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Yahoo and Nazi Memorabilia
Forbes Faces: Yahoo!'s Timothy Koogle
Debra Lau,, 01.29.01, 12:00 PM ET

NEW YORK - Yahoo!'s Timothy Koogle has found that cyberspace is not above the forces of history.

A group of Nazi concentration camp survivors in France is accusing the chairman and chief executive of justifying the Holocaust by allowing the sale of Nazi memorabilia on Yahoo!'s (nasdaq: YHOO) auction site. The company will not comment on the case because it has not yet been served with the complaint.

This latest move comes on the heels of another high-profile civil case in France against Yahoo! over the same issue. In November a French court ordered U.S.-based Yahoo! to block all users in France from accessing its auction site, as well as other areas of the site like chat rooms that contest Nazi crimes. Yahoo! has asked a U.S. federal court in San Jose, Calif., to decide whether it is bound by French law, and a ruling is expected in March.

Unlike the civil case, the Auschwitz survivors group has filed its suit in French criminal court, and the accused is Koogle himself. The Yahoo! chief was targeted because under French law such charges must be brought against a person rather than a company. If accused of justifying war crimes, Koogle could face fines or serve jail time.

A conviction against Koogle is still a stretch by French standards, even though the threshold for taking criminal liability up the corporate chain is much lower in France than in the U.S., says Matt Herrington, an extradition lawyer with Williams & Connolly in Washington, D.C. If Koogle loses, France would have to apply for his extradition through the State Department. And although both countries have an extradition treaty, the principle of "dual criminality" applies, which means the wrongdoing must be considered criminal in both countries before a person is handed over.

Clearly, the lawsuit is more symbolic than anything: The 1,000-member group, called the Association of Deportees of Auschwitz and Upper Silesia, is suing Koogle for one French franc, roughly 15 cents. And the chance of a heavy sentence has been weakened by the fact that Yahoo! earlier this month started banning the sale of any item directly associated with or promoting hate groups such as Nazis or the Ku Klux Klan. The Web portal already forbids the sale of firearms, illegal drugs and body parts.

Things aren't that rosy for Yahoo! on this side of the Atlantic either. The company announced on Jan. 10 that it had barely met analysts' estimates in the fourth quarter 2000 and that its earnings and revenue for 2001 would be lower than expected. The news led to a wave of downgrades, and Yahoo!'s shares slid 22% to $24 that day.

Koogle, 49, has certainly seen better days. Recruited as president and CEO in March 1995 by Yahoo! founders David Filo and Jerry Yang, he was later named chairman in 1999. Koogle, who has a $295,000 salary and shares worth $365 million, was an ideal hire. With nearly 20 years of business experience, he helped turn Yahoo! into a company with a $21.4 billion market capitalization and oversaw some $10 billion in acquisitions, which were mostly paid for with stock.

Koogle blames the softened U.S. economy for Yahoo!'s recent disappointing numbers and says the company has taken new steps such as charging fees for listing on its auction site, offering a premium service for paid members and forming partnerships with corporations. Analysts say the market for Yahoo!'s business model is shifting, and the company is going through an important transition.

The way things look Koogle is likely to prevail both here and in France.


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