The last-minute deal in a Beverly Hills hotel that saved Michael Jackson's empire

Michael Jackson's music empire has been saved by a last- minute $70m loan deal brokered by two businessmen - one of whom has previously been linked to the Mafia - The Independent on Sunday can reveal.

As the pop star was preparing for his courthouse debut in Santa Maria, California, last week on charges of child molestation, another drama in the Jackson's surreal life was being played out in a plush conference room 130 miles away. At stake was not only the future of the troubled finances of the "King of Pop", but the ownership of one of the largest, most valuable collections of popular song publishing rights ever amassed.

The IoS has learnt of a last-minute $70m bail-out by Jackson's close business associates that has allowed the star to retain ownership of the best investment he ever made - his 50 per cent stake in a massive portfolio of up to 400,000 pop and rock songs written or performed by some of the most famous groups and solo artists of the past 50 years, including the Beatles.

The bail-out followed an extraordinary all-day crisis conference - held last Monday in a room at the plush Beverly Hills Hotel, Los Angeles - that was attended by 27 of Jackson's closest business and legal advisors. Jackson did not attend, but is believed to have participated via a phone link. Four days later, he was playing to the crowd massed outside the Santa Maria courthouse as his trial opened, leaping on to the roof of his van, dancing and giving a V-for-victory sign.

Away from the cavorting, some serious business had been seen to. According to one report, two of Jackson's most important aides, Al Malnik - a 70-year-old multimillionaire lawyer, businessman, property developer and money-lending magnate with alleged long-standing connections to the Mafia - and Charles Koppelman, a senior record industry figure, have now steered the singer away from potential disaster by arranging for a crucial $70m loan repayment on Jackson's behalf.

Mr Malnik, who is based in Miami, was at one time personal lawyer to notorious mobster Meyer Lansky, who died in 1983. The character of Hyman Roth, played by Lee Strasberg in The Godfather, Part II, is a thinly disguised version of Lansky. Malnik originally raised bail for Jackson when he was arrested on the current charges last year.

Also reported to be at the Beverly Hills meeting, called to discuss the star's financial situation, were representatives of the Nation of Islam, the fundamentalist black rights group that has recently become closely associated with the embattled singer.

Without the 11th-hour payment, one source told Fox News, "Michael would have been flushed down the toilet". Jackson's part-ownership of the song rights collection, whose total value has been estimated at between $700m and $1bn, has long underpinned the big-spending star's credit-worthiness. His loss of the highly lucrative publishing rights to songs by hundreds of artists including the Beatles, Bob Dylan, Elvis Presley, Madonna, Little Richard, Oasis, the Pretenders and most of the big names in country and rock'n'roll - which could have happened in the middle of next month - would have knocked away the last pillar supporting the singer's lavish lifestyle.

Jackson started investing in music in 1985, when he paid $47.5m for the rights to 251 Beatles songs and thousands of others held in the catalogue created by the media company ATV, outbidding his then friend Paul McCartney.

An owner of publishing rights usually receives half the royalties every time a song is played on radio, television, a jukebox or a Karaoke machine, or when its lyrics or music are printed. The rights-holder can also charge for the right to record a cover version, or for its use in a film or advertisement, or as piped music. The rest goes to the songwriter or writers.

This can be an extraordinarily profitable investment. In the early 1990s, Jackson's ATV song rights alone earned him around $30m a year.

McCartney, defeated in the bid to buy the Beatles' song rights, went on to amass his own vast catalogue of more than 3,000 songs, currently thought to be worth more than £400m.

In 1995, Jackson merged his ATV company with the giant music multinational Sony to create a joint venture, Sony/ATV Music Publishing. By 1999, the new firm was valued at more than $900m - most of this down to the "golden core" of Beatles songs. As part of the deal, Sony paid Jackson around £65m.

According to figures obtained recently by Rolling Stone magazine, revenue generated by the Sony/ATV catalogue has been increasing dramatically, pointing to a likely income for Jackson and Sony of $80m last year.

In one year, 1998, rights revenue from Oasis songs alone raked in around £1m. But at the heart of the Sony/ATV holdings is a small group of Lennon-McCartney songs, led by "Yesterday", "Eleanor Rigby" and "Penny Lane".

The future of the Beatles' song rights held by Jackson are believed to have been a focus of discussion at last Monday's Beverly Hills conference.

By the end of the 1990s, Jackson's extraordinary lifestyle, including monthly "running costs" of more than $1m, had led him to seek a series of huge loans totalling more than $200m from the Bank of America. The cost of producing his 2001 album Invincible was spectacular. Sony lent Jackson $40m to make it - the most expensive album ever - and forked out a further $25m promoting it. But sales were relatively modest: two million copies sold in the US, compared with 26 million copies of Thriller 20 years earlier. Loans were granted to Jackson, using his share of the song rights as security and with Sony acting, in effect, as guarantor.

Since then, disappointing album sales and a series of settlements, as well as large legal bills, have added to financial woes that are thought to include debts of more than $240m. Last year the star failed to sell his fantastical Neverland ranch home for around £30m.

Sony would automatically have assumed ownership of the entire catalogue, thanks to a deal with the singer whereby Sony has a "first right to buy" should the singer ever sell, had Jackson defaulted on the repayment of his Bank of America loans.

"It was paid," a spokesman for Sony told the IoS last week. "It's not like he defaulted or anything. That's not the case."

Contacted last week, the Bank of America refused to confirm the Jackson repayment, saying that since he was a client of theirs, they would not discuss his financial affairs with a third party. Also not able to speak to the IoS last week was Al Malnik.

By making the 15 February loan repayment deadline, Jackson has saved his music empire until the end of 2005. But the $70m bail-out won't help him with his next big battle - in California's criminal courts.