SWITZERLAND - A court for the Swiss region of Olten has dismissed a government lawsuit against six people connected with the 1996 collapse of the Vera/Pevos pension fund - the biggest ever in Switzerland.

In the dismissal, Olten's administrative court agreed with lawyers for the six defendants that the lawsuit was without merit.

"The criminal actions that the accused were supposed to have committed were not sufficiently explained. The lawsuit fulfils neither the minimal requirements under the Swiss Constitution nor those under the European Human Rights Convention," the court said.

As a result, the accused would not have been able to adequately defend themselves, it  added.

Those accused included three ex-managers at the Vera/Pevos fund, one of the fund's former supervisors and two employees at Swiss auditor BDO Visura.
The Vera/Pevos pension fund collapsed in 1996 due to a CHF200m (€125m) funding deficit. The deficit was caused by overexposure to a local real estate market that was in deep recession. According to past news reports, the scheme had 50% of its assets invested in local real estate.

In building up such an exposure, the news reports said the management of Vera/Pevos was greatly influenced by Albert Heer, a real estate mogul from Olten who died in 2002.

In order to preserve benefits for the scheme's 2000 insured employees, the Swiss government had to provide a partial bailout worth CHF73m. But government authorities felt that the incompetence of managers and auditors at Vera/Pevos, instead of circumstances, was to blame for the debacle.

After a prolonged investigation, the authorities in 2004 brought criminal charges against the six defendants and appointed Martin Zeltner as prosecutor for their case. According to Olten's daily newspaper, Zeltner was made aware of the lawsuit's glaring flaws shortly after the filing.

Even so, Zeltner denied that the lawsuit had any flaws. "We were able to demonstrate (in the lawsuit) specific acts of wrongdoing. The fund was overexposed to local real estate and as such took on too much risk. Regardless of this, those accused did nothing for years," he told the Swiss press after the court's ruling.

Zeltner acknowledged, however, that because the alleged criminal action took place for several years, specifying a specific time and place was simply not possible.