PtG Article 14.05.2013

IWF president under suspicion of financial mismanagement

In the International Weightlifting Federation under IOC honorary member Tamás Aján, the whereabouts of several million dollars of Olympic revenues are unaccounted for. Despite accusations of financial mismanagement, the IOC, supported by CAS, has so far declined responsibility to act on the allegations.

Recently, at the annual convention of the International Weightlifting Federation, beginning of April, Tamás Aján was once again in the best of moods. The Hungarian, who has been at the reins of weightlifting as long as Sepp Blatter has controlled the football stage – since 1976 as General Secretary and 13 years as President – was about to reveal good news: at his suggestion, every national association should be donated a ticket for the upcoming electoral convention in Moscow, Russia. It had in fact happened, Aján reasoned, that somebody had paid tickets for delegates from less fortunate countries with the purpose of "so to speak buy" their votes. This donation, therefore, should be regarded as "preventing corruption".

Aján, aged 74, as the Cleaner? In the eyes of some IWF members, this was hardly to be believed about the President. On the contrary, this would just be one more of the many cases within the IWF built on the same model: at the front Aján's show and cold reality behind. Indignant officials may give you examples of why in the case of the IWF Patriarchs you had better look behind the lifting platform. In their words it would translate into this reality: the free trip to Moscow secures the participation of officials from Africa. This is a continent where Aján always loved to recruit votes for his followers on the IWF Executive Board. In one week, at the electoral convention, he himself might put them to good use. As a first, Aján has to cope with a new situation: rival candidates.

This is due to an activity by an alliance of officials from Europe, Asia and Latin America in the very field, which Aján is now perkily combating: corruption. It concerns two Swiss bank accounts and the unknown whereabouts of several million U.S. dollars. This reporter has been presented with numerous documents that date back to the 1990s. Aján did not respond to enquiries. In the real business world, this would be a case for criminal investigators. In sports, such detective stories are categorized as "ethical violations". Sometimes. This time, the Court of Arbitration for Sports (CAS) has, as a – temporary — conclusion cast some light on some system intricacies. If you will: the reality of the IOC Ethics show that is not always as brave as it seems.The story begins four years ago, during the latest IWF electoral convention in Madrid at the end of March 2009. Aján, like most years, whined a little, when he presented the annual financial statements: "It has never been easy to secure a suitable financial background to our activities."

Such sentences did not fall into the taste of a few officials: certainly, only a few know that Aján cashes in USD 300,000 per year for his honorary post, but no one can miss the fact that the costs for running the President’s office in Budapest, where among others Aján’s son-in-law acts, are constantly rising. At this point, a delegate asks why the current balance sheet opened without funds, where the previous one closed with a surplus of USD 1.6 million. There are further questions to this thin three-page list of revenues and expenditures. So many in fact that a tell-tale sentence slips out of the IWF boss‘ mouth: Within the IWF "the complete overview of the funds" was being made accessible only to the Executive Board and the internal auditors.

Questions, questions

The complete overview of the funds? Many of the officials hear about this for the first time.

This is also the case for the newly elected Auditor’s Committee; it is their job to check the balance sheets presented by the President. A few weeks after the electoral convention, the three auditors submit some questions to Aján. The first one concerns money from the IOC, which since 1992 allocates shares of the marketing-income from the Olympic Games to the International Sports Federations. For the Peking Games only USD 1.3 million are in the latest balance sheet.

"We do not wish", Aján lets the auditors know, "to send you the required documentation, as it consists in reserved information." What lies behind that, the auditors learn when they do their inspection in Budapest, and therefore they refuse to acknowledge the new financial statement: In their opinion it is – like all the balance sheets and financial statements have been for years – "absolutely unacceptable." Because it only shows revenues and expenditures for an account with the National Savings Bank in Budapest. In Switzerland, where most of the international sports federations are formally based, there are two more bank accounts. For which, strangely enough, not the Secretary General/Treasurer is authorized to sign, but: Aján. USD 16.7 million is stashed there, the funds from the IOC. It is a lot of money for the lifters – they calculate with an annual budget of 3 million U.S. dollars.

However, since 1992 a total of USD 23.3 million came from the IOC. After Madrid, the IWF Executive Board requires clarification. At a crisis meeting, the long-serving vice president Sam Coffa (Australia) makes this calculation: should a normal interest rate of 5 % not assure 28 million dollars on the account in Switzerland? Aján refers to losses in the financial markets. And to the fact that IOC funds have also flowed into the account in Budapest. According to the official balance sheets this was only twice the case, in 2004 and 2009. But this does not explain the difference. Even on the basis of conservative calculation the deficit is still impressive: Approximately 5 million U.S. dollars.

Aján promises clarification. Two professional auditing companies are engaged. Their findings the president then sells in internal circulars as clean bills of health ("found no irregularities") – of course, without publishing the reports. For a good reason: when mingled into the overall picture, they support the suspicion of unexplained funds. The experts, however, were only allowed to review one of the Swiss bank accounts back to 1992, and only for a so-called performance analysis. According to that, five payments were made to the recipient "IWF" at the total of nearly 600,000 dollars. In the balance sheets for the relevant years, the input is at best traceable only once, in 1999, where the revenue item "interest" was inexplicably high. Besides, the "performance" raises stronger doubts about the alleged "losses" on the financial markets – the bankers increased the IWF assets. But above all, the transactions on the second account remain in the dark.

Only at the first glance one might wonder why soon enough within the Executive Board approval dominates again. "We must protect our President to protect the image of weightlifting", one Board member comments on those auditor’s reports. This is almost a critical contribution. Coffa for instance is now deeply impressed by the scrappy figures: Aján's "financial activities", he states, were "highly appreciated".

An approach for interpretation, from the inner life of International Sports Federations, where even scandal-involved figures can grow old. For the IWF, the three rebellious auditors deliver an explanation with their next report: all payments to the board members, they recommend, should "be made by bank transfers because there are large cash amounts in question". Aján's answer: "90 percent of the members will not be happy with it", and personally he does not agree. To explain the cash practice, says one National Weightlifting Federation president, you need not be "a financial genius". "In some countries, this would be interesting for the tax authorities."

Only eleven weightlifting officials, most of them presidents of European federations, believe that it is time to clean out the own stable. In February 2011 they notify the affair of the missing millions to IOC president Jacques Rogge. Formally, their complaint is referring to "the International Weightlifting Federations financial management".

After acknowledgement of all facts, they address more precisely: "Essentially, the non-reporting of the Swiss bank accounts and the related transactions with those accounts, means that from 1992 through March 2009, Mr Tamás Aján had a hidden fund at his disposal with no control whatsoever on his use of the said funds." Rogge is requested to proceed the matter to the IOC Ethics Commission, for an "in-depth-investigation". The complainants refer to a passage of IOC’s book on etiquette, the Code of Ethics: "The Olympic resources of the Olympic parties", it states seemingly indisputable, "may be used only for Olympic purposes." Their use "must be clearly demonstrated in the accounts".

The washing machine is spinning for three months. Then the IOC legal department spits out a result in seven lines: The matter is "related to the application of the IWF Statutes". "Consequently, the IOC, respecting the IF’s autonomy, will not intervene in this debate."

The Italian Antonio Urso, President of the European Weightlifting Federation, and one of the auditors are not willing to let go that easily. They think this rejection is in conflict with "the ethical values of Olympism." This is the content of an appeal, they, as individual persons, file to the Court of Arbitration for Sport. Defendants: the IOC and its President. The CAS award from last June 2012 could have been written in a few words as the judges determined that the case was outside their jurisdiction. Yet they devote 195 sentences – a special taking of evidence about all the matters you cannot claim within the allegedly efficient self-purification, the Olympic family subjects itself to with its sports law. For instance, the decisions of the IOC-magnificos are "final", also the one from Rogge related to the IWF-complaint.

Embarrassing for the IOC

Also safe from judicial control is the business-morality of dubious kings of sports federations: Only matters in connection with the event of the Olympic Games can be brought to CAS. That does not involve the billions of profits from the big party nor "the mismanagement of funds". Moreover: The International Federations do not belong to the "Olympic parties". Therefore, the Code of Ethics is "not applicable".

The whole affair rounds up to be an embarrassment, as the judges order the IOC to pay one third of the costs of arbitration, linked with the statement, the appellants could "reasonably and legitimately" be of the opinion, that  CAS could entertain the appeal. But even without this explicit statement of displeasure – the award reminds of another parallel universe, where patrons juggle with lots of money, without rules for its management. One weightlifting official puts his disillusion this way: "The International Federations are autonomous – autonomous, too, in corruption." And he adds: "Probably, we have been naive to assume the IOC would support us." The suspicion that the lords of the rings prefer to protect their peers instead of investigating hard indications of infamous practices, is not an away-with-the-fairies view. Aján has been with the IOC for 13 years, since 2010 he is an honorary member. And the IOC Ethics experts are, by all means, allowed to watch over the members of the Olympus.

However, Aján only has to reckon with his own federation. If ‘the wrong one’ wins the Moscow elections, the final clarification of his financial deals is looming. Three of his five opponents want to investigate the transactions on the Swiss bank accounts and the whereabouts of the millions of dollars. An uncomfortable scenario, not only for Aján. At the beginning of the year IOC’s top-heads demonstrated their strong belief in the good within an Olympier: The Hungarian again was appointed to serve in two commissions. At the IWF-convention in April the president paid back and gave his thanks for the "fruitful cooperation".

This time, everybody believed his words.