Former Porsche CEO Wendelin Wiedeking is one of several executives under prosectors' scrutiny.
The planned merger of Porsche with the bigger German automaker Volkswagen AG is likely to be delayed – and may be called off entirely – as the result of an intensifying investigation of actions taken by current and former Porsche executives.
German prosecutors are looking into possible market manipulation, breach of trust and credit fraud stemming from the abortive effort by Porsche to take over its bigger rival. Among those under the microscope are former Porsche CEO Wendelin Wiedeking, the executive who triggered the attempted acquisition before being forced out when his company had to concede defeat.
As part of a settlement, the debt-laden Porsche agreed to allow itself to instead be taken over by Volkswagen. But that plan, Porsche officials today acknowledged, is now in jeopardy.
For their part, prosecutors in Stuttgart, home to Porsche, said three executives are facing accusations they provided “false or incomplete information” to banks involved in the planned takeover’s financing.
“The further investigations will be extremely costly and time-intensive,” the prosecutors stated, stressing that their work, “can in no case be completed before the end of the year,” which means it will push past the point at which VW and Porsche had hoped to conclude their merger.
Volkswagen appears to be reluctant to move ahead in light of the possibility Porsche could face legal action by shareholders, as well as the possible prosecution of current and former executives.
The David-v-Goliath battle transfixed the German automotive and business communities for much of 2010. The takeover battle had a personal, as much as business, tone. While CEO Wiedeking spearheaded Porsche’s efforts, the maker’s Chairman Wolfgang Porsche was a cousin to VW’s former CEO and current Chairman of the Supervisory Board, Ferdinand Piech.
The two wings of the family, both heirs to the legendary Ferdinand Porsche, have often feuded and the takeover battle was seen as just an extension of their bitter rivalries.