March 6, 2012 4:42 pm

Former Porsche CFO charged with fraud

German prosecutors have charged the former chief financial officer of Porsche’s holding company with credit fraud for allegedly making incorrect statements to a bank during a €10bn loan refinancing.

In statements in March 2009 to an unnamed credit institute, Holger Haerter, Porsche’s former CFO, together with two other employees are accused of having underestimated the premium carmaker’s liquidity needs by €1.4bn in the event of it exercising options to buy Volkswagen shares. They are also accused of having withheld information related to other financial options.

The charge is the latest episode in a complex legal saga stemming from Porsche’s failed attempt in 2008 to acquire the much larger VW, which put Porsche at risk of bankruptcy and caused big losses for hedge funds who had bet on a fall in VW’s share price.

Mr Haerter’s lawyer said that her client “opposes the charge of the Stuttgart prosecutor with emphasis”, adding: “All statements required by the provider of the loan were provided to the full extent.” The bank has never made an accusation that it was incompletely or falsely informed, Mr Haerter’s lawyer added.

A person with knowledge of the case said the bank in question was BNP Paribas. However, BNP Paribas and Porsche declined to comment.

Porsche SE, which was not named in the charges, said the individuals retained the presumption of innocence and added that it continues to work with the bank for its refinancing needs. Mr Haerter left the company in 2009.

The announcement came as Porsche faced the world’s media at the Geneva motor show and only a few days after a German court ruled that Ferdinand Piëch, VW’s chairman and grandson of Porsche’s founder, had breached his duties as a supervisory board member during Porsche’s attempt to acquire VW. Mr Piëch said on Sunday that he could not see how he had violated his duties and Porsche said it would appeal that decision.

German prosecutors are continuing to investigate Wendelin Wiedeking, former Porsche chief executive and Mr Haerter for alleged market manipulation and breach of trust in relation to their attempt to take over VW. They have always denied wrongdoing.

Prosecutors in Stuttgart said that the investigation was “particularly complex and time-intensive” and would not be concluded before the summer, at the earliest. The outcome of the investigation is keenly awaited by German and US investors who are suing Porsche SE for about €5bn.

They are attempting to recoup losses suffered after Porsche in 2008 revealed the full extent of its options to buy VW shares. The announcement triggered a short squeeze – where short sellers rush to repurchase shares, forcing up the price – which briefly made VW the world’s most valuable company.

The unquantifiable potential damages arising from these lawsuits forced VW in September to suspend plans to merge this year with Porsche.

VW and Porsche are continuing to explore ways to form an integrated car group. It is thought probable that VW will exercise its options to buy the remaining shares of Porsche’s carmaking operations that it does not already own. However, as this could result in a tax bill estimated at €1bn, VW managers are thought to be considering more tax-efficient ways to expedite the integration. The two carmakers already co-operate on a wide range of projects.

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