Dot-com star on trial for fraud

3 December 2004

HAMBURG – Lawyers accused judges of bias on Friday as Alexander Falk, a German businessman who sold an Internet service company at vast profit at the height of the dot-com boom, went on trial for fraud in Hamburg.

The defence team for 35-year-old Falk challenged the judges before the indictment was read, contending they had allowed breaches of procedural rules.

Lawyer Gerhard Strate for the defence said the trial ought never to have begun. He said prosecutors had not interviewed defence witnesses, and had failed for nine months to disclose a vital document that could have helped the defence.

Presiding judge Nikolaus Berger confirmed in court that photocopies of some of the prosecution evidence had not been handed to the defence on time. He said this had been an “inadvertent” error.

Falk, who once raced expensive yachts and divided his time between a Hamburg mansion and a vineyard he owns in South Africa, has been in pre-trial custody since 5 June 2003. German prosecutors have sought seizure of his South African assets.

Legal experts said it was the most complex white-collar crime case ever dealt with by the Hamburg courts. Falk, who denies all the charges, is accused of pushing up the value of his former company Ision by false statements about its meagre sales.

A British company, Energis plc, bought a majority stake in Ision for EUR 812 million in 2001 and discovered it had been overvalued. Energis later filed for insolvency.

Falk and five other men are accused of serious fraud, pushing stock prices and evading tax. The maximum possible jail term is 10 years, and the courts have repeatedly refused to bail Falk, saying he would be likely to flee abroad if freed.

While the criminal charges relate to alleged losses of EUR 46.7 million, Energis is seeking civil damages of EUR 763 million from Falk under a provision of German law that allows both forms of suit to be heard at once.

The defence contended on Friday it had been kept in the dark for nine months about a due diligence report by Dresdner Kleinworth Benson that offered a detailed valuation of Ision.

Adding spice to the publicity about the case in Hamburg were revelations in the weekly Die Zeit that Falk had sought help from a friend in South Africa to aid him in escaping from justice.

News reports say Falk allegedly wrote a secret letter, in English, to be smuggled out of jail by his lawyer and faxed to South Africa. It ended up in the hands of South African justice officials, who informed German prosecutors.

In the letter, dated 10 June, a year after his arrest, Falk said he was hoping for his release on bail, in which case he wanted his friend in South Africa to help him go to some other country, even if it meant losing his surety deposit, newspaper reports said. 

DPA

Subject: German news