Former Deutsche Bank AG (DBK) Chief Executive Officer Rolf Breuer told a court he wasn’t told beforehand that a 2002 meeting with then-German Chancellor Gerhard Schroeder would include discussing the situation of the late Leo Kirch’s media group.
When he was invited by the chancellor’s office he wasn’t told the subject of the meeting, Breuer said at a Munich appeals court in one of the cases Kirch filed against Breuer and the lender. Breuer said he assumed Schroeder wanted to discuss foreign investors’ ambitions for Germany’s cable market.
“When the discussion touched Kirch’s situation I understood from the context the others were hoping we would take an active role to help him,” Breuer said. “But I was pretty tight-lipped on all of this.”
The Kirch lawsuits, which continued after the media entrepreneur’s July death, claim Deutsche Bank secretly plotted the company’s demise. Kirch argued the meeting with Schroeder was part of a plan that included a February 2002 interview on Bloomberg Television in which Breuer said “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch.
Within months, Kirch’s media group filed the country’s biggest bankruptcy since World War II. Kirch sued Frankfurt-based Deutsche Bank and Breuer in lawsuits that seek about 3.3 billion euros ($4.6 billion).
Breuer also told the judges he wasn’t approached by Erich Schumann, then head of publisher WAZ Group, before a Jan. 27, 2002, meeting about its interest in acquiring Kirch’s stake in Axel-Springer AG. (SPR) He only learned about the interest during that evening, he said. Kirch pledged the stake to Deutsche Bank as loan collateral.
Schroeder had asked Breuer, Schumann and Thomas Middelhoff, the CEO of Bertelsmann AG at the time, to join the meeting.
Middelhoff, who testified in June, said he called Schroeder after Christmas in 2001 because of rumors John Malone’s Liberty Media Corp., together with Rupert Murdoch’s News Corp., might try to take over Kirch. He was worried such a scenario would create a monopoly in the cable-TV market and hoped to recruit Schroeder’s help to prevent it, Middelhoff said.
Breuer told the judges today that selling Kirch’s assets was discussed as one possible option to avoid bankruptcy. He said he explained to the meeting’s participants that Deutsche Bank couldn’t sell the Axel-Springer stake it held as collateral because Kirch wasn’t in default with payments on his loan.
The Kirch suits claim the men talked about breaking up the group and selling the Axel-Springer stake. Part of the plot, Kirch claimed, was to make the company hire Deutsche Bank for a restructuring.
The Kirch side argues that as part of its plan Deutsche Bank scheduled a meeting with the so called “pool banks,” Kirch’s principle lenders including HVB Group, Commerzbank AG, Bayerische Landesbank and DZ Bank AG, on Feb. 14, 2002. Dresdner Bank AG was also invited. The move destroyed the group’s own refinancing efforts, the Kirch lawyers claim.
Deutsche Bank and Breuer have long denied the allegations and said that BayernLB suggested the meeting be called.
Former HVB Chief Executive Officer Albrecht Schmidt, who testified today, said Deutsche Bank invited him to the 2002 meeting. While he didn’t attend, he said Stefan Jentzsch, his former colleague on the HVB management board, did.
Kirch had also invited the pool lenders to a meeting in Munich in the afternoon of the same day to discuss its liquidity. To the surprise of the bankers, the Kirch group disclosed it needed a “considerable” amount of fresh money, Schmidt said. The pool banks then came up with the idea Kirch should sell assets to ease the situation, he said.
The Breuer “interview didn’t really help to remove pressure from that liquidity situation,” Schmidt said.
Former Dresdner Bank AG CEO Bernd Fahrholz and Jentzsch are scheduled to testify tomorrow. Former Commerzbank AG CEO Klaus-Peter Mueller is scheduled to testify on Oct. 27.
Today’s case is: OLG Muenchen, 5 U 2472/09.
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