Bloomberg News

EnBW Deal Guarantees Violated State Constitution, Court Says

October 06, 2011

Oct. 6 (Bloomberg) -- The government of Baden-Wuerttemberg violated the state constitution when it authorized 4.7 billion euros in guarantees as part of the purchase of a 45 percent stake in EnBW Energie Baden-Wuerttemberg AG, a court ruled.

The Baden-Wuerttemberg constitutional court ruled the government shouldn’t have authorized the guarantees without asking the state legislature for approval beforehand. The case was brought by the Green party and the Social Democrats, the court said in an e-mailed statement today. Both parties formed the opposition when they filed the suit and are now the ruling coalition in the German state.

“Using an emergency authorization in cases where there is enough time to ask parliament isn’t backed by the state constitution,” the court said today. “Volatility in the capital markets doesn’t justify waiving parliament’s vote which has the primary say on budgetary issues.”

Electricite de France SA, Europe’s biggest power generator, sold the stake in the utility on Dec. 6. The state of Baden- Wurttemberg offered 41.50 euros a share, representing a 19 percent premium on the share price at the time. Former state prime minister Stefan Mappus justified the emergency approval with regulatory constraints and the need to keep the deal secret, the court said.

--Editors:

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.


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