Prosecutors Seek Jail for Former Porsche Executives
18 Febbraio 2016 - 9:50PM
Dow Jones News
STUTTGART—German prosecutors on Thursday urged a regional court
to fine Porsche SE €807 million ($895.7 million) and sentence two
former top executives to more than two years in prison each for
allegedly lying to investors during their aborted 2008 take over of
rival car maker Volkswagen AG.
Prosecutors allege the Porsche executives concealed their
intention to gain control over their bigger rival and then shifted
strategy to survival when their attempt unwound. The case is
unrelated to Volkswagen's evolving scandal over automotive
emission.
A lawyer for former Porsche Chief Executive Wendelin Wiedeking
and former Chief Financial Officer Holger Hä rter on Thursday said
prosecutors' assertions were absurd and dismissed any prison
sentences for his clients.
The defense makes its closing arguments next week. Presiding
judge Frank Maurer is slated to rule early next month. A guilty
verdict could serve as a precedent for a separate trial in which
hedge funds are seeking as much as €5 billion in damages from
Porsche.
In October 2008, Porsche disclosed it held 42.6% of Volkswagen
shares and controlled another 31.5% through stock options, and that
it aimed to increase its stake to above 75% in 2009. Porsche had
previously denied that it sought to own 75% of Volkswagen, a
crucial threshold for controlling a target company under German
law.
The news shocked markets because investors who had bet
Volkswagen's stock price would fall suddenly realized there were
few shares left to close their bets. Volkswagen's share price
climbed above €1,000 the following week, making it the world's most
valuable company at the time.
Prosecutors in their final arguments said Porsche's statement at
the time was fraudulent because Porsche had virtually no cash left
to buy a controlling stake in Volkswagen. They also allege that
Porsche would have suffered further life-threatening losses if
Volkswagen's shares remained flat or fell further.
Porsche "knew exactly that their statement would propel
Volkswagen shares," a move necessary to ease the company's
stretched financial situation, one of the prosecutors said. Porsche
is now a holding company that controls 52% of the shares in
Volkswagen. It previously held the Porsche sports car maker, which
is now owned by Volkswagen.
Prosecutors for the first time revealed evidence obtained by
police that they said showed Porsche had suffered €7.5 billion in
losses in the weeks prior to October 26 because Volkswagen shares
halved during that time. Those losses stemmed from the options it
held to buy 31.5% of Volkswagen's stock.
"Porsche would have suffered another €7 billion in losses or
more if Volkswagen shares had remained stable or declined further
in the following week," one of the prosecutors said in final
arguments at the Stuttgart regional court.
He added such a scenario was likely dire "and Porsche executives
knew this" because the company had virtually no liquidity left.
Public interest in the trial has been strong because Porsche is
owned by one of Germany's richest families, the descendants of
Beetle creator Ferdinand Porsche. Adding to the intrigue, longtime
Volkswagen patriarch Ferdinand Pië ch at the time of the attempted
takeover chaired the company's supervisory board. The families
aren't accused of wrongdoing and the criminal trial's outcome won't
directly hit Volkswagen.
Write to Eyk Henning at eyk.henning@wsj.com
(END) Dow Jones Newswires
February 18, 2016 15:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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