A Porsche SE manager can’t be blamed for BNP Paribas SA (BNP) staff failing to understanding financial terms used to analyze an option strategy in the carmaker’s failed bid for Volkswagen AG (VOW), his lawyers told a German court.
The man, who can be identified only as Christian N., made no mistake when working on an e-mail exchange with the bank while refinancing part of a 10 billion-euro ($13 billion) loan, defense attorney Renate Verjans said in closing arguments today. Bankers at BNP’s Frankfurt office didn’t know that the term “net purchase price” didn’t refer to liquidity needs, she said.
Christian N. is standing trial alongside former Porsche Chief Financial Officer Holger Haerter on charges they lied about Porsche’s financial condition during the failed bid for VW. Haerter has separately been charged with market manipulation along with former Chief Executive Officer Wendelin Wiedeking over the use of options in the VW bid. A verdict in the case is scheduled for 11 a.m. in Stuttgart tomorrow.
“There was a shocking ignorance of the BNP employees in Frankfurt about the structure of the derivative transactions,” Verjans said. “It’s appalling” that that the matter “was handled by people who didn’t properly understand” the financial terminology.
Verjans asked the court to acquit her client because the bank had already decided to provide Porsche the 500 million-euro share of the loan before the e-mail was sent. Haerter’s lawyer last month also asked for an acquittal.
Prosecutors claim the message downplayed the company’s liquidity needs by 1.4 billion euros if it was to acquire a 20 percent stake in Volkswagen. They also argue Porsche failed to disclose 45 million in extra put options against which Porsche held no call options.
The e-mail was sent on March 19, 2009, six days after the Paris-based BNP credit committee had internally decided to participate in the syndicated loan. The deal was signed on March 24. A Frankfurt-based BNP manager, who negotiated the agreement, had drafted the March 19 statement seeking the additional information and asked Haerter to sign it. The ex-CFO and Christian N. edited the text and sent it back.
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