German board members will now have 'no choice' but to sue failed former managers

Board members of German companies are likely to be increasingly willing to take legal action against former managers should they be found guilty of corporate wrongdoing, it has been suggested.

Coming on the back of the conclusion of one of the most high-profile corporate compensation deals in European history, one leading expert has stated that growing numbers of boards could now follow the lead of Siemens, which pursued former managers it felt had neglected their supervisory roles by failing to prevent 'extensive bribery'.

Now this case is being put to bed, the chairman of the engineering group, Gerhard Cromme, has expressed his belief that this will usher in a 'sea change' in corporate governance.

"This will happen more often," he told the Financial Times.

"This has shown that the room for manoeuvre is very, very limited for supervisory board members.

"They have no choice but to claim damages in cases of wrongdoing by former managers, as shareholders will otherwise sue the supervisory board."

These comments come after the publication of the Walker review of Corporate Governance in UK banks, which noted that boards and stakeholders need to be given more influence.