ISL defendants blame FIFA for marketing firm's collapse

Updated: April 3, 2008, 11:31 AM ET
Reuters

By Mark Ledsom

ZUG, Switzerland, April 3 - The criminal hearings into the collapse of FIFA's former marketing partners ISL ended on Thursday with defendants putting the blame for the company's failure squarely at the feet of world soccer's governing body.

Six former executives of ISL and its parent company ISMM are facing charges of criminal mismanagement in a trial that has also revealed how ISL paid large bribes to high-ranking sports officials in its efforts to secure lucrative contracts.

Presiding judge Carole Ziegler said the court would reconvene on July 2 to deliver its verdicts.

ISL's collapse in 2001 with estimated debts of more than $300 million left FIFA with a gaping hole in its finances and prompted the organisation to instigate proceedings against its former partners.

Several of the defendants insisted on Thursday, however, that it was FIFA's deliberate decision to pull out of an agreed joint rescue package for ISL that led to the company's failure.

"The only thing we did was to try our hardest to rescue a company in which we had invested our heart's blood," former ISMM CEO Daniel Beauvois told the court in an emotional final address.

"If we failed, it was not due to a lack of ability but because our main business partners did all that they could to make sure we did not survive, allowing another company with FIFA at its head to take over our operations."

FIFA later withdrew its suit against ISL, but state prosecutors said they had uncovered enough evidence to press ahead with their own case.

FIFA has since said it will not comment on the trial until the verdicts are announced.

During the trial, state prosecutor Marc von Dach argued FIFA was one of several parties criminally damaged by the defendants' activities in the run-up to the company's collapse.

He has called for prison sentences of up to 4-1/2 years on charges including fraud, embezzlement and fraudulent bankruptcy.

All six defendants have pleaded not guilty to the charges and have demanded compensation from the court.

BRIBES PAID

The bribes paid by ISL to help secure its marketing contracts have played a lesser part in the overall trial, mainly because the payment of bribes to private individuals is not illegal in Switzerland.

The prosecution instead argues that some of the defendants used the secret Liechtenstein accounts through which the bribes were channelled to divert funds away from ISL's creditors.

Von Dach has listed payments of more than 18 million Swiss francs ($17.75 million) "to people involved either directly or indirectly in contracts entered into by the ISMM group" between June 1999 and January 2001.

FIFA executive committee member Nicolas Leoz is named on the list as receiving two separate payments totalling $130,000.

Leoz, who is not a defendant in the case, has not yet commented on the alleged payments.

The South American Football Confederation (CSF), over which Leoz has presided since 1986, has repeatedly denied any wrongdoing by the 79-year-old Paraguayan.

Citing defence papers during the trial's second day, Judge Marc Siegwart said the total amount of bribes paid out by ISL since 1989 came to more than 138 million Swiss francs.

Former ISMM board president Christoph Malms said last month he had been aware of the payments and had tried to put an end to them only to be told they were a "regular part" of the business.

"I was told the company would not have existed if it had not made such payments," Malms told the court.

Former ISMM general director Jean-Marie Weber is the only defendant to acknowledge knowing the identity of the bribed officials, many of whom were paid directly by him in cash.

Weber has refused to name the recipients, however, insisting the payments were legal and confidential.

On Wednesday, Weber's lawyer Marc Engler told the court his client would continue to respect that confidentiality.

"All the payments were made in accordance with the intended purpose of the account," Engler said.

"Since the purpose was to help the main business, then it is inconceivable to describe them as damaging to the company's creditors."

(Reporting by Mark Ledsom; Editing by Ken Ferris)

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