Presumably the legal basis would've been the Bundesdatenschutzgesetz, which is Germany's implementation of the DPD. The DPD itself is not very specific, only saying "such a data protection official, whether or not an employee of the controller, must be in a position to exercise his functions in complete independence;". The language in the Bundesdatenschutzgesetz itself[1] is quite similar to the DPO language in the GDPR.

[1]: https://www.gesetze-im-internet.de/bdsg_1990/__4f.html