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SLOC is bracing for trial

But Romney believes it won’t hurt sales, support

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Gov. Mike Leavitt once promised the world that while Olympic corruption didn't start in Salt Lake City, it would end here. Unfortunately for organizers of the 2002 Winter Games, it may end in a trial.

Despite the best efforts of Mitt Romney and other Salt Lake Organizing Committee officials, Thursday's indictment against former bid leaders Tom Welch and Dave Johnson means SLOC is facing the prospect of once again having to soothe sponsors and supporters rattled by the vote-buying scandal that first surfaced in late 1997.

Now, though, the stakes are higher than ever.

Even though organizers have raised some $200 million in just the past year, they still face nearly an $80 million budget gap that's supposed to come from signing new corporate sponsors.

Tickets, the last major source of Games revenue, go on sale in October, and organizers are already anxious about how many they'll sell. Congressional approval is needed for millions of dollars in federal funding requests related to the Games.

Then there's the challenge revelations during the trial could bring to the public trust built over the past 17 months since the governor made his speech and installed Romney as the new leader of the Games.

Polls show that a majority of Utahns have continued to support the organizing committee throughout the U.S. Department of Justice investigation. But what will happen when the world once again turns its attention to wrongdoings along the Wasatch Front?

Romney said he's not worried.

"I believe this firmly, that sponsors, ticket buyers and the government for that matter . . . are focused on the athletes, not the managers wearing suits. On the other hand, a trial could color the pride of the community and the nation. I hope it doesn't," Romney said.

The SLOC president said he's confident the organizing committee has nothing to fear from federal prosecutors. In May, the Justice Department issued a letter to SLOC stating the organization would not be charged in the case.

"I believe at this stage, our involvement in the process is over," Romney said. That doesn't mean organizing committee employees won't be drawn into the trial as witnesses. Testifying may "be difficult on them, but it surely won't affect our ability to organize or host the Games."

There may be some extra expenses for the organizing committee in association with the trial. Under its own bylaws, SLOC must pick up the legal tab for its current and former officials — unless they either plead to, or are convicted of, serious crimes.

But SLOC's insurance company is balking at paying the $1,059,000 in legal bills submitted so far in the case, mostly from lawyers hired by Welch and Johnson. If they're convicted, they'll apparently have to repay all the legal fees they were advanced.

There's some question raised about whether the nature of the indictment affects SLOC's responsibility for advancing future fees. "We will honor our full obligation to Tom and Dave," Romney said. "If we have no obligation, we will assert the right not to reimburse."

SLOC leaders can take some comfort in the fact that the charges filed Thursday against Welch and Johnson contain little information not previously disclosed by investigations by SLOC, the U.S. Olympic Committee and the International Olympic Committee. Those investigations showed more than $1 million in cash, gifts and scholarships were given to more than a dozen IOC members to obtain their support for Salt Lake City's bid to host the 2002 Games.

Welch and Johnson are accused of conspiracy, mail fraud, wire fraud and interstate travel in aid of racketeering. Each of the 15 felony counts carries a maximum sentence of five years in prison, a $250,000 fine or both.

Monday, the two men turned down a deal offered by the government that might have involved only home confinement and a possible fine.

Olympic organizers wanted to avoid a trial and actively encouraged at least Welch to accept a plea agreement. Romney, who last week warned a trial would be painful, went so far as to talk to Welch for the first time.

Romney got on the telephone with his predecessor on July 12, the day before members of SLOC's management committee discussed in a closed-door session how to respond to the threat of a trial.

He said he told Welch that "a settlement would make sense. . . . I did not suggest he take one for the country and for the Games or whatever has been suggested. That would be bone-headed for me to make that kind of suggestion."

It didn't work. But Romney said if he hadn't broken his self-imposed ban on talking with Welch, he would have always "wondered whether or not my involvement could have made a difference and been helpful to Tom, been helpful to the community and to the Olympics."

Welch, who read a statement Thursday night to reporters gathered in the driveway of his Huntington Beach, Calif., home, maintained that he and Johnson committed no crimes.

"If I could do anything to save us all, this ordeal I would. But to have to plead guilty to something I did not do would be wrong. The idea that we defrauded the bid committee or anybody else is preposterous. So is the charge we bribed anybody," Welch said.

Johnson was scheduled to make a statement in Salt Lake City Friday afternoon. Johnson's attorney, Max Wheeler, issued a brief statement Thursday that labeled the charges "ill-advised."

"They victimize not only Dave Johnson and his family, but the people of Utah, and may jeopardize the effective presentation of the Olympic Games," Wheeler said.

Both Welch and Johnson have been saying privately for some time they'd welcome the opportunity to put on the stand the same government officials and community leaders who blamed them for the scandal.

IOC spokesman Franklin Servan-Schreiber said the Switzerland-based organization "doesn't want to impact the proceedings by making specific comments on the indictment.

"The IOC sanctioned the members who had acted inappropriately early last year. We spent the rest of 1999 reforming our organization. The IOC today is renewed — more transparent, more modern and more responsive."

Anita DeFrantz, the senior member of the IOC from the United States, said the 2000 Summer Games that begin in Sydney, Australia, in September will help keep the world's attention on athletes instead of the trial. "People will be really, really jazzed about the Olympic Games again," DeFrantz said.

The USOC had little to say about the indictment. A three-paragraph statement issued Thursday called the action "another important step in bringing closure to this matter."

Both the IOC and the USOC have been damaged by the scandal, and like Salt Lake, both face more damage from a trial. They, too, depend on sponsors for support — and on the interest of the public in the Games to deliver audiences to those sponsors.

The USOC's former international relations director, Alfredo LaMont, was forced to resign after his bosses learned he'd accepted payments from the Salt Lake bid. That is referred to in the indictment.

LaMont pleaded guilty in March to two felony tax fraud charges and is cooperating with federal authorities.

Last year, 10 IOC members were either forced to resign or expelled. Another 10 were disciplined, and a series of reforms were adopted that will bring new scrutiny to the once-secretive organization.

Members named in the indictment turned up in the IOC's investigation with the exception of Yugoslavia's Slobodan Filopovic, who had died. According to the indictment, Filopovic received $1,200 for information on foreign investments and steel production in Yugoslavia.

The IOC investigation, led by Dick Pound, an IOC vice president from Canada, did not find any evidence of criminal activities. The investigation relied on documents supplied by SLOC and did not have the authority to compel anyone to come forward.

"It's reassuring to see something we did so quickly seems to have been more or less supported by the allegations against Welch and Johnson," Pound said Friday from his law office in Montreal.

Marc Hodler, the senior IOC member from Switzerland who first used the word bribes to describe the cash and gifts given to some of his colleagues by Salt Lake bidders, was hesitant to comment on the indictment Friday because he had not yet seen it.

"There is not an easy borderline between buying sympathy and corruption," Hodler, who's also a lawyer, said.

Asked if Welch and Johnson deserved to be accused of criminal activities, he said he couldn't tell without knowing the facts of the government's case.

"Of course, they have been my friends, and I'm sorry for them."

E-MAIL: lisa@desnews.com