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UPDATE 1-Grenke says new business falls less than expected in Q3

* Q3 new business leasing down 24.6% vs prior year

* Says will do everything to refute fraud allegations (Adds quote, details)

BERLIN, Oct 2 (Reuters) - German leasing business Grenke said new business fell slightly less than expected in the third quarter as it said it would fight the fraud allegations which have seen it temporarily suspend its founder.

The company, which helps small and medium-sized companies finance office communication equipment, said new business was 75.4% of the previous year’s quarter at 517.6 million euros ($605.75 million).

This was ahead of its forecast for around 70% of the prior year’s quarter.

“The fact that our new leasing business is developing positively despite the COVID-19 pandemic is a strong sign,” Grenke Chairwoman Antje Leminsky said.

New business declined the least in the Germany, Austria and Switzerland region, falling 11.8%, while new business was down by almost a third in both the Southern Europe and Northern/Eastern Europe regions.

“This performance gives us momentum – particularly in light of the short-seller attack we are currently facing – and we will continue to do everything in our power to refute the unjustified accusations,” Leminsky said.

Grenke last month said its founder Wolfgang Grenke would temporarily give up his seat on the supervisory board in the wake of a critical report by a short seller accusing the company of fraud.

The report from short-seller Viceroy Research said that Grenke over the years bought various franchises without disclosing that corporate insiders, including Wolfgang Grenke, already controlled those franchises and stood to profit from the transaction. ($1 = 0.8545 euros) (Reporting by Caroline Copley; editing by Thomas Seythal and Maria Sheahan)

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