The age of the meta-bribe (the punishment that is Germany)

by on August 6, 2014 at 1:23 am in Current Affairs, Economics, Law, Uncategorized | Permalink

Bernie Ecclestone, is to make a $100m (£60m) payment to end his trial on bribery charges, a district court in Munich has confirmed.

Ecclestone, 83, went on trial in Munich in April over allegations that he bribed a former German banker as part of the sale of a major stake in the motorsport business eight years ago.

German law provides for some criminal cases to be settled with smaller punishments, such as fines, though the size of the payment in Ecclestone’s case has led some to question a system that effectively favours wealthy defendants.

The Munich court said in a statement that $99m would be paid to the German treasury and a further $1m to a German children’s hospice charity. The money will be paid within a week, after which time the trial will officially be abandoned.

The full story is here, not quite China punishment of the day.

For the pointer I thank Dan Jackson.

prior_approval August 6, 2014 at 1:57 am

The former CEO of the Deutsche Bank paid 3.2 million euros, of which 40% was distributed directly to charity. Oddly, there is no simple English language source concerning the Mannesmann trial, where, if I recall correctly, one of the guilty parties, in an attempt to defend themselves, said that a guilty verdict would prevent the glories of American capitalism from blossoming in a German legal framework.

‘Das Verfahren wurde am 29. November 2006 gegen eine Geldauflage (§ 153a Abs. 2 StPO) in Höhe von 5,8 Millionen Euro auf Grund eines Antrags der Verteidiger, dem die Staatsanwaltschaft zustimmte, vorläufig eingestellt.[5] Dabei soll Ackermann 3,2 und Esser 1,5 Millionen Euro zahlen. Der ehemalige Aufsichtsratsvorsitzende Joachim Funk soll eine Million Euro und Ex-IG-Metall-Chef Klaus Zwickel 60.000 Euro zahlen. Für Betriebsratschef Jürgen Ladberg legte das Gericht eine Geldauflage in Höhe von 12.500 Euro und für den Manager Dietmar Droste 30.000 Euro fest. Nach Erfüllung der Auflagen wurde das Verfahren durch die Strafkammer mit Beschluss vom 5. Februar 2007 endgültig gemäß § 153a StPO eingestellt. Gleichzeitig wurden 40% der Auflagen – insgesamt 2.321.000 € – an über 350 gemeinnützige Einrichtungen verteilt. Die restlichen 60% wurden der Staatskasse zugewiesen. Die Angeklagten sind mit der Einstellung des Verfahrens nicht vorbestraft. Josef Ackermann bleibt Deutsche-Bank-Manager.’ http://de.wikipedia.org/wiki/Mannesmann-Prozess

The final sentence of that German wikipedia cite contains the real essence of such a settlement, as the person paying does not admit guilt, and thus does not suffer more than a fine. Along with an implicitly public acknowledgment of wrong doing, without accompanying legal judgment. As noted in the Guardian article – ‘”Through this abandonment the presumption of innocence in favour of Mr Ecclestone remains intact,” the defence team wrote in a separate joint statement signed by his lawyers.’

And the F1 circus, much like the similar one at FIFA (the Olympics only gets a cheap bronze in this competition), continues along its moneymaking path. Though the F1 allowing Schumacher to continue racing after his second collision to ensure himself victory says everything one ever needed to know that F1 is only about money. And no concern about any rules that may stand in the way of profit.

genauer August 6, 2014 at 3:44 am

There is no wonder, that there is no english version of this trial, because nobody in the US / UK would understand it.

What the Booad (Ackermann, union boss Funke, etc.) agreed with Esser is there not just perfectly legal, but honourable.

And this also my feeling of justice, and I doubt it very much that there would have been a verdict against Ackermann, holding up to the final appeal.

David Wright August 6, 2014 at 4:49 am

What happened at Mannesmann is certainly common, and probably but not certainly legal, but definitely not honorable. Mannesmann was the target of a hostile takeover. Mannesmann’s management fought the takeover tooth and nail, arguing vociferously that it was not in the interest of Mannesmann’s shareholders. The Mannesmann board arranged to pay management a large bonus as a part of the takeover. Suddenly management’s opposition to the takeover evaporated and the takeover went through. Pretty clearly multiple parties were not carrying out their fiduciary duties to shareholders.

Das August 6, 2014 at 5:04 am

The Mannesmann deal was shady, it’s legality remains unclear.

I too doubt there would have been a guilty verdict, but honourable is definitely not the word I would use to describe the deal that was made.
But then there is little honour anyways in the upper echelons of businesses as big.

genauer August 6, 2014 at 5:46 am

Esser and his Crew increased the shareholder value from about 100 to 190 billion, within just 3 months playing hard to get. A genius.

And also towards whether that was good for the non-Telecom parts:

http://www.welt.de/wirtschaft/article5188616/Wie-ein-Brite-die-Deutschland-AG-sprengte.html

“Sicher ist aber, dass sich viele Mannesmann-Töchter erst nach der Übernahme richtig gut entwickelten”

prior_approval August 6, 2014 at 5:58 am

‘not just perfectly legal, but honourable’

Well, if one’s idea of honor includes finding new ways to be personally enriched while going against the interests of your current employer. There is no question that a certain class of Americans find this not only honorable, but essential to ensuring that America continues to be a place where the rich get richer, without any interference.

‘and I doubt it very much that there would have been a verdict against Ackermann, holding up to the final appeal.’

Ackermann put his money up to avoid finding that out, however. And to keep his job, of course, because at some point, having the CEO of Deutsche Bank on trial would harm the interests of Ackermann’s emploer. Not that Ackermann cared, of course – as seen in this article from 2011 – ‘Breuer’s criminal trial began 10 days after the bank said current CEO Josef Ackermann is under investigation over testimony he gave earlier this year in a lawsuit brought by Leo Kirch. The charges against Breuer relate to a 2003 appearance in another Kirch suit.

The start of the trial was delayed when the defense asked to have presiding judge Anton Winkler removed for bias. The motion was dismissed and the trial opened more than six hours late. Prosecutor Christiane Serini, who also works on the Ackermann probe, read the indictment.

With Breuer’s trial opening in the shadow of the Ackermann probe, it will be more difficult for Deutsche Bank to defend its public image and may also hamper Breuer’s defense, said Frank Saliger, a criminal law professor at Bucerius Law School in Hamburg.

“From a legal perspective, Breuer’s trial and the Ackermann probe are two different matters which need to be, and should be, handled strictly separately,” Saliger said. “But as a matter of fact, of course, all persons involved take notice of what happens. It’s difficult for an investigator to escape the feeling that one case is somehow backed by the fact that more similar probes evolved out of the same overall issue.”

………………..

Kirch’s allegations are baseless, said Christian Streckert, a spokesman for the Frankfurt-based lender. Ackermann’s lawyer Eberhard Kempf didn’t reply to e-mails seeking comment. ‘ http://www.bloomberg.com/news/2011-11-23/deutsche-bank-faces-breuer-trial-amid-ackermann-probe-on-kirch.html

Of course, Ackermann failed a half year ago in his attempt to keep various seized documents from being read in another case where he is considered to have acted in a fashion that breached his obligations. http://www.spiegel.de/wirtschaft/unternehmen/kirch-prozess-verfassungsrichter-lassen-ackermann-abblitzen-a-938698.html

I’m pretty sure that Ackermann will also pay to ensure that this trial does not reach a conclusion.

Olaf August 6, 2014 at 2:21 am

Three further facts to play with:
1. Under the mild German sentencing system he would probably gotten a maximum of a two-year probation sentence and/or a maximum monetary penalty of eur 26m (probably much less).
2. This was a tripartite, voluntary deal between judge, prosecutor and defendant.
3. Different from a true plea-bargaining, defendant does/did not need to submit (and hence was not indirectly coerced) into a guilty plea, as a true judgement remains reserved for a completed trial i.e. full judicial process.

For a legal system which abhorrs the economic analysis of law, a surprisingly economic and libertarian outcome and settlement mechanism?

prior_approval August 6, 2014 at 3:13 am

’1. Under the mild German sentencing system he would probably gotten a maximum of a two-year probation sentence and/or a maximum monetary penalty of eur 26m (probably much less).’

But such a legal judgment would essentially ban him from doing any business in Germany – ever (and Germany is a major source of F1 revenue – much more than a piddling 100 million dollars from an 83 year old man). What some people don’t grasp when looking at German sentencing ‘mildness’ is how the German social framework deals with the ‘vorgestraft.’ For example, Ackermann would have no longer have been able to be CEO of Deutsche Bank (nor ever again sit on a company board), especially for the crime he was charged with, as he was facing 2 years in prison for ‘schwere Untreue.’ Which is a very hard term to translate actually, as neither ‘extreme perfidy’ nor ‘massive breach of trust’ translates well into Anglo-Saxon criminal terms. (And Untreue is a criminal act, not a civil one.)

Bribery, as Mr Ecclestone was charged with, is easily translated into just about every language used by a government.

Marton August 6, 2014 at 4:07 am

“Untreue” in the criminal sense can be reasonably translated to “embezzlement”. Hence, “Schwere Untreue” would be aggravated embezzlement.

prior_approval August 6, 2014 at 6:09 am

Except that embezzlement is covered quite well by the terms ‘Unterschlagung’ or ‘Veruntreuung’ (which can also be translated with the wonderful ‘peculation’ or the more mundane ‘fraud’).

The problem with translating ‘Untreue’ relates to its basis – being untrue, but not in terms of truth. Or infidelty, without any connotation of relationship or marriage. Or failing one’s duty, without it involving a sense of honor. Perfidy is a fairly good translation in some senses (and German does use the term ‘perfid’ as an adjective), but clearly fails as a legal term.

And, as much as Ackermann is a contemptible figure whose ethical framework is apparently revealed best though prosecution, he did not, in any legal sense, commit any acts of embezzlement in the Mannesmann case.

Olaf August 6, 2014 at 4:39 am

Your reference to the “social” consequences is true of course. But also true is that the evidence and conviction liklihood was pretty lacking. Formally it may have been still open, but I think the judge knew where this would be going, and took the 100m option (but consensual) for the state.

genauer August 6, 2014 at 3:21 am

What German media report, it was pretty obvious that there was no hard proof against Ecclestone.

And we had recently a trial, in the end about 750 Euro, and ended with the complete clearing of Wulff,
after a predatory prosecutor spend many millions on the trial.

Ecclestone bought himself time, he can obviously better invest in his legitimate business, and the prosecution saved face and got a lot of money.

prior_approval August 6, 2014 at 6:18 am

Why not bring up Hoeneß, who is currently sitting in jail? It isn’t as if everyone accused by a German prosecutor is being persecuted – or allowed to buy their way out of conviction and jail time (that Hoeneß is a proven liar in what he told the government certainly contributed to his punishment).

As for Wulff, the lack of memory on the part of just about everyone involved was striking.

genauer August 6, 2014 at 6:36 am

Good grief,

now trying to get from Ecclestone, over Ackermann, to Wulff to Hoeneß, when your arguments run dry on the stuff discussed previously.

Have you looked at the questions people had no recollection to ? Who paid what round at an Oktoberfest bash? I do not know any more the next morning, because it is chicken shit.

And years later ? Like I have nothing relevant to think and remember?

Prior_approval, you are disappointing me,

I have so far perceived you as a mostly reasonable person

Careless August 7, 2014 at 8:43 am

Lol

Jason W. August 6, 2014 at 3:24 am

This is like the headlight punishment. You use your high beams inappropriately, they force you to stare directly into high beams for five minutes. You get caught bribing, you are forced to bribe (or “pay a fine” in the parlance of the courts).

cowboydroid August 6, 2014 at 4:02 pm

“It’s not illegal if the government does it.”

Scott Mauldin August 6, 2014 at 3:33 am

In such a case, a defendant has the following opt-outs, according to Criminal Process Law (Strafprozeßordnung) Paragraph 153a.:

1. to perform a specified service in order to make reparations for damage caused by the offence;

2. to pay a sum of money to a non-profit-making institution or to the Treasury;

3. to perform some other service of a non-profit-making nature;

4. to comply with duties to pay a specified amount in maintenance;

5. to make a serious attempt to reach a mediated agreement with the aggrieved person (perpetrator-victim mediation) thereby trying to make reparation for his offence, in full or to a predominant extent, or to strive therefor;

6. to participate in a social skills training course; or

7. to participate in a course pursuant to section 2b subsection (2), second sentence, or section 4 subsection (8), fourth sentence, of the Road Traffic Act.

ummm August 6, 2014 at 5:20 am

the trial was ended prematurely. that doesn’t mean he did anything wrong. To someone his age, he probably paid them off to end the ordeal so he can spend the rest of his life and money not having to worry about it. The left is using this to attack the rich again.

Alexei Sadeski August 6, 2014 at 6:07 am

Paying a fine in exchange for dropping criminal proceedings actually seems to have quite a bit in common with the “China punishment of the day.”

-Firstly, both corporal punishment and blood money are ‘Biblical’, are they not?

-Secondly, both punishments have the incredible advantage of allowing the (alleged) offender to move on with his/her life after paying a commensurate cost. Vis a vis the previous discussion in the ‘China’ blog, it simply seems wasteful and pointless to put a lot of people in jail for a lot of the crimes we imprison them for. Paying a relevant fine or going to the stocks or sitting in front of a light seems like a great way to get the point across that the behavior is not approved of, and will be punished commensurately, but really there’s no need to waste everyone’s lives getting the point across.

Olaf August 6, 2014 at 6:24 am

I also don’t understand why this is constantly denoted a “bribe”, when the agreement is fully in line with the principal itself (the state / court) and the payment received by it and not by the agent (the judge as an individual actor). What does this have to do with bribing or for that matter “meta-bribing”, if it is simply a legitimate settlement mechanism fully regulated by the process owner (the state) within a criminal proceeding? How is plea-bargaining in the US any better (I think it is a lot worse actually because people are bacially coerced into actually being criminally sentenced and not only to paying a contractual fee whilst maintaining their innocence in lieu of a judgement – the pursuit of which the state does not feel fully confident in).

Norman Pfyster August 6, 2014 at 9:06 am

Because there is a payment to end a legal process before it reaches a conclusion (unlike a fine, for instance). You could also have called it extortion.

rick August 6, 2014 at 1:11 pm

Or a settlement, by that definition

JWatts August 6, 2014 at 6:54 pm

Bribe is probably a poor choice of verbage in this context. Buying an indulgence would probably be a closer match.

genauer August 6, 2014 at 7:06 am
JC August 6, 2014 at 2:24 pm

How is this morally any different from the deals that Wall Street banks are making with prosecutors and regulators – very large sums of money are handed over and no one goes to jail.

cowboydroid August 6, 2014 at 4:07 pm

There is no moral discrepancy. The state is not protecting and providing restitution to victims. It is protecting and providing booty to itself.

JC August 6, 2014 at 6:23 pm

One hundred million dollars is chump change:

“USA TODAY – 50 minutes ago
WASHINGTON – The Justice Department and Bank of America have reached a record settlement in principle in which the bank will pay just under $17 billion to resolve allegations related to fraudulent marketing of mortgage-backed securities that helped …”

cowboydroid August 6, 2014 at 4:06 pm

The German government’s generosity to the children is duly noted.

The government keeping $99 million suggests that this was a crime against the state. Is Germany really still in the business of defining crimes against the state? Shouldn’t the shareholders be receiving those funds?

Olaf August 6, 2014 at 5:07 pm

one more on the light side, wonderful:
https://twitter.com/TomBowk/status/497049892385484801

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