A Twist in the Metallgesellschaft Saga

In a remarkable about-face in one of Europe's longest-running corporate disputes, Metallgesellschaft, the German industrial conglomerate, is preparing to make a cash payment and withdraw all charges of wrongdoing against the former chief executive it fired two years ago after a $1 billion oil trading scandal.

The scandal sent shock waves through the oil futures market, brought huge embarrassment to Europe's most powerful bank, Deutsche Bank, and fueled criticism of the extensive network of shareholdings in industrial companies by big German banks.

On Saturday in Frankfurt, members of Metallgesellschaft's supervisory board will be asked to approve an out-of-court settlement that absolves Heinz Schimmelbusch, who was dismissed in late 1993 as chief executive. He was blamed for the oil-related losses in New York by Ronaldo Schmitz, a Deutsche Bank board member who is chairman of Metallgesellschaft's supervisory board.

Deutsche Bank, a creditor of the company that also owns 16.5 percent of it, subsequently pressured a number of reluctant European bank lenders into a $2 billion rescue of Metallgesellschaft, and Mr. Schmitz then launched an unusually public and vitriolic attack on Mr. Schimmelbusch.

But now, Metallgesellschaft is beating a diplomatic retreat, its officials saying privately that it wants to put the embarrassing incident behind it.

A source close to Metallgesellschaft noted that the agreement was encouraged by the fact that an arbitration panel in New York recently ruled that a former oil trader for the company had been fired "with cause" but that Mr. Schimmelbusch had not been involved in the dealings.