31st August 2018

Senior officials at Athletics Kenya diverted Nike payments

The Ethics Board of the International Association of Athletics Federations (IAAF) has found that former senior officials at Athletics Kenya diverted payments made by Nike to the national federation for their own personal benefit. The IAAF Ethics Board concluded that former Athletics Kenya President Isaiah Kiplagat (pictured), former Vice President David Okeyo and former Treasurer Joseph Kinyua diverted ‘Honorarium’ and Service Payments made by Nike under its sponsorship agreement with Athletics Kenya into a Clearance Account, from which they would withdraw cash for their own benefit.

The IAAF Ethics Panel’s consideration of the use of the word ‘Honorarium’ to describe the Nike payments…

Okeyo was sanctioned with a life ban and was expelled as a member of the IAAF Council. He has since told media that he will appeal the decision. Only Okeyo faced any disciplinary action, as Kiplagat died in 2016 and Kinyua was found not to be bound by the 2003 IAAF Code of Ethics. Okeyo also faces a separate charge of extorting money from athletes, which the IAAF Ethics Board clarified would be subject to a separate judgment.

The IAAF Ethics Board decision (PDF below & Twitter analysis here) details that:

• 16 payments totalling US$1.226 million were paid in ‘Honorariums’ and Service Fees by Nike to Athletics Kenya between December 2004 and December 2012. Such payments were deposited into a ‘Clearance Account’ and did not appear in Athletics Kenya’s financial statements;
• Cash withdrawals were made from the ‘Clearance Account’ for the personal benefit of Kiplagat, Okeyo and Kinyua;
• The payment of ‘Honorariums’ by Nike to Athletics Kenya officials predated its 2003 sponsorship agreement;
• In some cases, ‘Honorariums’ were paid directly by Nike into the bank accounts of the Defendants;
• Neither Nike or Athletics Kenya required details of how the ‘Honorariums’ were spent;
• Nike claimed that the ‘Honorariums’ were to cover the travel costs of officials, but investigators found that Athletics Kenya covered the travel costs of their officials;
• Nike also paid ‘Honorariums’ to one other organisation other than Athletics Kenya – the organisation was not named;
• The Defendants alleged that other Athletics Kenya officials received such ‘Honorariums’, but declined to provide details;
• A US$500,000 Nike payment to Athletics Kenya was posted into the Clearance Account and withdrawals relating to this payment were split. A US$200,000 ‘signing fee’ paid by Pamodzi Sports Consulting into the Clearance Account for Li-Ning (China) Sports Goods Ltd. to become Athletics Kenya’s exclusive marketing agent in Asia was shared amongst the defendants. A further US$200,000 was withdrawn to reimburse Pamodzi for the ‘signing fee’. Pamodzi is a marketing company run by Papa Massata Diack, the son of former IAAF President Lamine Diack who is subject to an Interpol arrest warrant, and was banned for life by the IAAF in January 2016.

Background

In March 2015, the IAAF began investigating allegations that Athletics Kenya officials were complicit in covering up doping. The allegations dated back to a 2012 documentary produced by Hajo Seppelt, which also alleged that Athletics Kenya officials had siphoned money from a sponsorship contract with Nike. The allegations that Athletics Kenya officials were complicit in covering up doping were repeated in a 2015 documentary, ‘Poisoned Spikes’ (video below).

In November 2015, the IAAF provisionally suspended Kiplagat, Okeyo and Kinyua. In June 2016, the suspensions were extended while IAAF investigations continued. In November last year, the IAAF confirmed that it is still investigating Major Michael Rotich, former Manager of Kenya’s Rio 2016 track and field delegation. Rotich was provisionally suspended after alleging that British Doping Control Officers (DCOs) could provide him with advance notice of when doping tests would take place.

Qatar connection

The IAAF’s November 2015 suspension announcement also mentions a ‘prima facie’ case against Kiplagat in relation to the receipt of two motor vehicles from the Qatar Athletics Federation (QAF). In December 2015, IAAF President Sebastian Coe told the Digital, Culture, Media and Sport (DCMS) Committee of the UK Parliament that Okeyo was also implicated regarding the receipt of the two vehicles. 

Coe also told the DCMS Committee that the IAAF was investigating whether Doha’s bid to host next year’s IAAF World Championships was “clean”. In February this year, the US Department of Justice (DoJ) launched an investigation into the awarding of the IAAF World Championships to Doha in 2019, and to Eugene, Oregon, in 2021. Neither the IAAF nor the DoJ has published any updates on their investigations. Doha 2019 takes place at the end of September next year.

Implications

The IAAF Ethics Board’s case against the three Defendants…

There is no doubt that the IAAF Ethics Board decision constitutes a serious misappropriation of funds over a number of years that could have been utilised by an underfunded Athletics Kenya. As the Ethics Board concludes: ‘The misconduct in this matter resulted in the diversion of substantial funds that could have been used to develop athletics in Kenya. Kenya, as members of the Panel well know and many of the witnesses mentioned, is a country that excels at athletics, something of which many Kenyans are justly proud. This decision affirms the fundamental principle that the IAAF Ethics Code requires that the funds of Athletics Kenya should be used to promote Kenya’s continued excellence in the sport and not diverted for private gain.’

However, the IAAF Ethics Board decision could have implications beyond Kenya. The Energy and Commerce Committee of the US House of Representatives has been attempting to gather information that anchors payments relating to corruption in athletics to US shores for the past three years. Payments made by Nike in connection to its sponsorship agreements are likely to be of interest – especially to which other organisation Nike paid its ‘Honorariums’.

The US Department of Justice (DoJ) and French prosecutors are separately investigating the award of the 2019 Worlds to Doha and the 2021 Worlds to Eugene – without a bidding process. They may also be interested in which other organisation is paid ‘Honorariums’ by Nike. The Qatar Athletics Federation (QAF) doesn’t list its partners on its internet site, but a number of photos on its news page show athletes in Nike kit. 

Once again, the involvement of Pamodzi Sports Consulting is likely to lead to allegations that Papa Massata Diack’s company was a facilitator for corrupt payments, especially as the IAAF Ethics Board found that the agreement with Li-Ning (China) Sports Goods Ltd. ‘came to naught’. Papa Diack has previously denied any suggestion that he or his company was involved in corruption.

Kiplagat and Okeyo were both former members of the IAAF Council. Kiplagat lost out in his bid to become a Vice President of the IAAF at the August 2015 IAAF Congress, which elected Sebastian Coe as President. The elected Council members are featured in the PDF below.

The allegations concerning Athletics Kenya bear remarkable similarities to those involving Russia. Both involve allegations that athletics officials extorted money from athletes in return for the covering up of positive doping tests.

As previously reported, the allegations relating to Russia date back to at least 2010, perhaps earlier. As stated above, the allegations relating to Kenya date back to at least 2012, and involve IAAF officials other than those already sanctioned as part of investigations into Russia. As such, further questions are likely to be asked about who else within the IAAF leadership was aware that such corruption was taking place.

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