The final report into the collapse of Swissair shows that management knew the airline was in serious trouble but did nothing to prevent its collapse.This content was published on February 12, 2003 - 18:26
The report was leaked to the "Tages Anzeiger" newspaper as creditors learned they would receive only a fraction of the SFr22.7 billion they claim they are owed.
The Ernst & Young report was due to be issued on Wednesday to Swissair creditors, who were told on the same day that they would receive just SFr472 million ($345 million) from Swissair.
The newspaper said it had obtained a copy of the report, which contained "explosive" allegations that warning signs had been ignored at the highest levels of Swissair and its parent company, SAirGroup.
It could prove an even more damning indictment of Swissair management than a preliminary report released last month, which blamed a mixture of management incompetence and lack of aviation experience for the airline's downfall two years ago.
swissinfo contacted Wenger Plattner, the law firm overseeing Swissair's liquidation, but was told it could not comment on the report's findings.
"The final report shows that Swissair management behaved in a more scandalous manner than hitherto believed," the Tages Anzeiger said.
It said the report had concluded that it was already "crystal clear" by the summer of 2000 that without decisive action Swissair would not survive the disastrous effects of an expansion plan implemented by former chief, Philippe Bruggisser.
Despite that, management had continued its mistaken strategy.
"[The board] allowed Bruggisser to buy airlines in urgent need of modernisation at inflated prices," the paper quoted Ernst & Young as saying.
"The agreed budgets were all exceeded, but even then there was no attempt made to put things right."
The report quoted a leaked memo from former SAirGroup board member Lukas Mühlemann saying that Bruggisser had not accepted criticism and by 1998 "had become a dictator".
But despite that neither Mühlemann nor other members of the board had thought of having him removed until January 2001.
The report was also highly critical of Bruggisser's successor, Mario Corti, who it alleges knew about the perilous state of Swissair's finances months before taking over in 2001.
It said that instead of carrying out immediate restructuring and selling off unprofitable branches of the business, Corti charged commissioned consultants KPMG to come up with a modernisation concept.
KPMG was then paid millions of francs for coming to the same conclusions already drawn by earlier management consultancy reports, namely that Swissair could not survive without selling off considerable sections of the operation.
"Corti, like Bruggisser before him, totally ignored the warnings," the paper said.
There was also harsh criticism of the board's finance commission, which was supposed to monitor the concern's finances and bookkeeping.
According to the report, a majority of the commission members had no experience of dealing with company finances and had "failed in their duty" by doing nothing when it was made clear to them that the end of year results for 1999 and 2000 had been doctored.
swissinfo with agencies
A leaked copy of the final report into the collapse of Swissair shows that the airline's management knew its collapse was imminent but did nothing to prevent it.
The report blames a disastrous expansion plan and a lack of financial controls for the company's collapse two years ago.
It is highly critical of two former CEOs, Philippe Bruggisser and Mario Corti for ignoring warning signs.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: email@example.com