German prosecutors are investigating Porsche’s former chief executive Wendelin Wiedeking and other people close to the sports carmaker, alleging market manipulation and passing on inside information in their failed takeover attempt of Volkswagen.
Prosecutors in Stuttgart on Thursday raided the headquarters of Porsche, which recently agreed to merge with VW after an attempt to acquire the much bigger rival had pushed it to the brink of bankruptcy. A Porsche spokesman rebuffed the prosecutor’s allegations. He confirmed that Mr Wiedeking and Holger Harter, former chief financial officer, who were both forced to leave the company last month after they lost the backing of the family owners, were among the suspects. “Mr Wiedeking and Mr Härter are supporting the prosecutors fully,” he said. Both Mr Wiedeking and Mr Härter could not be reached for comment. Claudia Krauth, a prosecutor at the regional court in Stuttgart, said the investigation had been launched after a complaint from Bafin, Germany’s financial regulator. Bafin launched an investigation into market manipulation earlier this year after a German press report suggested Porsche had misled markets about its ambition to take over VW.
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Porsche swooped on VW in 2005 taking a minority stake. In the following years, it used a special breed of options slowly to lift its holding in its rival. The contentious options strategy made the producer of the 911 sports car look like a hedge fund. In its fiscal year 2008, Porsche made a profit of €6.8 billion in trading VW options and only €1 billion from selling cars. The strategy left markets in the dark and infuriated investors around the world. Henning Gebhardt, head of equities at DWS, Germany’s largest institutional investor, on Thursday urged the German government to act. “The urgency to change the German laws on options disclosure is unchanged. The finance ministry signaled to us last year that they would do something. We are still waiting for that to happen,” he told the Financial Times. Porsche’s four-year long takeover attempt distorted the price of VW’s ordinary shares, at one point turning it into the world’s most valuable company. Porsche’s family owners last week agreed to sell options for around 17 percent of VW’s ordinary shares to the Emirate of Qatar, relieving the carmaker of parts of the large debt load it amassed in the course of the takeover attempt. Since then, VW’s share price has dropped by more than 40 percent to €144, shedding around €20 billion in the carmaker’s market capitalization — more than BMW’s current stock market valuation. “The selling pressure is enormous. The artificial valuation bubble in the VW stock will subside further in the coming weeks,” Mr Gebhardt said. Bafin said on Thursday it had started an examination of VW’s recent share price movements. Investors were infuriated further when it emerged that Porsche had owned an options package for 50 percent of VW’s preference shares, which it also sold to Qatar.