Outlook: Germans shoot themselves in foot as Gent takes aim

THERE WE all were, hoping to see Goldman Smug have its nose properly rubbed in it and its fee-hungry ways exposed for all the world to see. Instead of which it was the poor old Germans who got it in the neck - again - while the world's most aggressive and successful investment bank came out smelling of roses - again. Is there no stopping these people?

Mannesmann seemed to have the Americans on the run in challenging Goldman's right to act for Vodafone so soon after it had been advising Mannesmann on its stake in Omnitel, and within weeks of giving a "fair value" assessment on Mannesmann's bid for Orange. The cheek of these investment banking boys. They take your money - and boy, do they take your money - then they turn round and act for the competition in bidding for you. How dare they?

The prospect of fees of 1 per cent and upwards of the world's biggest ever hostile takeover bid tells you all you need to know about the answer. Even in the investment banking village of Hampstead, that'll buy you quite a few mansions. In the circumstance, the ethical thing would perhaps have been to turn down these lottery winnings, but since when did investment banking have much to do with ethics? Soooo ... there we all were at the High Court of Justice in the Strand, hoping to see Goldman Sachs horse- whipped and thoroughly dragged through the mud.

All that nonsense about seeking always to maintain the highest ethical standards, recognising that a bank's principle asset is its reputation, which must be protected at all costs, was to be exposed for what it was - a load of pompous, marketing hogwash. Ah well, we can all dream, can't we? The Germans so messed up their case - nay, Fritz went so far as to give false and misleading evidence, according to Mr Justice Lightman - that its application to ban Goldman Sachs from acting became "completely hopeless" and it was Mannesmann that received the horse whipping, not the investment bankers. It was also Mannesmann, the fee-paying client, that emerged as the one without integrity. It is hard to imagine a more unlikely turnaround.

As it happens Mannesmann only has itself to blame for Mr Lightman's strictures. Other than counsel and solicitors, no Mannesmann representative even bothered to show up in court. Counsel then dismissed the proceedings as "only one battle in a larger war" and explained Mannesmann's defective evidence by saying that the board had rather greater fish to fry and couldn't be expected to give the British courts its full attention. No wonder the judge saw red.

By rights Goldman Sachs should not be acting in this bid, but this is a moral, not a legal point. By running to law with such a feeble, concocted case, Mannesmann has succeeded only in making itself look foolish and untrustworthy. As such, it has also undermined any non legal defence to Vodafone's bid.

Given that 60 per cent of Mannesmann's shares are held by foreigners, and that majority control therefore lies with those who are not part of Germany's stakeholder system of corporate partnership, this could prove rather serious.

Mannesmann should think twice before activating plans to open a second legal front in Germany - this for breach by Vodafone in mounting a hostile bid of joint venture agreements between the two companies. Mannesmann's Klaus Esser only acts against his shareholders' interests in seeking to prevent Vodafone from mounting a bid. He should be as good as his word, and fight the war on value grounds alone.

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