- Judge says he doesn't understand prosecutors' latest claim
- Wolfgang Porsche may not have to testify, court tells parties
Two former Porsche SE executives on trial for market manipulation related to a failed takeover of Volkswagen AG received a boost as a German judge labeled prosecutors’ latest theory of the case incomprehensible.
The criticism from Presiding Judge Frank Maurer in Stuttgart comes after a series of setbacks in the case against former Chief Executive Officer Wendelin Wiedeking and ex-Chief Financial Officer Holger Haerter. Witnesses have repeatedly failed to back up prosecutors’ claims, forcing them to rework their theory of the case.
The two men are accused of lying in 2008 about their true intentions to acquire full control of VW through a series of options. The bid backfired spectacularly, first as short sellers drove up the price of VW shares as they scrambled to cover their positions, and then after funding dried up amid the financial crisis.
Prosecutors in December changed their arguments about a press release Porsche issued on Oct. 26, 2008, the first time the company disclosed its plan to acquire VW. Before, they had claimed the company tried to protect itself from bankruptcy by trying to push up VW shares. Now, they argue Porsche used the statement to push the stock down to help its partner Maple Bank, which had provided the options, avoid regulatory risks from the deals.
"The claims by the prosecution about what risks Maple faced at the time aren’t comprehensible given that an outside review in 2009 showed the bank was never in trouble over these risks," Maurer said at a hearing Friday. "I simply don’t get it."
Witnesses have also questioned the theory that Porsche in October 2008 was under financial pressure from the options and issued the release even though it was no longer financially able to take over Volkswagen.
Wolfgang Schuck, the head of Maple’s German unit, told the court Friday that the lender was never in peril because of the options strategy. Prosecutors developed the theory from a document that discussed a 30-minute period when Maple wasn’t able to hedge increased risk from the VW share value increase on Oct. 28.
"At the time, we couldn’t do interbank trading after 5 p.m. and there was gap before market closed at 5:30 p.m.," Schuck said. "We were able to close that gap the next morning right after interbank trades could be placed again."
The about-face cost Porsche dearly as the bid fell apart and VW ended up rescuing the sports-car maker. The shell company that retained the Porsche name and its former executives have faced civil lawsuits and regulatory and criminal investigations ever since.
Porsche Chairman Wolfgang Porsche, who was scheduled to appear as a witness on Jan. 14, can refuse to testify and doesn’t have to appear, the court ruled. He faces the possibility of an investigation into the issue.