LBBW Managers Charged by Prosecutors Over False Accounts
German prosecutors charged nine current and former employees of Landesbank Baden-Wuerttemberg with false accounting after the country’s biggest state-run lender received a 17 billion-euro ($22 billion) bailout.
Seven serving or ex-management board members, two employees and two auditors were implicated, the prosecutors said in an e- mailed statement from a court in Stuttgart today. No suspects were identified.
LBBW’s owners, including the state of Baden-Wuerttemberg, the city of Stuttgart and regional savings banks, had to inject 5 billion euros of capital and provide a 12 billion-euro lifeline after the lender reported a 2008 loss of 2.1 billion euros due to writedowns on the value of securities and credit derivatives. LBBW’s headquarters and ten homes were raided in 2009 as part of the criminal probe.
The board members were charged with making incorrect statements over LBBW’s accounts for 2005 and 2006, the prosecutors said. The inaccuracies relate to investments in asset backed securities through off-balance-sheet vehicles that weren’t included in the bank’s financial accounts, they said.
‘Dramatic Situation’
The board members “disguised the dramatic situation” at LBBW when it got the bailout, the prosecutors charged.
The regional court now has to decide whether to open legal proceedings. A separate probe into breach of trust related to the investments has been discontinued, the statement said.
LBBW’s financial statements complied with the law and the people concerned are confident that legal proceedings won’t begin, Thomas Knierim, a lawyer for LBBW’s ex-chief executive Siegfried Jaschinski and management board members Michael Horn and Hans-Joachim Strueder, said in an e-mailed statement.
The bank declined to identify the people charged.
“LBBW has constructively supported the investigations and has taken note of the prosecutors’ decision,” Supervisory Board Chairman Hans Wagener said by e-mail.
The bank is led by Chief Executive Officer Hans-Joerg Vetter, who replaced Jaschinski in 2009. It returned to profit last year as provisions for souring debt declined.
To contact the reporter on this story: Oliver Suess in Munich at osuess@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Edward Evans at eevans3@bloomberg.net
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.