Deutsche Bank, Porsche Losses May Limit Prosecutors as VW Looms

  • High-profile acquittals to `swing pendulum back to normal'
  • German corporate crime prosecution not crippled, lawyers say

The biggest winners in German prosecutors’ failed cases against Deutsche Bank AG and Porsche SE executives may not have even been in the courtroom.

The acquittals of Deutsche Bank executives Monday, coming a little more than a month after two former Porsche top managers were cleared of market manipulation charges, may force local prosecutors to temper their tactics in pursuit of wrongdoing by Germany’s top business names.

The rulings are far from crippling for white-collar crime prosecution in the country. But with probes looming over Volkswagen AG and Robert Bosch GmbH for using software to allow diesel engines vehicles to cheat pollution checks, setbacks in the most high-profile corporate cases in years may tame some over-ambitious actions by investigators, lawyers say.

“In the Porsche and Deutsche Bank cases, prosecutors were scolded for being overzealous," Cologne University law professor Michael Kubiciel said. "The acquittals may lead to a counter-movement that will move criminal prosecution back to the right level."

Acquittals

The Munich Regional Court Monday acquitted Deutsche Bank co-Chief Executive Officer Juergen Fitschen and former CEOs Josef Ackermann and Rolf Breuer on charges they colluded to lie to a court to fend off a 2 billion-euro ($2.3 billion) lawsuit. Last month, a Stuttgart tribunal acquitted former Porsche CEO Wendelin Wiedeking and Chief Financial Officer Holger Haerter on charges related to a 2008 bid for Volkswagen AG that faltered.

Over the years, prosecutors have expanded their reach and are scrutinizing management decisions more intensely, even in areas where executives have a broad leeway, according to Oliver Sahan, a defense lawyer at Roxin Rechtsanwaelte in Hamburg.

"That’s especially true when we talk about top names of the German business world," Sahan said. “I do expect that both acquittals will send the signal to cut back on these expansive tendencies -- or at least I hope they do!”

Volkswagen Cases

The next big case is in Braunschweig, where prosecutors are investigating 17 suspects over the diesel-emission scandal at Volkswagen. There’s also a probe of five people in a related case over tax issues linked to faulty carbon-dioxide readings. None of the carmakers top executives are among the suspects. 

Volkswagen said on Friday it will complete its own internal probe in the matter in the fourth quarter.

Prosecutors are opting to charge suspects more often, and are bringing more cases to a full trial because lawmakers have reduced their ability to settle, Sahan said. The court system was criticized by the public and politicians for settling prominent cases, and letting executives pay their way out of trouble, Kubiciel said.

In 2014, Formula One boss Bernie Ecclestone agreed to pay $100 million to end a German corruption case that overshadowed three years of his term at the top of the motor-racing competition.

"Prosecutors, maybe because of that public attack on prominent deals, tend to bring charges even where you might have made a deal in the past because the evidence wasn’t conclusive," Kubiciel said. "Then the risk is rather high that trials end like these two."

Scoldings

The Porsche and the Deutsche Bank cases ran almost simultaneously in the German courts. Although there were no links between the trials, the judges in each case scolded prosecutors on how they handled the trials. German newspapers have also laid into their performance.

Harsh criticism of the decisions to originally bring the cases may be overdone, according to Juergen Taschke, a corporate crime lawyer with DLA Piper in Frankfurt. Under German law, judges must consider charges and decide a conviction is more likely than acquittal before permitting a trial. That means prosecutors enter the court knowing the indictments have some judicial backing, he said.

"But you may be right to criticize excessive prosecutorial zeal,” Taschke said. "German prosecutors aren’t allowed to think in categories like winning and losing. Their task is to bring a set of facts indicative of a crime to court. And they have done their job regardless of what the outcome is in the end."

Both Taschke and Kubiciel don’t expect the verdicts will deter other prosecutors from pursuing high profile white-collar crime cases. The Porsche and the Deutsche Bank trial were also determined by very specific constellations that won’t be echoed in other big cases, according to Kubiciel.

"It’s just a sort of a swing of a pendulum," he said. "The verdicts will initiate a process of normalization."

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