DEUTSCHE BANK SAYS NO SUPPORT FOR VW MANAGEMENT
West Germany's biggest
bank said it would withhold support from Volkswagen AG <VOWG.F>
management at next month's annual meeting because of the VW
currency scandal.
    Deutsche Bank AG <DBKG.F> said it would abstain in votes
exonerating VW management and the supervisory board, which
represents shareholders and employees, unless an auditor's
report on the currency scandal is published before the July 2
annual meeting and either clearly absolves or blames the
management and board.
    Several shareholder groups have said they will vote against
management at what promises to be a stormy annual meeting. If a
majority of shareholders back these groups, the top management
of Europe's biggest carmaker could be dismissed.
    Deutsche said it expected the results of the auditor's
report on the currency fraud, which cost VW some 260 mln dlrs,
to be published before the annual meeting.
    But in a letter to Deutsche customers depositing their VW
shares at the bank, Deutsche wrote: "Without knowledge of these
results, we do not think we are in a position to make you a
suggestion for or against exoneration of the management board
and supervisory board."
    "Unless you give us instructions to the contrary, we will
abstain with your shares ... but we reserve the right to vote
for or against exoneration of the management board and
supervisory board, if this seems in your interest in line with
the results of the auditor's report," it added.
    A strong shareholder vote against the management would
empower the supervisory board to dismiss the management if it
chooses, though such a move would not be mandatory.
    A member of the supervisory board who does not receive
exoneration at an annual meeting may have to step down.
    An abstention or no-vote by banks on behalf of customers
against management would in itself be a vote of no confidence.
    German banks traditionally use their huge proxy votes at
annual meetings to support the management of the company, in
which they are often represented on the supervisory board.
    VW management board chairman Carl Hahn said in April that
1986 profits had been hit by the scandal, in which documents
relating to currency arbitrage were allegedly faked, but
profits for 1987 would not be affected.
    Following the scandal, finance director Rolf Selowsky
resigned, and former chief dealer Bobby Junger was arrested.
    Deutsche represents 8-10 pct of VW's share capital, the
sources said, and F. Wilhelm Christians, one of the bank's two
management board spokesmen (chief executives) is on the VW
supervisory board.
    Banking sources said Deutsche was furious with VW after the
bank led an international placement of VW shares from the
company's record rights issue last September.
    Less than two months later VW announced a sharp fall in
interim profits, bashing its share price and severely denting
confidence in the German share market generally.
    A spokesman for the Savings Bank Association said that
German savings banks would vote not to discharge Selowsky, and
depending on whether the auditor's report was published would
abstain on the vote for other management board members.
    The federal government and the state of Lower Saxony
together have 40 pct of VW shareholders' votes. It is still
unclear how they will vote. Associations representing small
shareholders will also ensure the annual meeting is heated.
    The Protective Association for Securities Ownership has
said it will vote against the entire management board, and the
Protective Society for Small Shareholders will also vote
against the supervisory board.
    A spokeswoman for Deutsche Treuhand-Gesellschaft AG, the
auditors commissioned by VW in March to investigate the
scandal, declined to comment when its report would be issued.
 Reuter
