Global brands in smear threat

World Cup sponsors could be exposed to bad publicity from activists during the tournament, according to an intellectual property (IP) insurance expert.

Up to $50bn (£34bn) could be wiped off the value of some of the world's biggest brands as most companies do not have adequate IP cover.

High-profile allegations are likely to stimulate interest in intellectual property insurance, which can cover brands.

While 15 top corporations have paid £10m each to be associated with the tournament, activists are known to be plotting campaigns aimed at muddying the names of companies which have controversial business methods.

Experts fear global brands could suffer huge damage even if allegations, such as that companies use child labour or condone sweatshop factory conditions, are unfounded.

Intellectual property protection expert Gareth Davies of consultants Rouse & Co said: "It's a realistic threat. It's measurable on public statistics and the opportunity for bad press has never been greater."

Specific brand crisis insurance, created by Lloyd's insurer Kiln, is available through Rouse & Co to pay for immediate independent verification of allegations.

Davies said: "The bigger the brand, the more exposed it is to scandal, justified or unjustified. And no one will believe an allegation is unjustified unless a company can prove it."

The speed at which allegations can be flashed around the globe by the world's media means that by the time a company can disprove an allegation, the damage may already have been done.

Nike suffered a 25% fall in its share price in 1997, blamed at least partly on falling sales after a US magazine showed a photograph of a Pakistani boy stitching together a Nike football.

It was also cited in revelations that workers in a contracted factory in Vietnam were exposed to toxic fumes.

Companies are particularly vulnerable as a result of counterfeit goods.

The Times reported last week that child labour was being used to make footballs bearing the names of World Cup sponsors Adidas and Coca-Cola.

But Adidas-Solomon said it believed the balls were counterfeits.