Kuoni boss faces uphill struggle to keep job
The chairman of the Kuoni travel concern, Daniel Affolter, and the company's main shareholder, the Kuoni and Hugentobler foundation, have lost the first round in a legal battle for control of the firm.
On Friday, a supervisory body in canton Zurich warned that their voting rights at next Tuesday's crucial annual shareholders' meeting would be limited.
In a separate development, Affolter said that he was stepping down as chairman of the foundation and that his wife was also quitting.
The foundation, which has 25 per cent of voting rights in Kuoni Holding, but only owns 6.3 per cent of its shares, has been warned either to vote in line with the recommendations of the majority of the board of directors or to abstain.
The decision is the first ruling in a dispute that broke out a week ago between Affolter and the rest of Kuoni's board, and it appears to back their efforts to oust him.
In a statement, the canton said it feared that if the foundation could vote freely at Kuoni's annual meeting, this might lead to a dispute which could severely damage the group.
In its ruling, the canton said that "airing the grave controversy between the foundation and the board at the annual meeting... could substantially damage the company".
Affolter can effectively be relieved of his duties at the company by the rest of the board. However, he cannot be forced out as chairman without shareholder approval and he has refused to leave in the meantime.
The rest of the Kuoni board cited "destroyed trust" for their decision to remove Affolter, alleging he abused his position of control at the foundation, created in 1957 by the son of the group's founder.
The accusations against Affolter include the illegal payout of roughly SFr12 million ($6.86 million) to the board of trustees in 2000, with SFr8.1 million going to Affolter personally.
Affolter is also accused of arranging for the foundation to pay him an annual sum of SFr1 million until his retirement age (a maximum period of 19 years), in the event that he resigned as Kuoni chairman.
The board said in a statement that the foundation had to obtain a bank loan to finance the distributions.
Affolter has denied any wrongdoing and said that he has not been paid the SFr8 million. Last Sunday's Swiss press quoted him as saying he would give the money to a children's charity.
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