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.
No comments:
Post a Comment