Don King, on Mike Tyson


"Why would anyone expect him to come out smarter?
He went to prison, not to Princeton."



"To me, boxing is like a ballet, except there's no music
and the dancers hit each other."

Monday, November 7, 2016

Questions About AIBA, Boxing’s Governing Body


Olympics
An Olympic bout in August between Fazliddin Gaibnazarov of Uzbekistan, in red, and Lorenzo Sotomayor Collazo of Azerbaijan. Credit Pool photo by Agence France-Presse — Getty Images

Under pressure by Olympic officials to address possible financial problems in his organization, the president of boxing’s international governing body in 2015 ordered an investigation by the accounting firm Price Waterhouse Coopers.

The resulting report revealed irregularities so widespread that the auditors suggested the federation find a criminal lawyer.

It was unclear if the federation did so. In fact, the existence of the report is not widely known because the president of the federation never released it, not even to the executive board that oversees him and the sport.

While portions of the report have been described by some news outlets, a full copy, recently obtained by The New York Times, reveals bookkeeping shortfalls and raises questions about the management of one of the most prominent Olympic sports.

The investigators focused on a $10 million loan in 2010 from a private company in Azerbaijan to help pay for a new boxing league in North America. The loan was never paid back, and investigators could not account for how more than $4.5 million of the money was spent. The federation, which goes by the acronym AIBA, could not say where the missing money went.

The federation, which is based in Switzerland, also did not properly account for the losses on its books, possibly breaking the law.

These and other concerns led the investigators at PricewaterhouseCoopers to write, “It is recommended that legal counsel be sought by AIBA as the actions, and nonactions, of some of the directors may contravene” several articles in the Swiss Criminal Code.

Amateur boxing has long been considered rife with corruption, with frequent accusations of match fixing, doping and outright bribery and fraud. 

After the Rio Games in August, all 36 boxing referees and judges were suspended over questionable calls in matches there.

The 39-page investigative report, however — amplified by interviews with about a dozen current and former AIBA employees is one of the fullest accountings of the sport’s financial troubles, which critics suspect stem from corruption.

The genesis of the audit dates to 2015, when Ching-kuo Wu, the president of AIBA, fired his deputy, Ho Kim, after an internal revolt by AIBA staff members who opposed him.

Thomas Bach, the president of the International Olympic Committee, himself under increasing pressure to address corruption and clean up the image of international sports, then ordered Mr. Wu to look into the wayward $10 million loan. The I.O.C. holds considerable sway over AIBA, which runs boxing at the Olympics, and Mr. Wu is also on the I.O.C.’s executive board.

Mark Adams, a spokesman for the I.O.C., said Mr. Wu was asked to “carry out a full, transparent and independent audit.” The I.O.C., he said, “has made it clear with the Olympic Agenda 2020 reforms that we expect good governance and transparency from all sporting organizations.”

According to a copy of the original loan agreement, obtained by The Times from a member of AIBA’s executive committee who was disappointed with Mr. Wu’s lack of transparency, Mr. Wu personally signed for the loan, which was made to an AIBA subsidiary. 

Yet AIBA is unable to explain why it borrowed money from a company with no obvious ties to boxing.

In a statement to The Times, AIBA said it was looking into the reports of problematic bookkeeping at the boxing venture in North America, but it suggested Mr. Kim was to blame because he oversaw that project.

AIBA said that the investigation, which PricewaterhouseCoopers finished more than a year ago, was a draft and that a final version would be completed in a few months.

The loan was made by Benkons MMC, a conglomerate based in Baku, Azerbaijan, that seemingly had no sports-related businesses in its fold.
The money was to go for the World Series of Boxing in North America, a new semiprofessional league. Mr. Wu declined to say why AIBA borrowed the money from this company but said Mr. Kim, his former deputy, had “wide discretion in the negotiation and in the implementation of the transaction.”

Representatives from Benkons and the boxing federation in Azerbaijan did not respond to requests for comment.

Some former AIBA officials noted that the loan coincided with an uptick in medals by Azerbaijani boxers.

Since the loan was made, Azerbaijan has won nine medals, including four gold, at the three world championships since 2010, up from four medals, without a single gold, before that. Azerbaijani boxers won four medals in the past two Olympics, compared with three at the two Olympics before that.

Former insiders looked askance at the loan and suspected it was aimed at buying influence, whether successful or not.

In an email, Rudel Obreja, a former AIBA vice president from Romania who was fired after alleging that boxing matches at the Beijing Games in 2008 were fixed, called it “a very strange ‘loan’” that, based on his experience, could be explained only as a bribe.

“We boxing people know that Azerbaijan was very interested in boxing medals,” he wrote in an email to The Times.

AIBA called speculation about a medals-for-money scheme “misplaced” because an internal review “found no evidence of wrongdoing whatsoever.”

According to the PricewaterhouseCoopers investigation, the loan helped pay for boxers, coaches and officials and to rent venues for the World Series of Boxing, but the organization ran up millions of dollars of losses in its first 18 months.

These losses were not accounted for on its books, a potentially criminal offense in Switzerland, the auditors said. When AIBA failed to repay the $10 million in 2013, a $500,000 one-time interest penalty was added to the loan, and interest continues to accumulate.

AIBA also failed to tell Benkons how its money was being spent and how indebted the World Series of Boxing venture had become, as required by the terms of the loan.

Mr. Kim suggested in an email to The Times that it was all a matter of negligent bookkeeping, not fraud.

“Yes, we did not report to the creditor,” he said. “It was our careless work.”

Mr. Wu had installed allies in key positions, reporting directly to him, yet there is no record that they passed along information about the financial losses to the executive board.

Several years ago, Mr. Wu hired a longtime friend and former general from Taiwan, Abe Lin, to work at the World Series of Boxing headquarters in the United States. Former co-workers in North America said Mr. Lin had no particular experience as a financial manager but was there to keep an eye on how money was spent. He was paid a salary of $90,000.

Mr. Kim confirmed that Mr. Lin was hired as Mr. Wu’s man in North America.

“President Wu wanted to have his friend to manage all funds to make sure he would know everything about the financial matters going on” at the World Series of Boxing, Mr. Kim wrote.

According to former employees in the United States office, executives in the head office would tell their American counterparts to make costly purchases, like renting arenas that were too expensive for a new league like the World Series of Boxing. Losses quickly mounted, some boxers went unpaid for weeks, and executives had to cover expenses out of their own pockets.

“The burn rate was silly,” said Jeffrey Benz, who ran the boxing franchise in Los Angeles for two years. “The financials were completely ridiculous.”

Executive committee members will have a chance to quiz Mr. Wu about these expenses and other spending when they meet in Switzerland before the end of the year.

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