From 1989 to 2001, the world’s biggest marketing company ISL/ISSM paid personal commissions – or bribes – worth an unbelievable 138 million Swiss Francs (87,5 million euros) to sports officials and other persons involved in the dealing of sports TV and marketing rights.
Reporting by JENS WEINREICH in Zug and MICHAEL HERBORN in Aarhus
Special to Shunpiking Online
AARHUS (13 March 2008) – THIS REVELATION of the biggest corruption scandal in sport known so far was thrown onto the table on Wednesday by a judge in the Swiss city of Zug, where a fraud trial concerning the collapse of sports marketing company ISL in 2001 entered its second day.
Six former employees of the now defunct ISL, which held media and marketing rights for events including the FIFA World Cup and the Olympic Games, stand accused of defrauding creditors millions of Swiss francs. Two of the defendants, Hans-Juerg Schmid and Christoph Malms, have now admitted that ISL paid undocumented ‘commissions’ to secure broadcast rights to major sports events.
Among the accused recipients is COMNEBOL President and FIFA Executive Committee member Dr Nicolas Leoz.
To carry out the extensive bribery programme, a complex web of companies in different countries was built up by ISL/ISSM.
It was two subsidiaries of ISMM, the holding company for ISL, that were the central focus of the day’s proceedings in court; Sunbow SA, a wholly owned subsidiary of the Nunca Foundation, which in turn was owned by ISMM. The subsidiaries were created around the time of a stock offering for ISMM was mooted.
Presiding judge Marc Siegwart alleged that between 1999 and 2001, 18 million Swiss francs was paid by ISL through Sunbow SA in ‘schmiergeld’, literally bribes or kickbacks, to secure broadcast rights to major sporting events. These figures were meticulously detailed in the records of the court.
Prior to the creation of the Sunbow-Nunca subsidiary, between 1989 and 1999, 120 million Swiss francs was paid in kickbacks to secure media rights for major events. The figure is not part of the case, but was brought forward by judge Siegwart, quoting information from the lawyers of one of the defendants.
The amounts cited by Siegwart went unchallenged by Malms and Schmid, who rather confirmed them, though phrasing them instead as business ‘commissions’. They argued that such commissions were a reality of business in the securing of rights for major sports events.
However, on one occasion Schmid himself, the former Chief Financial Officer of ISL, also used the term ‘schmiergeld’.
It is worth noting that bribery was not illegal according to Swiss law at the time of the events, but it is illegal to drain a company of its money as the six former top executives are accused of doing.
Bribe-takers don’t give receipts
Malms and Schmid did not reveal whom payments were made to. They stated that no invoices were received for the payments, due to sensitivity on the part of the recipients over publicly accepting such payments.
Malms did, however, recommend that prosecutors examine ‘the literature’, implying journalistic investigations into the affair, if they wanted to see whom the bribes were being paid too.
At the time, ISL held contracts with among others, FIFA, the International Olympic Committee, FINA, IAAF, FIBA, IAAF and UEFA.
Judge Siegwart mentioned COMNEBOL president and FIFA Executive Board member Dr Nicolas Leoz as one of the recipients of these ‘commissions’, an accusation that neither Malms nor Schmid did anything to contest.
A spokesman for Leoz told the Reuters news agency that COMNEBOL had nothing to add to a statement made by the organisation in September 2006, in which Leoz denied the allegations outright. He is accused of receiving over 200,000 Swiss francs from Sunbow in 2000.
Siegwart also questioned a payment of 5 million Swiss francs made to Abdul Muttaleb, Director General of the Olympic Council for Asia, for which no invoice was obtained.
Malms, the former chairman of ISL, reiterated that this was the standard operating practice of the sports world. If you want a broadcast contract, you must be prepared to pay a kickback to get it. It was not something that Malms was happy about, nor aware of when he became involved in the business he claims. Nonetheless, he accepted it as a reality of the industry.
Malms and Schmid accused co-defendant Jean-Marie Weber alone of paying these ‘commissions’ to sports officials, working on lists drawn up by Hans-Peter Weber.
Neither of the Webers spoke in court, both exercising their right to remain silent. All four pleaded not guilty to the charges laid before them in court, ranging from embezzlement to falsification of documents.
Two further defendants in the case, Heinz Schurtenberger and Daniel Beauvois, were not in court for the first two days of the trial, as they were not involved in the Nunca or Sunbow subsidiaries.
The investigation into the ISMM collapse was initiated by FIFA, after the world football governing body claimed they were owed 22 million US dollars by ISMM in payments from Brazilian TV station O Globo for the rights to the 2002 and 2006 World Cup.
However, as soon as the ISL bankruptcy administrators had succeeded in getting bribes worth 2,5 million Swiss francs paid back from an anonymous source, and with still more evidence suggesting that FIFA was involved in the bribery, FIFA suddenly asked the authorities to drop the case. Swiss prosecutors continued with the case nonetheless, appointing independent magistrate Thomas Hildbrand to lead the inquiry.
– See more information at Play the Game
Who took the bribes?, and Andrew Jennings’s presentation, http://playthegame.org/Home/Conferences/Play_the_Game_2007/presentations/jenningspaper.aspx
FIFA: An era of corruption nears its end, at Play the Game 2007
Play the Game – www.playthegame.org