Porsche/Volkswagen Takeover: Former Porsche CFO Sentenced For Credit Deception

In my view, the criminal action based on credit deception always had to be a side show in the great Porsche/Volkswagen saga. It was relatively insignificant, given the size of the securities and civil litigation, on which it has no impact, and the fact that the “victim”, BNP Parisbas, did not suffer a damage. Charges were brought nevertheless, and today, Härter was found guilty and sentenced.

The Stuttgart court sentenced Härter to a fine of EUR 630,000 – way short of the sentence the prosecution had asked for, namely at least 12 months imprisonment on suspension, and a fine of EUR 1,000,000.

The Stuttgart District Court (Landgericht) found Härter and a member of his finance team guilty of having misrepresented the exposure under the Volkswagen option agreements to BNP Parisbas  when they negotiated Porsche’s credit line. The court has found during a trial that lasted for 32 days, that Härter had understated the cash needed by Porsche in the order of EUR 1.4 billion and that the misstatement did cause BNP Parisbas to grant the credit. Porsche had hence obtained credit by deception (KreditbetrugSec. 265b German Criminal CodeStrafgesetzbuch). This is a criminal offence, even if the bank did not suffer any credit – merely having put the bank at risk suffices. Härter will appeal the verdict, but for the time being, the prosecution have got the upper hand.

Update – June 5, 2013: Joachim Jahn comments on the case in Das letzte Wort, FAZ’s legal blog today – to him, the matter was a waste of energy (“Verpulverte Energie”). The prosecution should rather have applied its scarce resources to the market manipulation charges.

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