Ex-Porsche CEO Wiedeking Manipulation Case Dropped by Court

Apr 25, 2014 7:00 am ET

(Updates with court comment in third paragraph.)

April 25 (Bloomberg) -- A Stuttgart court threw out market manipulation charges against former Porsche SE Chief Executive Officer Wendelin Wiedeking, imperiling multiple probes over the company’s failed bid to use options to acquire Volkswagen AG.

Prosecutors’ request to try the case against Wiedeking and ex-Chief Financial Officer Holger Haerter was rejected by judges yesterday, court spokesman Reiner Skujat said. The charges were filed in December 2012 and prosecutors extended their probe last year to supervisory board members including Ferdinand Piech and Wolfgang Porsche.

“The court found that there wasn’t enough evidence backing up the charges,” Skujat said in a phone interview. “With the evidence at hand, from today’s perspective an acquittal is more likely than a conviction, so the case couldn’t move to trial.”

Porsche has faced a series of investigations and lawsuits since disclosing in October 2008 that it had access to 74.1 percent of Volkswagen AG, partly through cash settled options, and was seeking to acquire 75 percent as part of a takeover strategy. The announcement caused Volkswagen’s stock to jump as short sellers raced to buy shares to repay borrowed stock in bets that VW would fall.

Stefan Biehl, a spokesman for Stuttgart prosecutors, said his office will analyze the ruling before commenting. Porsche spokesman Albrecht Bamler said the allegations against Wiedeking and Haerter are unfounded.

‘No Surprise’

“The ruling is hardly a surprise,” the four defense lawyers for the two men said in a joint statement. “It confirms the view of Mr. Wiedeking and Mr. Haerter that the allegations are thoroughly unfounded.”

Prosecutors can appeal the ruling within one week after they receive the case files back from the court.

Today’s news may hinder hedge funds that are seeking a total of more than 5 billion euros ($6.9 billion) in multiple lawsuits against Porsche. A criminal trial may have unearthed more evidence that could have been used in the civil cases.

Porsche won dismissal of one of the suits in Stuttgart in March. The funds have appealed the ruling. A Braunschweig court has scheduled a series of hearings in these cases, the first starting April 30.

In the period between March 10, 2008, and October 2, 2008, Porsche denied at least five times that it planned to increase its VW stake to 75 percent, prosecutors have said. In October of that year, the company unveiled a strategy to take control of the carmaker.

The funds claim the company misled investors about its intentions. Prosecutors said in the indictment that by February 2008 Porsche leadership had made a decision to increase the company’s stake in Volkswagen to 75 percent in the first quarter of 2009 to prepare for a takeover.