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Porsche Offices Raided By German Prosecutors

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http://business.timesonline.co.uk/tol/busi...icle6804436.ece

German authorities have raided the offices of sports-car maker Porsche as part of an investigation into possible market manipulation and insider trading by its former management team.

Porsche has confirmed that Wendelin Wiedeking, its former chief executive, and Holger Haerter, its ex-chief financial officer, are under investigation by Stuttgart prosecutors following reports in the German press.

The investigation relates to the luxury carmaker’s failed attempt to buy Volkswagen when the company was under their management.

Porsche said in a statement: “There is a suspicion of breaching the publication duty as prescribed by the German Stock Corporation Act and furthermore of market manipulation. Porsche rejects the accusations but has pledged to cooperate with the authorities “to clarify the issue as quickly as possibleâ€.

The raids, which took place on Thursday morning at the company’s headquarters in Stuttgart-Zuffenhausen, followed the decision by Bafin, the financial market regulator, to file charges with the prosecutor’s offices. The company said documents were seized during the raid. Reports suggested the homes of the executives had also been raided.

Questions over the timing of Porsche’s attempt to raise its stake in Volkswagen to the 75 per cent level, and when it communicated its intentions to the market, acted as a catalyst for Bafin’s investigation.

Both Mr Wiedeking, who was Germany’s highest-paid executive, and Mr Haerter stood down last month after the protracted attempt to buy Europe’s largest car maker backfired. Although Porsche had built a stake of over 51 per cent in its rival and had options to increase that holding further, the strategy saddled the car company with over €10 billion in debt.

That left Porsche vulnerable financially as the economic downturn hit the credit markets which in turn hit sales of luxury cars.

Volkswagen, which makes six million vehicles a year compared to Porsche’s 100,000, turned the tables on its rival by launching a bid to take a near-50 per cent stake in its rival in June.

If they where a bank would this have happened?

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