* Former regional premier also target of investigation
* Investigation looks into suspected breach of trust
* Morgan Stanley says cooperates with prosecutors
By Christoph Steitz and Philipp Halstrick
FRANKFURT, July 11 German prosecutors have
opened preliminary proceedings into alleged links between Morgan
Stanley's top dealmaker in Germany and one of
Baden-Wuerttemberg's top politicians, relating to the state's
purchase of shares in German utility EnBW in 2010.
The Stuttgart public prosecutor's office said "sufficient
and actual clues have emerged" suggesting ex-premier Stefan
Mappus could have made himself liable to prosecution for breach
of trust, while Morgan Stanley's Dirk Notheis could have made
himself liable to prosecution for aiding and abetting breach of
Notheis, 44, who ran Morgan Stanley's operations in Germany
and Austria for more than three years, was granted leave of
absence by the bank last month following an uproar over emails
he reportedly exchanged with Mappus.
German newspapers in June published copies of emails Notheis
reportedly sent to Mappus in 2010, when the southwestern state
was trying to purchase a 45 percent stake in local utility EnBW
from French energy group EDF.
In the emails published by the newspapers, Notheis appears
to give Mappus advice on how to limit time for political debate
on a renationalisation of EnBW, Germany's third-largest utility.
In a statement on Wednesday the prosecutor's office said
several premises had been searched as part of the proceedings
and a number of documents were seized.
"All of the accusations of breach of trust are without
merit. And that is what the investigation will show", Notheis
A Morgan Stanley spokeswoman said in an emailed statement:
"We confirm the presence of the Stuttgart public prosecutor's
office in our business premises today. Morgan Stanley is
cooperating with the public prosecutor's office during its
The reports prompted a wave of criticism, in part because
they highlighted the cosy relationship between bankers and
politicians when many Germans are angry about the role banks
have played in the global financial and euro-zone debt crises.
The prosecutors also quoted a report by a government audit
body which said the 4.7 billion euro ($5.76 billion) purchase
price paid by Baden-Wuerttemberg for the stake in EnBW was at
least 180 million euros too high.
According to the opinion of a separate report drawn up by
auditors Warth & Klein Grant Thornton, which was mandated by the
regional state's government to assess the deal,
Baden-Wuerttemberg had overpaid by around 840 million euros, the
state's government said in a statement.
In Germany, Morgan Stanley ranked second behind Deutsche
Bank and ahead of U.S. rival Goldman Sachs in
mergers and acquisitions rankings in the year-to-date, measured
by overall deal value, Thomson Reuters data show.
Notheis' absence will be a blow for the investment bank,
which had come to rely on him and his connections for lucrative
advisory roles or mandates in merger and acquisition deals.
Morgan Stanley has won some big mandates from companies in
which Germany retains an equity stake.
It was for example co-bookrunner for Commerzbank's
11 billion euro rights issue, was adviser to Deutsche Telekom's
aborted $39 billion sale of T-Mobile USA to AT&T
and was bookrunner for Deutsche Post DHL on a
750 million euro exchangeable bond for state-controlled
development bank KFW.