Now even Germany wants to scupper LSE deal
AN INSIDER trading probe into the foreign takeover of the London Stock Exchange may have been triggered by a dirty tricks campaign orchestrated by German critics of the deal.
Deutsche Boerse chief executive Carsten Kengeter is being investigated by Frankfurt prosecutors over £3.8m of shares he bought days before his company launched formal tie-up talks with the LSE.
The probe threatens to derail the £21bn deal and Kengeter, 49, could face jail if convicted.
Now there is growing speculation in Germany that the investigation has been launched following a dirty tricks campaign trying to scupper the takeover.
A number of leading political figures in Frankfurt, where Deutsche Boerse is based, have attacked the merger. They are concerned the corporate headquarters will be in London and this would weaken Frankfurt as a banking base. Senior figures have claimed an opportunity to damage the City has been missed.
Meanwhile, politicians in Germany are under growing pressure to act tough on financial services as elections draw near.
Regional finance minister Thomas Schaefer said: ‘The reasons for the headquarters being in Frankfurt are crystal clear. Those involved in London must recognise, also in their own interests, that it would not be a good idea to keep the plans as they are now.’
German watchdog BaFin is another opponent of the head- quarters plan – particularly since the Brexit vote.
Boss Felix Hufeld said: ‘It is hard to imagine that the most important exchange venue in the eurozone would be steered from a headquarters outside the EU.’
Crucially BaFin has played a role in the investigation of Kengeter and passed its information to prosecutors. Questions had been asked about why the authorities should suddenly investigate him when the details of his share deal had been known for months.
‘There have been issues with [BaFin] and some of Deutsche’s shareholders, who’ve not been comfortable with this deal,’ one insider said. ‘It doesn’t surprise me that Carsten is being thrown to the wolves.’
The allegations relate to 60,000 Deutsche Boerse shares worth £3.8m which Kengeter, who lives in a £9m seven-bedroom house in Wimbledon, bought on December 14, 2015. Official talks had not started with the LSE – but Frankfurt prosecutors claim Kengeter first became aware of a possible takeover between July and August that year. It means he would have been aware of the possible deal when he bought the shares, which have since risen by around 10pc.
On the Continent, the timing of the investigation has raised eyebrows. Kengeter declared his purchase at the time, and it was vet- ted by his firm’s compliance team, but the probe was made public only when his office and apartment were raided last month.
Deutsche claims he was required to buy the shares by the board as part of a remuneration scheme. It is rumoured an enemy of Kengeter’s noticed the share sale and was biding their time to cause maximum damage.
Yesterday, Deutsche said it had ‘full confidence’ in Kengeter.
British opponents of the deal have seized on the opportunity to investigate more thoroughly. Tory MP Sir Bill Cash yesterday tabled a parliamentary debate for February 21 at which he hopes detailed discussions can take place.