Deutsche Bank’s Josef Ackermann To Testify In IKB Trial As France Mulls Goldman Probe

23 Apr

The bottom is about to fall out for Goldman. First Reuters reports that Deutsche CEO Josef Ackerman will be asked to testify in relation to the near-collapse of German IKB, a bank that has gained sudden notoriety for being implicated in the alleged Goldman CDO fraud as a dumb buyer of anything pitched to it. As Deutsche Bank has previous been blamed for the near-collapse of IKB by its former CEO Stefan Orstfein, would not be surprised if Josef takes this chance to join the “blame Goldman” bandwagon to deflect attention from himself. Ironically, Deutsche Bank is certainly not without blame as its CDO-desk managed by just departed Greg Lippmann was one of the powerhouses in arranging Abacus-type deals in the 2005-2007 time period. And in separate news, again Reuters notes that France is the latest, after Germany and the UK, to “mull” a Goldman probe. Whether British, French and other German companies will follow in BayernLB’s footsteps and stop trading with Goldman remains to be seen. Certainly, there is an element of politics to all such actions, and political players in Germany and the UK are most in need of populist electoral boosts, while France not so much, at least for the time being.

From Reuters:

Deutsche Bank AG's  Chief Executive Josef Ackermann will be asked to testify at a trial examining the near-collapse of IKB Deutsche Industriebank AG , a bank eyed by U.S. regulators for its dealings with Goldman Sachs Group Inc.

Brigitte Koppenhoefer, the German judge who oversaw an earlier trial examining Ackermann’s role in awarding eye-popping bonuses to Mannesmann executives, is calling a raft of witnesses to testify in the IKB trial currently underway in a court in Duesseldorf, Germany.

Ackermann and the court have yet to arrange a date for his appearance, a court spokesman said on Wednesday. Deutsche Bank said Ackermann is ready to appear as a witness.

IKB's former chief executive Stefan Ortseifen, who stands accused of misleading investors about the perilous state of IKB's finances in the summer of 2007, has blamed Deutsche Bank for the near collapse of the Duesseldorf-based lender. 

Ortseifen told the court that Deutsche’s decision to cut credit lines for IKB on July 27, 2007 caused “immeasurable reputational damage” for IKB, crimping its ability to function normally in nervous markets.

Deutsche Bank rejects accusations that it was the cause for the crisis at IKB.

And also from Reuters:

France could become the latest country to examine whether Goldman Sachs Group Inc defrauded investors in marketing a mortgage investment product while the hedge fund that played a key role in the deal moved to head off investor concerns.

Goldman is being investigated by the Securities and Exchange Commission (SEC) and Britain’s market watchdog, which launched its own probe on Tuesday.

The accusations warrant a full probe by French regulators, Economy Minister Christine Lagarde said on Wednesday. Regulator AMF (Autorite des Marches Financiers) said earlier this week that it planned to co-operate with the SEC over the Goldman case if necessary, adding on Wednesday that it aimed to publish an update on the probe next week.

Last but not least, one should recall that Goldman is pending investigation for its involvement in arranging various Greek swaps that fooled EuroStat in believing the country’s debt picture is much more aggreable than it was in reality. Lloyd must be wondering if being the dominant market making monopoly in virtually every flow product (not to mention flawless prop trading desk) is really worth all the hassle.


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