Ex-Porsche boss faces trial over failed VW takeover scandal

Wendelin Wiedeking to stand trial for alleged share price manipulation

deputy business editor

The former chief executive of Porsche is facing a criminal trial over his actions during the failed takeover attempt of Volkswagen, hailed in some quarters as one of the biggest alleged trading scandals outside of the banking industry.

Under then-boss Wendelin Wiedeking, Porsche secretly built up a huge stake in VW, using intermediaries to build up a controlling position over nearly 75 per cent of the company before informing the market of Porsche’s intention to buy the company. When that shock announcement finally came, in October 2008, it triggered a staggering rise in the VW share price.

London and Wall Street hedge funds, who had been betting against VW’s shares, were left nursing an estimated $24bn (£14.5bn) of losses as their price rocketed. The “hedgies” losses were made worse by the fact that short-sellers like them had to buy VW stock at the new, sky-high price in order to make good their bad bets.

Such huge demand for the shares sent their value up even higher to a point where, briefly, VW became the world’s most-valuable company. Porsche’s own paper profit on the increase in the shares’ value at one point touched more than $100bn – dwarfing its revenues from car sales.

Now, Mr Wiedeking and ex-chief financial officer Holger Haerter are to be tried for allegedly hiding their takeover plan from the market, creating a false share price before they made plain their intentions.

Lawyers for the men, and Porsche, said the charges were unfounded and without merit. The men’s lawyers said in a joint emailed statement that Porsche’s press releases about the takeover were accurate at all times.

The decision by the Stuttgart Higher Regional Court overrules a previous decision and says prosecutors indicate it “seems quite likely” the company concealed its plan. The judges said it was likely Porsche’s board “de facto” approved of the project on  3 March, 2008.

The court listed “numerous indications that could suggest there was a hidden decision to increase the stake”, a spokesman said.

One such was an instance in March 2007 where  Mr Wiedeking went on the record at the Geneva auto show to say there was no plan to raise Porsche’s stake above 30 per cent, even though the family shareholders approved such an increase the following day.

Other pieces of evidence include a memo of a meeting with state officials in February 2008 regarding Porsche’s intentions for its stake in VW and testimony from  Mr Wiedeking’s former chief counsel who testified that she was convinced Porsche’s leaders sought a takeover.

Among the losers from the VW trade were Adolf Merckle, one of the world’s richest men, who committed suicide in 2009 after his family empire lost heavily betting against VW shares. The spectacular losses jeopardised his life’s work building up a business conglomerate with 100,000 employees.

For hedge funds, it was seen as the biggest single loss-making event ever, with famous names like London’s Crispin Odey said to have taken a hit when Porsche finally showed its hand.

Until that moment, “shorting” VW shares had been dubbed “the safest play in the market” given falling demand for mid-priced cars during the recession.

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas