German telco major Deutsche Telekom said accusations of wrongdoing in connection with its share offering in 2000 were unfounded and rejected an appeal to settle thousands of shareholder claims.The former state monopoly is defending itself against claims that it misled investors in the prospectus for its 2000 share offering by overvaluing property assets and concealing its plans for a $35 billion acquisition.
A legal representative of the claimants appealed to lawyers of the telecoms group to agree to a settlement akin to a 2005 deal it reached with investors in the United States, where it settled for $120 million but admitted no wrongdoing.
“These small shareholders, many of them advanced in age, are waiting for a decision,” the lawyer told the court.
He was rebuffed by Deutsche Telekom's legal team, which repeated its argument that the United States was different because its jury system made it difficult to determine the likely outcome of a case.
Deutsche Telekom lawyer Bernd-Wilhelm Schmitz reiterated that the defendants judged the claims to be unfounded.
The claimants, many of whom are small shareholders who say they used their life's savings, are suing Deutsche Telekom for up to €80 million ($126 million).
The issue price was €66.50 per share, six times what the shares are worth today, or €63.50 for retail investors.
Deutsche Telekom vastly expanded its shareholder base worldwide through the share issue, which involved German state reconstruction bank KfW releasing 200 million shares and incentives for small shareholders.
The case involves a new type of group legal action designed by legislators which may determine how future shareholder cases against companies are decided.
The mammoth proceedings will deal first with allegations that Deutsche Telekom hid its plans to buy US wireless company VoiceStream. It agreed the acquisition a month after the subscription period ended.
Next Monday, flamboyant former chief executive Ron Sommer is due to appear as a witness. Fellow ex-CEO Kai-Uwe Ricke and current Chief Financial Officer Karl-Gerhard Eick have also been called.
Deutsche Telekom says it is confident of winning the case, in which it is defending itself on 33 separate issues.
One legal expert said on Monday that the case, in which each individual claim will be referred back to a lower court if the principal arguments are accepted, could last 10 to 15 years. (Reuters)