trial, whose start was delayed an hour because a stand-in lay judge arrived late, was paused after Breuer’s defense asked for more time to review the bench’s composition. A resumption of the trial isn’t expected before the end of October, the court said in a statement.

“It turned out that we wouldn’t be able to hold hearings for another seven weeks,” said Presiding Judge Anton Winkler. “We decided to restart the trial with newly chosen lay judges in due course.” In some criminal cases in Germany, lay judges hear cases together with professional judges.

The trial is part of a nine-year fight over comments Breuer made to Bloomberg TV in 2002 about how creditworthy Kirch’s media group was. Kirch, once one of Germany’s biggest media tycoons, claimed Breuer’s remarks precipitated the company’s bankruptcy and filed claims totalling at least 3.3 billion euros ($4.8 billion). These suits continue in spite of Kirch’s death.

Deutsche Bank, while not a party in the criminal case, could see its image affected by the trial in which its former chief executive officer faces charges of attempted fraud, said Stephan Holzinger, a litigation media adviser.

Deutsche Bank’s Image

“Whatever a top executive, even a former one, does in court will be counted against the bank and it will become part of its image -- be it positive or negative,” said Holzinger, who isn’t involved in the case. “You can’t take a formal line that this is a case only against Breuer and that it was only him as a person who made a statement.”

The bank and Breuer, who both rejected a 775 million-euro settlement over the civil litigation proposed by a judge in March, deny any wrongdoing. Sven Thomas, Breuer’s lawyer, told reporters before the trial started that he is expecting an acquittal. Prosecutors claim Breuer lied to judges in 2003 to avoid losing a civil damages lawsuit Kirch brought.

The criminal trial is the result of Kirch’s attempt to draw attention away from his own responsibility for the failure of his enterprise, Christian Streckert, a Deutsche Bank spokesman, said yesterday. Breuer has said his televised remarks were based on media reports, not internal bank analysis.

In the Bloomberg TV interview in February 2002, Breuer said “everything that you can read and hear” shows that “the financial sector isn’t prepared to provide further” loans or equity to Kirch. Within months, Kirch’s group filed the country’s biggest bankruptcy since World War II.

Multiple Lawsuits

Kirch has fought Breuer and the bank since then, filing a series of lawsuits over the issue and asking prosecutors to look into the 2003 testimony. They charged Breuer in 2009.

The trial will center on a November 2003 appeals court hearing in Munich when Breuer told the judges that his TV comments were based on what was publicly known at the time, not on internal bank information. Breuer said he “had never seen the Kirch credit file” at Deutsche Bank and hadn’t seen correspondence with Germany’s financial regulator concerning Kirch, according to the indictment.

Prosecutors say Breuer’s initials are on a copy of the regulator’s September 2001 letter asking Deutsche Bank about its risks in light of Kirch’s financial trouble, indicating he saw the document. They also cite an internal bank briefing about Kirch’s situation that Breuer had attended.

‘Public Exposure’

“In any legal proceeding of this magnitude and public exposure, it’s important to coach executives in a way that makes sure their message comes across,” said Holzinger. “I don’t know whether that was the case here, but I have my doubts.”

During the prosecutors’ probe, Breuer refused to settle the case by accepting a so-called penal order that would have included a suspended one-year prison term and a fine, two people familiar with the issue said in May. They declined to be identified because the negotiations weren’t public. A suspended sentence means that while the prison term is imposed by the court, the defendant won’t spend time in jail unless he commits another violation.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net

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