Bayern Munich’s Hoeness Gets 3 1/2 Year Term in Tax Case

Photographer: Michael Dalder/AFP via Getty Images

President of FC Bayern Munich Uli Hoeness arrives at the regional courthouse in Munich, on March 13. Close

President of FC Bayern Munich Uli Hoeness arrives at the regional courthouse in Munich, on March 13.

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Photographer: Michael Dalder/AFP via Getty Images

President of FC Bayern Munich Uli Hoeness arrives at the regional courthouse in Munich, on March 13.

Uli Hoeness, the president of FC Bayern Munich, was sentenced to 3 1/2 years in prison in a tax case that gripped Germany and tainted the image of the country’s most successful soccer club.

The court found that Hoeness, 62, didn’t provide all the necessary information when he turned himself in a year ago in a bid for clemency, Andrea Titz, the tribunal’s spokeswoman, said after the verdict. The judges also took the view that the accused delayed submission of the missing details, she said.

“His initial self-declaration was driven by a fear of being discovered,” Titz said. “Later, Hoeness delayed providing missing material. He was playing for time.”

Hoeness, who plans to appeal the decision, was initially charged by prosecutors with evading 3.5 million euros ($4.9 million) in taxes from trading profits booked through an account in Switzerland. That amount spiraled during the four days the trial was scheduled for this week. On the first day, Hoeness admitted to avoiding 18.5 million euros in tax. Investigators on the second day put the amount at 27.2 million euros, which his lawyers didn’t contest.

“A fine or a suspended sentence would have been okay but prison is too harsh for somebody who did so much good for people and the club,” said Cornelia Bitzer, 50, who has been a club fan for 40 years, in an interview outside the court.

Appeal Planned

Prosecutor Achim von Engel earlier today asked the court to impose a prison term of 5 1/2 years. Feigen argued that if the case wasn’t dropped, any prison sentence should be suspended, which means the offender isn’t incarcerated and is given the chance to comply with requirements set by the court. “The appeals court will have to rule on what happens when you file a self-declaration and make a mistake,” said Hanns Feigen, Hoeness’s attorney, after the ruling. “Are you treated like any other offender or do the trial judges have to take into account that you turned yourself in?”

Ken Heidenreich, a prosecutor spokesman, said his office will decide in the coming days whether to appeal.

FC Bayern’s boards are meeting to discuss the ruling and plan to make a statement “promptly but not today,” Markus Hoerwick, the club’s spokesman, said in an e-mailed statement.

The trial has taken the shine off a performance by the club this season that is unrivaled in Germany’s Bundesliga with a 49th unbeaten league game against VfL Wolfsburg on March 8 ending in a 6-1 victory for FC Bayern.

Resisted Calls

Hoeness, who has resisted calls to step down from his post since details of his tax evasion came to light a year ago, went from the courtroom to the Allianz Arena, FC Bayern’s home stadium, on March 11 to cheer the team against Arsenal in a game that saw the German title-holders qualify for the last eight in the Champions League tournament it won last year.

The case also taints the club’s main sponsors, Adidas AG (ADS), Deutsche Telekom AG (DTE), Allianz SE (ALV) and Audi AG, a unit of Volkswagen AG. (VOW) The chief executive officers of four of the five companies, excluding Allianz, sit on the soccer club’s supervisory board.

Although the companies aren’t likely to be harmed financially, “the loss of image is considerable,” said Klaus Fleischer, a professor of finance at the University of Applied Sciences in Munich.

Allianz, Europe’s biggest insurer, on Feb. 12 said it would purchase an 8.33 percent stake in FC Bayern for 110 million euros to equal holdings by Adidas and Audi, which are all based in the club’s home state of Bavaria.

Final Judgment

Audi, based in Ingolstadt, declined to comment. The company has been the club’s official vehicle sponsor since 2002 and supplies corporate cars.

Martin Winterkorn, CEO of Audi’s parent Volkswagen, said before the ruling that FC Bayern’s supervisory board would discuss Hoeness’s future at the club once the judges had delivered their decision.

Adidas also declined to comment. Deutsche Telekom, which two years ago extended its sponsorship of the club to the summer of 2017, echoed FC Bayern’s statement.

HVB Group, the German unit of UniCredit SpA (UCG), has been a sponsor of the club since 2003 and extended the contract until 2016. HVB doesn’t expect that it’s “very profitable relationship” with the club will suffer from the Hoeness case, CEO Theodor Weimer said at a press conference yesterday.

Voluntary Disclosure

Allianz CEO Michael Diekmann said at the company’s annual press conference on Feb. 27 that he doesn’t see a need for them to distance itself from the soccer club and that everybody should be given the right to voluntarily disclose tax violations to avoid penalty.

“The compliance departments of the companies that have close ties to the club should have immediately taken action and put their commitment on hold or at least take a very neutral stance,” said Fleischer, the Munich professor. “That they didn’t care much is especially obvious for Allianz, which acquired a stake in FC Bayern long after the tax evasion issue became public knowledge.”

Hoeness has been a member of the management of FC Bayern since 1979. Before that, he spent almost nine years as a player, winning three league titles and European cups during the 1970s with the club. He was one of six FC Bayern players, including Franz Beckenbauer, Gerd Mueller and Paul Breitner, who helped the German national team win the 1974 World Cup title against the Netherlands.

The probe into Hoeness’s tax obligations started a year ago when he reported himself to authorities after lawmakers rejected a treaty that would have stopped prosecutors from buying stolen Swiss bank data with details on German account holders.

To contact the reporters on this story: Oliver Suess in Munich at osuess@bloomberg.net; Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net Angela Cullen

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