Former Porsche SE Chief Financial Officer Holger Haerter told aGerman court on the first day of his trial that he didn't makemisleading statements in 2009 when the company refinanced a 10billion-euro loan ($12.5 billion).

Haerter denied charges he downplayed Porsche's liquidity needswhen negotiating with BNP Paribas SA about a 500 million-euro shareof the loan. He said prosecutors didn't understand the complexterminology used in the discussions.

“I am aghast at these charges because I have always been verymeticulous in all my declarations,” Haerter, 66, told the Stuttgartcourt today. “It has never been my way to deceive business partnersand I didn't do it here.”

The case is part of a broader criminal investigation overPorsche's unsuccessful hostile bid for Volkswagen AG using aderivatives strategy. Stuttgart prosecutors are still probingHaerter and former Chief Executive Officer Wendelin Wiedeking onmarket manipulation and breach of trust allegations.

Haerter is on trial in Stuttgart with two other Porschemanagers, who under German law can't be fully identified. The twomen also rejected the charges in court today.

In a March 19, 2009, statement to BNP Paribas, which Haertersigned and the two other managers helped to set up, theyunderstated Porsche's liquidity needs by 1.4 billion euros, had allpurchase options the company then held on Volkswagen shares beenexercised, prosecutor Reto Woodtli said when reading theindictment. They also didn't mention 45 million put options Porschehad sold on VW shares, he said.

The statement declared “that the 12.5 billion-euro loan wasenough to finance an acquisition of 70.8 percent of VW shares,”Woodtli said. “In reality, a much higher amount would have beenneeded as all the accused knew.”

Haerter replied that the prosecutors mixed up the terminology.The statement didn't discuss liquidity needs and instead used thennet purchase price for VW shares, he said. The indictment fails totake into account that Porsche would have earned 1.4 billion eurosfrom cash settled call options it owned. They needed to besubtracted from the gross price, he said.

“I never claimed that 12.5 billion euros would have been enoughto acquire 70.8 percent of VW,” Haerter said. “It wasn't BNP whoinferred there was something wrong with the statement, only theprosecutors did.”

Dirk-Michael Mitter, a German spokesman for BNP, declined tocomment. Frank Gaube, a Porsche spokesman, declined to comment.

Economic Situation

Under German law, loan fraud doesn't require that a creditor isactually deceived. The law punishes incorrect statements about theeconomic situation of a business that seeks a loan, regardless ofthe actual effect of the statement on the creditor.

Porsche and VW agreed to combine in 2009 after Porsche racked upmore than 10 billion euros of debt in its unsuccessful hostile bid.Porsche started accumulating VW shares in 2005. A merger betweenthe two companies was scrapped last year because of thelawsuits.

To avoid further delays, Wolfsburg, Germany-based VW purchasedthe Porsche auto business and completed the transaction on Aug.1.

Stuttgart prosecutors said last year their probe into Wiedekingand Haerter had “solidified” suspicions Porsche didn't adequatelyinform the market between 2007 and 2009 about its intentions totake control of VW. They also added breach of trust allegationsover the use of derivatives, saying the instruments may have putPorsche at the risk of bankruptcy.

It's not clear when that part of the probe will be finished,Claudia Krauth, a spokeswoman for Stuttgart prosecutors said in aninterview yesterday.

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