Former managers at Sal. Oppenheim Jr. & Cie. charged with breach of trust in relation to bad investments won a bid to have a criminal trial halted because a judge in the case was improperly selected.
The Cologne, Germany, court ruled the tribunal’s presidency had too much leeway under the current rules to choose an alternate judge. The case can re-start from the beginning once the rules are amended and a new candidate selected, Presiding Judge Sabine Grobecker said at hearing today.
“The constitution requires that judges are chosen under a pre-determined abstract set of rules to bar any form of manipulation,” Grobecker said. “Choosing a judge ad hoc, as it was done here, can’t stand that test.”
Sal. Oppenheim put itself up for sale after reporting a 2008 loss of 117 million euros ($151 million), its first yearly loss since World War II, from investments in real estate and companies including insolvent German retailer Arcandor AG. (ARO) Deutsche Bank AG (DBK) bought the family-run lender, founded in 1789, to get control of its wealth-management operations.
Matthias Graf von Krockow, the former managing partner, as well as ex-managers and shareholders Christopher Freiherr von Oppenheim, Friedrich Carl Janssen and Dieter Pfundt, were charged with breach of trust over deals prosecutors said resulted in about 150 million euros of losses. Property investor Josef Esch was charged with aiding them.
The defendants profited personally from deals they approved in their roles at the bank, prosecutors said.
A motion by the defendants to remove the full panel of judges because court rules allowed prosecutors to influence the makeup of the panel was rejected.
“We expect the presidency to quickly take action so the trial can probably restart after the Easter holiday break,” court spokesman Dirk Esser told reporters after the hearing.
The trial must restart from the beginning with the reading of the indictment once the new alternate judge is selected.
A lawyer for one of the defendants compared the court’s decision to rulings by King Solomon.
“It’s a Salomonian decision, allowing the chamber to keep the case while granting us a victory on the alternate judge,” Klaus Volk, a lawyer for von Oppenheim said.
The charges focus on two property deals in Cologne and one in Frankfurt. In one instance, a fund run by Esch and some of the bank’s ex-managers and shareholders sold a mansion to Sal. Oppenheim at an inflated price, according to the indictment. The lender then leased the home to von Oppenheim’s mother at half the market price, prosecutors claim.
The court today didn’t rule on a separate bid by prosecutors to add a third charge over a 380 million-euro loan allegedly granted to a sham company to disguise the fact the money was given to then-Arcandor shareholder Madeleine Schickedanz. The managers shouldn’t have granted the loan because the risks were too high, prosecutors said.
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