SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant []
Filed by a party other than the Registrant [X]
Check the appropriate box:
[] Preliminary proxy statement.
[X] Definitive proxy statement.
[] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12.
[ ] Confidential, for use of the Commission only (as permitted by
Rule
14a-6(e)(2)).
THE NEW GERMANY FUND, INC.
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(Name of Registrant as Specified in Its Charter)
OPPORTUNITY PARTNERS L.P.
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Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was
paid previously. Identify the previous filing by
registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
Opportunity Partners L.P., 60 Heritage Drive, Pleasantville, NY
10570
(914) 747-5262 // Fax: (914) 747-5258//oplp@optonline.net
May 31, 2005
Dear Fellow Shareholder of The New Germany Fund:
As you probably know, The New Germany Fund's shares have traded
at a double-digit discount from net asset value (NAV) for a very
long time. At the upcoming annual meeting, shareholders will
finally have a chance to do something about the discount.
The board suggests that we should focus on the potential for long-
term gain, not on the discount. Unfortunately, long-term
shareholders have not fared very well. According to Lipper, The
New Germany Fund ranked sixth out of seven Western European
closed-end funds for the ten year period ending July 2004. For
the five year period ending March 31, 2005, its average annual
return based on NAV was -6.83%.
In our opinion, this letter and this proxy contest should not
have been necessary. Last year, we submitted a proposal
requesting that the board of directors promptly take the steps
necessary to open-end the Fund or otherwise enable stockholders
to realize NAV for their shares. Despite the board's opposition,
our proposal was approved by a wide margin -- 61% to 39%. The
actual results were as follows: For: 6,948,617 shares; Against:
4,451,528 shares; Abstain: 239,889 shares. We then requested
that the board take meaningful action to address the Fund's
discount. The board refused and said that it did not consider
that vote to be an important message from shareholders because
many shareholders did not vote.
We disagree. In almost every corporate election many
shareholders do not vote. That does not justify discounting the
wishes of those that do vote. We believe the board should have
implemented the proposal to realize NAV after shareholders
approved it. That is why, at this year's meeting, we are (1)
submitting a similar proposal to obtain NAV and (2) nominating
directors that are committed to implementing the proposal if it
is approved by a majority of the votes cast.
We appreciate that people can have honest differences about
matters like these. We think such differences should be resolved
democratically. Unfortunately, the board seems to be unwilling
to allow that. Instead, it is spending Fund assets on an
expensive election campaign to defeat our nominees. If
shareholders do not respond favorably to the board's pleas, it
has said it will refuse to count any votes for our nominees
because they allegedly do not meet the qualifications the board
itself adopted. Thus, either way the incumbents win.
We believe the board's "qualifications" violate the right of
shareholders to nominate an opposing slate. Furthermore, they
are hypocritical because the Fund's own proxy voting guidelines
state that the Fund votes against proposals of portfolio
companies that restrict shareholders rights. As one court said,
"To allow for voting while maintaining a closed candidate
selection process thus renders the former an empty exercise."
The board insists that its only objective is to insure that the
board has wonderful directors. If almost every shareholder of
the Fund is precluded from being a director because they cannot
meet the qualifications, that result certainly was not the
board's intent.
The board has said that we have "conceded [our nominees] are not
qualified to serve as directors under the Fund's Bylaws." That
is not really an accurate statement. What we said was that our
nominees did not meet "the illegal preclusive and inequitable
qualifications set forth in Section 3 of Article II of the Fund's
bylaws" and that any attempt to enforce it would be a breach of
fiduciary duty. Did the directors knowingly misrepresent what
we said? You decide whether they are credible.
The incumbent directors invite you to make your own comparison of
their qualifications with those of our nominees. Let's do that.
Perhaps the most distinguished director of The New Germany Fund
is Richard Burt, a former U.S. ambassador to Germany.
Unfortunately, Mr. Burt's sterling qualifications did not prevent
him from being chastised by former SEC chairman Richard Breedon
for his role on an audit committee of Hollinger International
that exercised an "inexplicable and nearly complete lack of
initiative, diligence and independent thought" while allowing
chief executive officer Lord Conrad Black to run Hollinger like a
"corporate kleptocracy." Recently, The Wall Street Journal
reported that Mr. Burt agreed to a $50 million settlement of a
lawsuit alleging that he and his esteemed fellow Hollinger
directors "rubber stamped" payouts to Lord Black and his cronies.
Although the board's proxy materials do not mention this
distasteful matter we think it is important so we have enclosed
an informative newspaper article about it. Please read it and,
as the board says, "Make your own comparison."
Admittedly, our nominees do not hobnob with people as
distinguished and sophisticated as Mr. Burt. However, if they
are elected as directors, they will not act like members of an
aristocratic social club. They are honest and competent and will
faithfully represent shareholder interests. Like Winston
Churchill, the British Bulldog, they are willing to give their
"blood, toil, tears and sweat" to make sure that nothing like the
"rubber stamping" that took place at Hollinger ever happens at
The New Germany Fund.
In any event, the main issue in this election is very simple. Do
you want an opportunity to realize NAV, e.g., via open-ending or
a self-tender offer? If so, then you need to return the GREEN
proxy card today. Better yet, you should vote by telephone at 1-
800-454-8683 or at WWW.PROXYVOTE.COM to insure that your vote is
received before the February 4. If you have any questions,
please call me at (914) 747-5262 or e-mail me at
oplp@optonline.net.
Yours truly,
Phillip Goldstein
Fellow GF Shareholder
THE NEW YORK TIMES
August 31, 2004
Panel Says Conrad Black Ran a 'Corporate Kleptocracy'
By FLOYD NORRIS
Conrad M. Black ran a "corporate kleptocracy" for his own benefit
at Hollinger International, the publisher of The Chicago Sun-
Times and other newspapers, and the board of directors failed in
its responsibilities to monitor what he was doing, a committee of
that board concluded in a report filed on Monday in federal court
in Chicago and made available today.
" Hollinger wasn't a company where isolated improper and abusive
acts took place," said the report, largely written by Richard C.
Breeden, a former chairman of the Securities and Exchange
Commission. Rather, it said, Hollinger was "an entity in which
ethical corruption was a defining characteristic."
Lord Black controlled Hollinger through a series of holding
companies and super voting stock, but his control of the company
was effectively ended when the board broke with him and persuaded
a Delaware judge to allow the company to sell The Telegraph
papers over Lord Black's objections. The company has sued Lord
Black and his associates for $1.25 billion in federal court in
Illinois.
While the report was careful to insist that Lord Black and F.
David Radler, Hollinger's former chief operating officer, were
"the primary offenders, the consistent inaction of the Hollinger
board also resulted in squandering opportunities for stopping
abusive acts before the damage was too great."
The report was particularly critical of the audit committee of
the board, which it said had not performed its duties to monitor
what was going on. But the report saved its harshest criticism
for Richard Perle, the former Reagan administration official and
current member of a Pentagon advisory board. It said it did not
consider Mr. Perle to have been an independent director and
called on him to return $5.4 million in pay he received after
"putting his own interests above those of Hollinger's
shareholders."
It said James R. Thompson, a former governor of Illinois and the
chairman of Hollinger's audit committee when the abuse was taking
place, had accepted the word of Lord Black and Mr. Radler on many
things, allowing them to take excessive management fees and
nearly all the company's profits for themselves. "He failed to
apply the critical part of former President Reagan's famous
dictum to `Trust, but Verify.' "
The report said that Hollinger's auditors, KPMG, and its outside
Canadian law firm, Torys, had not warned the audit committee that
the management fees might be so large as to violate fiduciary
standards, as the special committee claims they did, nor did the
auditors or lawyers raise questions about "noncompete" fees paid
to Lord Black and Mr. Radler that the committee concluded were
improper.
It said Mr. Thompson and two other members of the audit
committee, Richard D. Burt, a former United States ambassador to
Germany, and Marie-Jose Kravis, the wife of the financier Henry
Kravis, "failed to respond critically to the repeated demands for
noncompete payments even though they should all have known these
payments were highly unusual from the numerous boards on which
they had served."
The report was gentle in dealing with some former directors,
including Henry Kissinger, the former United States secretary of
state. It said they had acted reasonably in reviewing the
recommendations of the audit committee and were entitled to
assume the committee had done its job properly.
But the committee said large Hollinger donations to "pet
charities" of various directors, including Mr. Kissinger and
Robert Strauss, a former chairman of the Democratic National
Committee, "without the restraint of sound corporate governance
controls, raises questions regarding the independence of those
directors."
Mr. Perle was criticized for his involvement in Hollinger's
Internet subsidiary, in which he, Lord Black and others were
granted 22 percent of profits on successful investments - a total
of $8.3 million - even though the subsidiary lost money over all.
His share came to more than $3 million.
The report said Mr. Perle "repeatedly breached his fiducicary
duties" as a member of the board's executive committee, in
approving improper deals to benefit himself and Lord Black. It
said Hollinger had made a bad investment in a partnership run by
Mr. Perle. "As a faithless fiduciary, Perle should be required to
disgorge all compensation received from the company," the report
said.
Lord Black has repeatedly denied he did anything wrong and has
said the board approved the transactions for which he has been
criticized. A call to his secretary in Toronto was not
immediately returned today. Nor was a call to Mr. Perle at his
office at the American Enterprise Institute in Washington.
A KPMG spokeman said the firm had cooperated in the investigation
but did not discuss its findings.
The report lays out in devastating detail the ways in which it
says Lord Black and his associates drained $400 million, or 95
percent of Hollinger's adjusted net income from 1997 through
2003. It said much of that was accomplished by having Hollinger
pay a "management fee" to a company controlled by Lord Black. It
then paid management salaries, but the amounts were not disclosed
and the board evidently never asked for details. The report
concluded that the salaries were wildly exorbitant.
American companies are required to disclose salaries paid to the
top five officers, but the report said Hollinger failed to
disclose as much as 96 percent of the amounts it should have
disclosed.
PROXY STATEMENT OF PHILLIP GOLDSTEIN, A STOCKHOLDER OF THE NEW
GERMANY FUND, INC., IN OPPOSITION TO THE SOLICITATION BY THE
BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS (To be held on June 21, 2005)
I, Phillip Goldstein, a stockholder of The New Germany Fund, Inc.
(the "Fund"), am sending this proxy statement and the enclosed
GREEN proxy card to stockholders of record as of April 22, 2005
of the Fund. I am soliciting a proxy to vote your shares at the
Annual Meeting of Stockholders of the Fund (the "Meeting").
Please refer to the Fund's proxy soliciting material for
additional information concerning the Meeting and the matters to
be considered by stockholders including the election of
directors.
This proxy statement and the enclosed GREEN proxy card are first
being sent to stockholders of the Fund on or about May 31, 2005.
INTRODUCTION
There are three matters that will be voted upon at the Meeting:
(1) the election of four directors; (2) ratification of the
appointment of the independent auditors; and (3) a proposal
recommending that stockholders be afforded an opportunity to
realize net asset value ("NAV") for their shares as soon as
practicable. I am soliciting a proxy to vote your shares FOR the
election of my nominees, and FOR Proposals 2 and 3.
How Proxies Will Be Voted
If you return a GREEN proxy card in the enclosed envelope, your
shares will be voted on each matter as you indicate subject to
the condition set forth in the following paragraph. If you do not
indicate how your shares are to be voted on a matter, they will
be voted FOR the election of my nominees, and FOR Proposals 2 and
3. If you return a GREEN proxy card, you will be granting the
proxy holders discretionary authority to vote on any other
matters that may come before the Meeting including matters
relating to the conduct of the Meeting.
Rule 14a-4(e) of the Securities Exchange Act of 1934 requires
that, subject to reasonable specified conditions, all shares
represented by proxy must be voted. The board of directors has
adopted a bylaw that purports to require nominees to meet onerous
qualifications which my nominees do not meet. Because I believe
these qualifications constitute an improper constraint by the
board on the right of stockholders to elect directors, I have
requested that the board waive them and agree to comply with rule
14a-4(e) by allowing all proxies to be voted as instructed and
counted. Thus far, the board has failed to do so and has failed
to disclose how it will treat my proxies. If, prior to the
Meeting, the board does not irrevocably agree to allow all
proxies to be voted as instructed and counted, the proxy holders
may not attend the Meeting and I intend to file a lawsuit to
require all proxies to be voted as instructed and counted. If
the proxy holders do not attend the Meeting your shares will not
be counted toward a quorum or voted unless and until a court
makes a determination as to how the Fund must treat them. If you
do not believe the foregoing condition is reasonably specified or
you unconditionally want your shares to be represented at the
Meeting even if the board does not agree to allow them to be
voted as you instruct and counted, you should not give me your
proxy.
Voting Requirements
The presence in person or by proxy of at least one-third of the
Fund's outstanding shares shall constitute a quorum. The four
nominees receiving the greatest number of votes cast will be
elected directors. Proposals 2 and 3 each require the
affirmative vote of a majority of the votes cast at the Meeting
for approval. Abstentions and broker non-votes are not treated
as shares voted and thus will have no impact on either proposal.
Revocation of Proxies
You may revoke any proxy prior to its exercise by (i) delivering
a written revocation of your proxy at the Meeting; (ii) executing
and delivering a later dated proxy; or (iii) voting in person at
the Meeting. (Attendance at the Meeting will not in and of itself
revoke a proxy.) There is no limit on the number of times you may
revoke your proxy prior to the Meeting. Only your latest dated
proxy will be counted.
Information Concerning the Soliciting Shareholder
I, Phillip Goldstein, the soliciting stockholder, am an
investment advisor. Currently, my clients, clients of my
affiliates, and I beneficially own 2,183,000 shares of the Fund,
of which approximately 296,300 shares were bought in 2005,
approximately 1,457,306 shares were bought in 2004 and
approximately 181,352 shares were bought in 2003. There have
been no sales since January 1, 2003.
REASONS FOR THE SOLICITATION
At the Fund's annual meeting on June 22, 2004, stockholders
approved by a margin of 61% to 39% a proposal requesting the
board of directors to promptly take the steps necessary to open-
end the Fund or otherwise enable stockholders to realize net
asset value for their shares. The board has refused to implement
that proposal. I am submitting a similar proposal (Proposal 3)
this year and intend to nominate candidates for election as
directors that are committed to implementing the proposal if it
is adopted.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Meeting, I intend to nominate the following persons for
election as directors. Each nominee has consented to being named
in this proxy statement and to serve as a director if elected.
None of my nominees has any arrangement or understanding with any
person with respect to employment by or transactions with the
Fund or any affiliate of the Fund. I do not know of any material
conflicts of interest that would prevent any of my nominees from
acting in the best interest of the Fund. Please refer to the
Fund's proxy soliciting material for additional information
concerning the election of directors.
Gerald Hellerman (67), 10965 Eight Bells Lane, Columbia, MD 21044
Principal of Hellerman Associates, a financial and corporate
consulting firm since 1993; director of The Mexico Equity and
Income Fund; director and President of Innovative Clinical
Solutions, Ltd.: director of Frank's Nursery & Crafts, director
of MVC Capital; and director of Brantley Capital Corporation. Mr.
Hellerman is presently serving as Manager-Investment Advisor for
a U.S. Department of Justice Settlement Trust. Mr. Hellerman has
served as a Trustee or Director of Third Avenue Value Trust, a
Trustee of Third Avenue Variable Series Trust, and a Director of
Clemente Strategic Value Fund.
Phillip Goldstein (60), 60 Heritage Drive, Pleasantville, NY
10570
Investment advisor to Opportunity Partners L.P., an activist-
oriented private investment fund, and other clients since 1992.
Mr. Goldstein has been a director of Brantley Capital Corporation
since 2002, The Mexico Equity and Income Fund since 1999 and both
The Emerging Markets Telecommunications Fund and The First Israel
Fund since 2005.
Andrew Dakos (38), 43 Waterford Drive, Montville, NJ 07045
Mr. Dakos has been President of Elmhurst Capital, Inc., an
investment advisory firm, since 2000. Mr. Dakos has also been a
Managing Member of the general partner of Full Value Partners
L.P., an investment partnership, since 2001. In addition, Mr.
Dakos is President & CEO of UVitec Printing Ink Inc., a
manufacturing firm. Mr. Dakos also currently serves as Director
and Chairman of the Audit Committee of The Mexico Equity and
Income Fund Inc., a publicly traded company.
Rajeev Das (36), 68 Lafayette Avenue, Dumont, NJ 07628
Mr. Das has been an analyst at Kimball and Winthrop Inc. the
General Partner of Opportunity Partners L.P. an activist-oriented
private investment fund since 1997 and since September 2004 Mr.
Das has served as portfolio manager of Opportunity Income Plus
L.P. a private investment fund. Mr. Das is currently a director
of the Mexico Equity and Income Fund and a member of its Audit
Committee. Mr. Das holds the CFA designation.
Neither Mr. Hellerman nor Mr. Dakos owns any shares of the Fund.
Mr. Das has beneficially owned 402 shares for more than two
years. My wife and I jointly own 30,344 shares in street name
and I own 1,511 shares in an IRA account. Opportunity Partners
owns of record one share and 685,363 shares in street name. A
representative of Opportunity Partners will appear in person or
by proxy at the annual meeting to nominate the above persons. I
have voting and/or disposal authority for an additional 1,417,278
shares that are beneficially owned by my clients (excluding
Opportunity Partners). There are no definitive arrangements or
understandings between any of our nominees and Opportunity
Partners or its affiliates. Each nominee has consented to serve
if elected.
PROPOSAL 2: TO RATIFY PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2005
In the absence of contrary instructions, the proxy holders will
vote your shares FOR this proposal.
PROPOSAL 3: A RECOMMENDATION THAT STOCKHOLDERS OF THE FUND BE
AFFORDED AN OPPORTUNITY TO REALIZE NET ASSET VALUE FOR THEIR
SHARES AS SOON AS PRACTICABLE
Open-ending the Fund or a self-tender offer will allow
stockholders to realize NAV for their shares. However, either
action may also have adverse effects such as increasing the
Fund's expense ratio or the percentage of assets held in illiquid
investments. If adopted, this proposal will not be binding on
the board. Moreover, if my nominees, who are committed to its
implementation if it is adopted by stockholders, are elected,
they will constitute a minority of the board. In the absence of
contrary instructions, the proxy holders will vote your shares
FOR this proposal.
THE SOLICITATION
I, Phillip Goldstein, the soliciting shareholder, am making this
solicitation. Persons affiliated with or employed by me or my
affiliates may assist me in the solicitation of proxies. Banks,
brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward this proxy statement and the
enclosed GREEN proxy card to the beneficial owners of shares for
whom they hold shares of record. I will reimburse these
organizations for their reasonable out-of-pocket expenses.
Initially, I will bear all of the expenses related to this proxy
solicitation. Because I believe that all shareholders will
benefit from this solicitation, I intend to seek reimbursement of
my expenses from the Fund. Shareholders will not be asked to
vote on the reimbursement of my solicitation expenses which I
estimate will be $50,000. There is no arrangement or
understanding involving me or any of my affiliates relating to
future employment by or any future transactions with the Fund or
any of its affiliates.
DATED: May 31, 2005
PROXY CARD
Proxy Solicited in Opposition to the Board of Directors of The
New Germany Fund, Inc. by Phillip Goldstein for the Annual
Meeting of Shareholders
The undersigned hereby appoints Rajeev Das, Andrew Dakos and
Phillip Goldstein and each of them, as the undersigned's proxies,
with full power of substitution, to attend the Annual Meeting of
Shareholders of The New Germany Fund, Inc. (the "Fund") on June
21, 2005, (the "Meeting"), and any adjournment or postponement
thereof, and to vote on all matters that may come before the
Meeting and any such adjournment or postponement the number of
shares that the undersigned would be entitled to vote if present
in person, as specified below subject to the board, prior to the
Meeting, irrevocably agreeing to allow all proxies to be voted as
instructed and counted. If this condition is not met, the proxy
holders may not attend the Meeting and Mr. Goldstein may file a
lawsuit to require all proxies to be voted as instructed and
counted. If the proxy holders do not attend the Meeting the
undersigned's proxy will not be counted toward a quorum or voted
unless and until a court so orders.
(INSTRUCTIONS: Mark votes by placing an "x" in the appropriate [
].)
1. ELECTION OF TWO DIRECTORS
[ ] FOR GERALD HELLERMAN [ ] WITHHOLD AUTHORITY
[ ] FOR PHILLIP GOLDSTEIN [ ] WITHHOLD AUTHORITY
[ ] FOR ANDREW DAKOS [ ] WITHHOLD AUTHORITY
[ ] FOR RAJEEV DAS [ ] WITHHOLD AUTHORITY
2. TO RATIFY PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005
FOR [ ] AGAINST [ ]
ABSTAIN [ ]
3. A RECOMMENDATION THAT STOCKHOLDERS OF THE FUND BE AFFORDED AN
OPPORTUNITY TO REALIZE NET ASSET VALUE FOR THEIR SHARES AS SOON
AS PRACTICABLE
FOR [ ] AGAINST [ ]
ABSTAIN [ ]
Please sign and date below. Your shares will be voted as
directed subject to the board, prior to the Meeting, irrevocably
agreeing to allow all proxies to be voted as instructed and
counted. If no direction is made, this proxy will be voted FOR
the election of the nominees named above in Proposal 1 and FOR
Proposals 2 and 3. The undersigned hereby acknowledges receipt
of the proxy statement dated May 31, 2005 of Phillip Goldstein
and revokes any proxy previously executed. (Important - Please
be sure to enter date.)
SIGNATURE(S)____________________________ Dated: __________