French Prosecutors Probe Nike over Fraud Allegations

17 May 2006

Sportswear giant Nike is facing legal action in France resulting from its association with top soccer club Paris Saint-Germain.

The US-headquartered company's French affiliate, Nike Europe, was placed under investigation - a step short of formal charges - for alleged fraud, use of fraud and complicity in hiding employment at the club.

The case initially focused on player transfers from 1998 to 2003, but investigators subsequently suspected a plot involving allegedly bogus royalty payments to players allowing PSG to avoid charges paid by companies for health and welfare services for workers in France.

Investigating judges believe Nike may have paid royalty bonuses to certain players for special contracts to promote the company's image, enabling the club to avoid some of those charges. Nike has sponsored the club since 1989.

Company spokesman Massimo Giunco says Nike Europe "contests these allegations, and will continue to cooperate with the French judicial authorities".

Data sourced from Wall Street Journal Online; additional content by WARC staff