Prosecutors narrow case against FIFA’s ex-marketing partner

1 April 2008

ZUG – Swiss prosecutors narrowed their case against six executives of FIFA’s former marketing partner on Monday by asking for several lesser charges to be dropped and concentrating on accusations the men engaged in fraud, embezzlement and fraudulent bankruptcy.

Lead prosecutor Marc von Dach said the preferential treatment of some creditors of ISL/ISMM, which collapsed seven years ago leaving debts estimated at CHF 300 million (USD 300 million), fell outside the statute of limitations.

But he renewed his call for the men to be found guilty of defrauding their former business partner FIFA by hiding funds received from the sale of soccer television rights to Brazil and Japan.

The prosecution has asked for the six defendants to receive prison terms of 3-to-4½ years if convicted.

All six defendants deny the charges.

Monday’s summary by the prosecution marked a low-key start to the second stage of one of Switzerland’s biggest fraud trials.

The six former executives were all present for the hearing but did not speak. The court has ordered reporters covering the trial to refrain from using the names of the defendants because of strict privacy laws.

But Swiss media have widely named one of the defendants, Jean-Marie Weber, who is described in court documents as the strongman behind the ISMM group of companies. He is accused of the most serious charges, including fraud, embezzlement, damaging creditors and fraudulent bankruptcy.

Prosecutors say Weber had the closest contacts to FIFA before soccer’s governing body lodged a criminal complaint against ISL/ISMM over accounting irregularities and undeclared payments.

The move prompted prosecutors in the Swiss canton (state) of Zug to launch an investigation into the collapse of ISL/ISMM which continued even after FIFA withdrew its complaint.

Von Dach told the court that the executives knew about payments that were funnelled through the tax haven of Liechtenstein, and that some of the money was used for bribes.

Defence lawyers earlier said that the CHF 18 million paid to people involved in negotiating rights deals for major sporting events were part of the regular business negotiations and therefore legal.

Among those explicitly named in court documents as recipients of payments is the head of the South American soccer federation. Nicolas Leoz, a 79-year-old lawyer from Paraguay who has been CONMEBOL president since 1986, was sent two payments in 2000 totalling CHF 130,000 (USD 130,000), the documents said. Leoz has not been accused of acting illegally and has previously denied any connection with the marketing company.

FIFA says it will not comment on the payments and that no current or former FIFA official is named as a defendant in the trial.

Prosecutors say Weber dispensed many of the bribes, which the court documents describe as “grease money.” The Frenchman has refused to reveal details of the sports officials who received payments directly from him, citing confidentiality.

As bribery is not automatically considered a criminal offence in Switzerland, the Zug prosecutors have charged Weber with “damage to creditors.” But the payments could embarrass sports officials elsewhere and lead to further prosecutions in countries with stricter anti-graft laws.

In total, prosecutors say the criminal mishandling at ISMM amounted to more than CHF 100 million.

The company, which stood at the top of a complex business pyramid comprising about 60 separate entities, declared bankruptcy in 2001.

Its collapse caused a financial crisis at FIFA, which had given ISMM the concession to sell the part of the television and marketing rights for the 2002 and 2006 World Cups.

FIFA generates most of its revenues from the sale of World Cup rights, and the sudden hole in its finances caused some of its senior officials to complain that the Zurich-based sports body and its president Sepp Blatter had mishandled FIFA’s financial affairs.

In view of its close relationship with FIFA, ISL/ISMM had a special duty to safeguard the value of the rights it was charged with selling, prosecutors said Monday.

The accused did not meet this duty, von Dach said.

He described the men’s actions as “disappointing” and “malicious.”

Payments from Brazilian TV station Globo and Japanese marketing company Dentsu were “smuggled” onto ISMM accounts to avoid giving FIFA the oversight it was entitled to, von Dach said.

Prosecutors say FIFA is the injured party in the current trial case, but have left the door open for further probes into whether FIFA officials received illegal payments from ISL/ISMM.

Swiss and British media have reported that the offices of Blatter and FIFA’s former general secretary Urs Linsi were raided in November 2005 by investigators seeking to determine who repaid CHF 2.5 million in bribes to the insolvent estate of ISL/ISMM. Prosecutors have declined to confirm the raids.

Blatter said earlier this month that FIFA was affected by the case against its former marketing agent, but that the organisation was not worried about the trial.

“This will not disturb the work and responsibilities of the world of football, and FIFA and the president,” he said at a meeting in Gleneagles, Scotland.

A verdict in the trial is expected later this year.

[Copyright AP 2008]