- The Washington Times - Sunday, March 15, 2009

BERLIN (AP) - A German newspaper reported Sunday that Deutsche Post AG has paid a pension of euro20 million ($26 million) to Klaus Zumwinkel, the former CEO convicted of tax evasion.

The news sparked outrage among politicians in Germany, which is grappling with the issue of business leaders getting high salaries and bonuses, despite falling profits or management failures.

German industrial production fell 7.5 percent during January, as the global economic crisis continued to take its toll on the world’s biggest exporter and Europe’s largest economy.

On Sunday, Deutsche Post spokeswoman Silje Skogstad told The Associated Press that Zumwinkel received the pension that he qualified for in a single payment. But she refused to name the amount.

The newspaper, Bild am Sonntag, however, put the sum at euro20 million. It quoted Zumwinkel as defending the payment as “absolutely normal.”

Hubertus Heil, general secretary of the main opposition party, the Social Democrats, said: “This behavior is an insult to all those in our country who work hard, pay their taxes honestly and follow the rules.” The Social Democrats have been calling for limits on executive pay.

Zumwinkel was convicted in January of evading about euro970,000 in taxes from 2002 to 2006. He was given a two-year suspended sentence and a euro1 million fine.

Zumwinkel, who stepped down last year during the investigation against him, was given the choice of taking his pension in a one-time payment or in monthly retirement payments, the paper reported.

“I am not the only person who had his pension paid early,” Zumwinkel was quoted as saying.

Beate Merk, justice minister for the southern German state of Bavaria, said managers needed to be held accountable for their mistakes.

“A work contract that gives a euro20 million pension to a chief executive forced to step down for tax evasion should not exist,” Merk said.

Salaries of top managers in Germany are traditionally not as high as in the United States. Nonetheless, the recession has forced the country to grapple with the issue.

On Wednesday, the Cabinet of Chancellor Angela Merkel agreed to tougher rules for top managers. Under the new proposals, which must still be passed by parliament, companies’ supervisory boards would have to reduce managers’ salaries when companies perform poorly.

Amid the discussion of managers’ salaries, Postbank AG CEO Wolfgang Klein said this weekend that he is willing to work for a symbolic euro this year.

Klein’s remarks, carried by the Bild newspaper on Saturday, come as the company faces heavy criticism for paying directors bonuses last year, even though the company suffered heavy losses.

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