No basis for Swissair charges, says Mühlemann

Lukas Mühlemann (left) and his lawyer leave the hearing Keystone

Former Credit Suisse CEO and SAirGroup board member Lukas Mühlemann has rejected charges against him of dishonest management at the Swissair trial near Zurich.

The long-awaited trial comes after the collapse of the Swiss national carrier at the end of 2001.

Mühlemann, who also pleaded not guilty on Friday to damaging the interests of creditors, was the last of the 19 accused to appear at the court in Bülach. There will now be a recess of two weeks.

Like all the other directors – with the exception of industrialist Thomas Schmidheiny – Mühlemann refused to answer the questions of the public prosecutor of canton Zurich and the court president, fearing possible consequences in civil cases that will follow.

“The prosecution charges against me are absolutely without foundation,” he said. All seven board members at the trial have pleaded not guilty.

The prosecution maintained that when profitable parts of the group were moved under the umbrella of SAirLines, creditors lost out to the tune of SFr1.177 billion ($950 million).

They also were also negatively affected by the group’s injection of €150 million (SFr242.7 million) into the ailing Belgian carrier Sabena.

No choice

Mühlemann countered that the board had no other choice than to restructure SAirLines and try to improve Sabena’s capital structure.

“If we had not done that it would have had unforeseeable negative consequences for creditors,” he argued.

During the course of the three-week hearings, the prosecution has alleged that the SAirGroup management and board knew that the financial situation of the group was disastrous.

It accuses them of not taking the necessary measures to avoid the Swissair grounding of October 2, 2001 and favouring SAirLines to the detriment of other parts of the SAirGroup.

Earlier this week, the last SAirGroup CEO before the airline collapse Mario Corti, told the court that Switzerland’s major banks, in particular UBS, had been to blame for “strangling” the group.

Bank pressure?

Corti said a request for creditor protection and the grounding of Swissair had been integral parts of a rescue plan imposed by the banks.

However, UBS on Wednesday hit back by criticising the SAirGroup for a delay of “several months” in restructuring the struggling national carrier.

And it took a swipe at Corti, claiming he had missed the best possible opportunity to restructure the group.

The hearings continue on February 15 with the prosecution’s case before the case for creditors and the defence. They are to end on March 9.

swissinfo with agencies

Key facts

The trial opened on January 16 and is due until March 9 at Bülach district court near Zurich.
There are 19 defendants.
The investigation took five years and produced 280 metres of documents. The prosecution’s accusations run to 100 pages.
All 19 accused have proclaimed their innocence.
Only three have spoken out at length. All the others refused to answer questions because it might prejudice civil proceedings brought by former employees and shareholders seeking compensation.

In brief

Swissair planes were grounded in October 2001, after the company had been in business for 71 years.

The downturn in the aviation market after the terrorist attacks of September 11, 2001, proved the last straw for the heavily indebted Swissair, which folded the following year.

The airline collapsed after buying stakes in numerous loss-making airlines, including Belgium’s Sabena and Poland’s Lot, in an attempt to form its own airline alliance.

Swissair left behind debts to the tune of SFr17 billion ($13.7 billion) and resulted in 5,000 job losses.

The remains of Swissair and the regional carrier Crossair were brought together in 2002 to form the new national carrier Swiss, which was in turn taken over by Germany’s Lufthansa in 2005.