Court says Ferdinand Piech violated duties as Porsche board member

Article by Anita Panait, on March 1, 2012

The Stuttgart Higher Regional Court ruled that Ferdinand Piech violated his duties as a member of Porsche Automobile Holding SE 's supervisory board when he commented in 2009 about the company’s options transactions that were conducted as part of the plan to take over Volkswagen AG. In 2009, Piech told reporters in Sardinia that he didn’t know the amount of Porsche's option risks and that he hadn't sought clarity about it.

The German court ruled that if Piech’s words were taken literally, the current chairman of VW would have committed “a grave violation of his duties as a supervisory board member,” which includes assessing important Porsche transactions.

The court said that Piech wouldn't have been allowed to consent to the concerned transactions and “should have sought more information.” The court added that if the transactions did not allow Piech to understand the trades, he should have acted against them. According to the ruling, Piech words could be interpreted as a critical comment, since it argued that the risk involved in the options transactions was incalculable.

The court added that such a statement is improper because it would compromise Porsche's creditworthiness. Frank Gaube, spokesman for Porsche, said the company is disappointed that the Stuttgart Higher Regional Court didn't follow its arguments.

The ruling against Piech was part of a decision that voided votes by Porsche shareholders that discharged the VW chairman and the rest of Porsche’s supervisory board from responsibility for fiscal year 2008-2009.

The case is one of the legal actions that stem from Porsche’s failed takeover of the VW in 2009, which partly involved using its options to increase its stake in the German carmaker. During the process, Porsche’s debt mounted to over EUR10 billion ($13.5 billion). In a statement, the company said it will ask permission from Germany's top civil court to let it file an appeal of the decision. [source: Autonews]

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