tricky takeover

Ex-Porsche Boss Faces Charges of Stock Market Manipulation

wiedeking dpa
Former Porsche CEO Wendelin Wiedeking is looking at troubled times.
  • Why it matters

    Why it matters

    The charges are related to the most spectacular takeover battle in recent German history, when Porsche attempted to take over Volkswagen.

  • Facts

    Facts

    • Mr. Wiedeking was once Germany’s highest-paid executive, and he’s involved in the Tialini chain of restaurants.
    • The Higher Regional Court in Stuttgart ruled that the trial of Mr. Wiedeking and Holger Härter will now go forward.
    • At issue are stock price fluctuations that occurred during Porsche’s attempted takeover of Volkswagen Group.
  • Audio

    Audio

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Wendelin Wiedeking, who used to be Germany’s highest-paid executive, often can be found, befittingly, atop a Porsche tractor, plowing a potato field next to his house in Bietigheim in southwest Germany. Being tied to the earth in such an activity gives him strength to carry on in business – and in court, where he faces accusations of stock market manipulation.

Mr. Wiedeking, 61, recently said he wanted to expand his Tialini chain of restaurants. Pizza and pasta are more than just an everyday business to bon vivant Mr. Wiedeking. Which real estate would be best suited for this expansion? City-center locations, for example, such as those Austrian investor René Benko acquired for his portfolio through his takeover of Karstadt. Mr. Wiedeking, a member of Benko’s Signa Group advisory board, reportedly invested part of his €50 million ($65.7 million) settlement from Porsche in the real estate empire.

Pizza instead of Porsche could be the title of Mr. Wiedeking’s next phase in life if it weren’t for state prosecutors in Stuttgart, who recently scored a victory. After a complaint by the investigators, the Higher Regional Court in Stuttgart ruled the trial of  Mr. Wiedeking, the former head of Porsche, and his chief financial officer, Holger Härter, will now take place. The accusation of stock market manipulation is related to the most spectacular takeover battle in recent German history.

In essence, the charge relates to when the Wiedeking-Härter duo decided to take over the larger Volkswagen Group with the comparatively smaller Porsche. Mr. Wiedeking, who had already bought VW shares in 2007, had denied intentions of wanting to take over the whole Volkswagen Group up until October 2008. However, when the plans did become public, VW shares soared.

Most investors lost money because they had bet on VW stocks falling. The state prosecutors now accuse Mr. Wiedeking and Mr. Härter of intentionally manipulating the prices and plan to cite “covert grounds for the decision” to take over VW.

The takeover didn’t happen anyway. Mr. Härter ran out of money and Mr. Wiedeking lost the confidence of VW’s patriarch, Ferdinand Piëch. Both executives were forced to leave in July 2009. Volkswagen took over the leadership at Porsche.

Investors such as the Swabian family-owned pharma-company Merckle sued Porsche for €213 million in damages. Altogether, demands totaling €5.7 billion are being decided in courts in Hanover and Braunschweig. Porsche was able to win the first court cases.

Through their lawyers, Mr. Wiedeking and Mr. Härter said they were “confident the accusations will be proven, without exception, baseless in the main hearing.” At stake: five years imprisonment and a fine. This would be the second setback in court for Mr. Härter. In mid-August, the Federal Court of Justice, the country’s highest civil and criminal court, confirmed his conviction on credit fraud charges. He was accused of deceiving banks about the true borrowing requirements during the takeover bid.

 

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This article was translated by David Andersen. Vinny Kuntz also contributed to this article. To contact the author: M.Fasse@vhb.de 

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