Porsche’s greed blended with fraud

Porsche confirmed media reports that Mr Wiedeking, Germany's best-paid executive, and Mr Haerter were among targets of a fraud investigation.

Porsche, VW's majority shareholder, tried in vain to take over Europe's biggest carmaker only to abandon the campaign as its debt mounted, forcing it into a reverse takeover when recently VW bought Porsche after a battling family feud.

That has cost the jobs of Mr. Wiedeking, Porsche CEO and Mr. Haerter Porsche’s CFO, whose wizardry with derivatives helped Porsche mount the daring raid on Volkswagen.

As part of the takeover, Porsche moved to seize control over more than 70 per cent of Volkswagen's stock, causing Volkswagen ordinary shares to shoot up to €1000 ($1,425) apiece last year, when traders needed shares in October to cover bets they had made against the stock, a so-called short-squeeze, briefly pushed VW shares so high that VW, for a few days, was the world's most valuable company.

The prosecutors’ case centered on a report by Germany’s WirtschaftsWoche magazine that allegedly Porsche had revealed in February 2008 its intentions to take a 75 per cent voting stake in Volkswagen and pass a domination and profit transfer agreement, but did not make this public at the time. A report Porsche denied at the time.

However, “Porsche publicly decided on March 3, 2008, - about two weeks later - to acquire the majority of voting shares in VW. There was no intention at that time for Porsche to raise its stake to 75 per cent of the votes," Porsche said in a statement then.

Who was first the chicken or the egg? A question that now is under investigation. This is an indication that greed and fraud often are intertwined. The economy and Mr. Market now teach people another valuable lesson. Hopefully many other executives will learn from this as well. That: Greed Breeds Fate is too true to be ignored.