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German prosecutors to appeal acquittal of HSH executives
July 10, 2014 / 12:51 PM / in 3 years

German prosecutors to appeal acquittal of HSH executives

FRANKFURT, July 10 (Reuters) - Public prosecutors said they would appeal against a German court decision to acquit ex-managers of bailed-out lender HSH Nordbank of charges that included accounting fraud, in a high-profile case stemming from the financial crisis.

HSH, along with other regional state-owned German banks, lost billions of euros on risky investments. Its owners - the state of Schleswig-Holstein, the city state of Hamburg and local savings banks - propped it up with a 3 billion euro capital injection and 10 billion euros in loan guarantees.

The case against its Chief Executive Dirk Jens Nonnenmacher and five other former board members dealt with whether they properly accounted for a deal they struck in 2007 that reduced the bank’s capital requirements but later resulted in 500 million euros of writedowns.

Explaining his decision to acquit on Wednesday, Judge Marc Tully said the executives had not informed themselves sufficiently when striking the deal, but that these failures were not enough to warrant conviction for breach of trust.

The public prosecutors office in Hamburg said it would seek to have the verdict overturned by the Federal Court of Justice.

“If the court had doubts that the breaches of duty were serious, it should not have accepted the indictment in the first place,” a spokesman for the prosecutors office said on Thursday.

The HSH trial was one of the first cases of a European bank’s entire executive board being tried for actions taken in the run-up to the financial crisis.

The prosecutors had sought suspended sentences of up to one year and 10 months as well as fines of up to 150,000 euros ($204,000) for the former HSH directors, who had pleaded not guilty. ($1 = 0.7331 Euros) (Reporting by Jan Schwartz; writing by Arno Schuetze; editing by Tom Pfeiffer)

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