The Mannesmann takeover was bitterly contested

Together with five former colleagues, Klaus Esser is said to have taken an illegally high payment after the company was bought out by Vodafone.

But putting up a stern defence on the first day of the trail in D�sseldorf, Mr Esser accused prosecutors of using "evil defamation" against him.

He said he had followed procedure.

Defending his pocketing of 60m German marks ($27m; �15m), Mr Esser said, "it's not like this was the only such bonus in Germany, it wasn't even one of the highest."

High profile

Esser and his co-defendants, who include current Deutsche Bank head Josef Ackermann have all asserted their innocence.

They deny having broken the law when approving 111.5m marks (57m euros; $71m; �39m) in bonuses when the German telecoms firm was taken over by Vodafone four years ago.

Mr Ackermann, who is continuing to lead Deutsche Bank while the trial progresses, said he could not see where there was supposed to be a legal problem.

"According to business law I have acted correctly," he said.

The trial, which could last six months, is continuing amid much attention.

Culture shock

Back in 2000 the Mannesmann board approved the huge bonuses to recompense executives as they stepped down after the all-share merger was agreed.

Including retirement packages, the total comes to 150m marks.

I behaved correctly and we are here to prove it Klaus Esser, former Mannesmann chief executive

However, the size of the payoff was unprecedented in German corporate culture - and sparked the accusation that the board had betrayed its responsibility to shareholders.

Until February 2000, critics pointed out, Mannesmann's leadership had resisted the takeover.

Mr Esser and his colleagues only relented, prosecutors say, once the payoff was agreed.

Corporate practice

"The sole reason for the bonuses was the support for the friendly takeover of Mannesmann by Vodafone," said Johannes Puls, the state prosecutor.

Mr Ackermann, he said, was aware the size of the payments was illegal.

In all, Mr Esser's bonus and retirement package totalled 60m marks.

The fellow defendants of Mr Esser and Mr Ackermann, are former Mannesmann chief executive Klaus Esser, Klaus Zwickel, ex-boss of the IG Metall union, and former board chairman Joachim Funk.

The defence insists the decisions surrounding the bonuses were above board, and in line with corporate practice elsewhere.

Eventual support

Mr Esser maintains that by the time he accepted the bonus and backed down, a majority of shareholders were in favour of the takeover.

He has admitted, however, that his decision could be seen as controversial.