Ex-Swissair bosses may face their day in court
The liquidator of Swissair is suing the defunct airline’s former bosses and board in an effort to recoup money lost when it went under in 2001.
Karl Wüthrich told swissinfo that the lawsuits were likely to be the first of many, and that he was also confident of getting money back from Swissair’s banks.
Wüthrich is seeking SFr280 million ($231 million) from some of Switzerland’s top business people and politicians who were in charge of Swissair before it collapsed.
It was left to the taxpayer to fund the creation of a new airline, “Swiss”, from the remains of Swissair, at a cost of more than SFr1 billion.
He told creditors this week that he had filed lawsuits in mid-March against former CEO Philippe Bruggisser and former finance chief Georges Schorderet.
The liquidator is also suing ex-board members, among them Thomas Schmidheiny, Lukas Mühlemann, and Mario Corti, a former Nestlé executive who replaced Bruggisser when the extent of Swissair’s financial problems became known.
The former bosses and board could also face more serious charges – of falsifying documents and breach of trust – according to the Zurich cantonal prosecutor, who told a newspaper that he could bring criminal charges later this year.
The writs issued by Wüthrich concern an internal transaction in which Swissair’s bankrupt parent company, SAirGroup, handed over a firm called Roscor AG to another company within the group but received no compensation from the receiving firm, SAirLines.
Wüthrich says the managers and the board at the time approved the takeover and are therefore personally responsible for the loss incurred to SAirGroup, which he estimates at SFr280 million.
Wüthrich is also seeking money back from consultants and banks, which were paid just before Swissair went under. Claim avoidance actions have already been launched against consultants KPMG and Deutsche Bank.
swissinfo: Is the Roscor transaction the only mistake made by the management and the board? Didn’t their strategy destroy the national airline?
Karl Wüthrich: This Roscor transaction is only the first step. We are looking for other transactions, for example the buying of stakes in loss-making airlines such as Belgium’s Sabena and France’s Air Littoral. So we will be looking at all these transactions and I’m sure we will come up with other cases in which the management and board should be held to account.
swissinfo: How do you rate your chances of success, given that you are taking on some heavyweight business people and politicians?
K.W.: I don’t start lawsuits if I do not see chances of success. I’m convinced we have a strong case. In all the big cases I have dealt with in the past, the boards of directors and the auditors have had to pay.
swissinfo: Have you uncovered any evidence of criminal activity – the Zurich prosecutor is investigating the same individuals for falsification of documents. Or is this simply a case of incompetence and bad decisions?
K.W.: I am only concerned with getting money from those liable. In these cases, the decisions of the managers concerned and the board were not in the best interests of the company. They did not make use of all the information available to them and did not think through the consequences properly. The board of directors has to act in a responsible way and they did not do so.
swissinfo: You are also trying to make some of SAirGroup’s consultants and banks pay back fees they received from the company just before it went bankrupt. What have they done wrong?
K.W.: A short time before the insolvency proceedings started, they were paid in full. So they were treated in a preferential way compared with other creditors. That is all. It has nothing to do with incompetence or whether their fees were too high. It’s just because they were paid in full, but the other creditors were not.
swissinfo: So they took the money even though they knew SAirGroup was on the verge of bankruptcy, and other creditors would lose out?
K.W.: To get them to return their fees, the liquidator has to prove that the creditors who were given preference knew that they were being treated in a preferential manner. And of course, with the consultancy firms such as McKinsey, which was giving advice concerning a possible restructuring, there is a feeling that they possibly knew about the financial situation of SAirGroup.
swissinfo: And the same applies to the banks?
K.W.: We are investigating whether to launch lawsuits against the banks, which were also paid. The banks are much more interesting than the advisers, from a financial point of view. Our goal is to make sure that all creditors are treated equally. And to avoid having some treated more equally than others.
swissinfo-interview: Jonas Hughes
Writs have been served against Swissair’s former CEO Philippe Bruggisser and the former finance chief, Georges Schorderet.
Suits have also been filed against former board members, including Lukas Mühlemann, Eric Honegger, Mario Corti, Thomas Schmidheiny and Vrenni Spoerry.
They would have to dig into their own pockets, if made to pay.
Swissair’s liquidator is seeking SFr280 million from former bosses and board members.
He says they were in “breach of their duties in the handling of [a] merger”.
He also wants banks and consultancy firms to pay back fees they received from Swissair’s parent company just before it went bankrupt.
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