Prosecutors Probe Porsche and Prosecutors Probe Porsche and Volkswagen
In the cities of Stuttgart and Frankfurt in Germany, investigators are looking into accusations stating that the car manufacturer Porsche illegally manipulated market shares of the car company Volkswagen. As part of their probe, Stuttgart prosecutors raided and searched the apartment of a non-management board level Porsche employee. Allegedly the prosecutors found incriminating information on a computer – exactly what they were looking for. This is not the first raid to be conducted in the investigation: on August 20th, 2009, Porsche’s Stuttgart offices were raided, along with the private homes of Porsche executives. These earlier searches yielded information and clues that lead to the current raid.
The probe into Porsche began when two unidentified lawyers filed a complaint against Porsche. The main targets of this investigation are former chief executive of Porsche Wendelin Wiedeking and former chief financial officer Holger Haerter, as well as a bank in Frankfurt that Porsche works with. There are currently two investigations going on – one in Frankfurt and one in Stuttgart. The cases are separate, but closely related. The specific allegations against Porsche include violation of security laws, market manipulation and insider information leaks. Prosecutors are concerned that Porsche was passing insider information to third parties and illegally affecting the sales of market shares.
Porsche claims that it has done nothing wrong, and that they will cooperate with authorities to prove their innocence. The accusations against Porsche are serious enough to warrant attention from the German regulatory body BaFin. BaFin is roughly the German equivalent of the US Securities and Exchange Commission. Right now, the probe has not disrupted the everyday operations of either Porsche of Volkswagen. However, if the prosecutors find enough incriminating evidence in the future, manufacturing delays may occur.
Volkswagen and Porsche have always had a close relationship. Ferdinand Porsche, the founder of Porsche, also designed the original Volkswagen Beetle in 1938. The car later went on to be the most successful automobile designs in history. Manufacturing eventually ceased in 2003. Porsche began buying into Volkswagen in 2005, starting at only 18.65%, and currently owns over 40% of Volkswagen shares. Since Porsche owns more than 35% of Volkswagen, Porsche essentially controls the company. This has caused much controversy and anxiety among workers and other companies. The two companies intend to completely merge by 2011.