Swim Bosses At FINA & LEN Scrap Over Financial ‘Irregularities’ File Sent To Prosecutors

Turbulence - Photo Courtesy: Craig Lord

Senior Swim Executives Of FINA and LEN, the global and European federations for aquatic sports, in dispute over allegations of financial mismanagement

Three World swimming bosses have been named in a complaint alleging financial irregularity at the European Swimming League (LEN). After months of dispute within the federation, files have now been submitted to prosecutors in Switzerland and Italy as well as two sports ethics panels.

In a dossier seen by the Frankfurter Allgemeine in Germany, The Sunday Telegraph in Australia, The Times in London and Swimming World, serious questions are asked of Paolo Barelli, the president of LEN and a vice-president of FINA, David Sparkes, the former head of British Swimming, and Tamas Gyarfas, the former head of the Hungarian swimming federation, both LEN executives and members of the top table of world swimming governance, the FINA Bureau.

The matter ended up in the hands of prosecutors as a “last resort” after the complainant felt that his attempts to have matters resolved within LEN, and then FINA, were being blocked.

Paolo Barelli, credited with reviving LEN’s financial health – Photo Courtesy: Swimming World

Barelli, Sparkes and Gyarfas are cited as signatories to a 2016 contract with an insurance company called Elevan in which a percentage of broadcast-rights revenue is promised in return for securing an increase in fees. Registered in Italy as an insurance company, Elevan also received fees in 2016 and 2017 for “identification and assistance activity” related to a lucrative LEN sponsorship deal with insurer UnipolSai, records sent to prosecutors show.

The UnipolSai support is worth 850,000 euros and threw a lifeline to LEN at a time when Barelli was leading efforts to get the European aquatics federation out of a financial hole.

Part of those efforts includes revenue from rights to broadcast swimming and other aquatics sports on television. LEN’s contracts with the European Broadcast Union (EBU) run to more than 13 million euros since 2013 but the EBU says that it never negotiates with or through third parties and was unaware of any company called Elevan.

Indeed, Elevan is one of three companies that only Barelli, Sparkes and Gyarfas, who runs the FINA Aquatics magazine and is awaiting the next hearing in a trial in which he stands accused of ordering the murder of a businessman in Hungary more than 20 years ago (an allegation he denies), appear to have been aware of.

According to a string of correspondence between their fellow members of the LEN board, the leadership group beyond the executive first heard of payments to three companies from 2014 onwards when a fourth member of both global and European top tables of swimming governance, Bartolo Consolo, alerted them to the situation on December 27 last year.

Consolo, former president of LEN, honorary member of the FINA Bureau and the Italian president of Swiss Swimming, had received an anonymous letter late last year containing allegations of financial irregularity. Outlining some of those, Consolo added his own research to the pot and confirmed the existence of the three companies through company registrations in Italy and by calling the past three Directors of LEN to ask if they had been aware of the three companies and the services for which they had been paid amounts running into the hundreds of thousands of euros.

Between 2014 and 2017, fees were also paid to two other companies, CIR-AUR and Eurozona, both registered in Italy as property companies, in a string of payments worth between euros 20,000 and 24,400 for “organization logistics services activities” and “commercial assistance”. CIR-AUR is majority owned by Barelli.

A senior source at LEN, which is based in Nyon Switzerland, told Swimming World that “there is no case to answer”, while six members of the LEN Bureau signed a “Statement to the President” that includes: “We are extremely satisfied with the explanations provided” by Barelli.

After newspapers published the contents of Consolo’s complaint, LEN issues the following statement:

LEN (Ligue Européenne de Natation) totally rejects the allegations, which have appeared in some media reports.

Following various briefings and the receipt of the Audit Report, the LEN Bureau unanimously agrees that there is no substance to the allegations raised.

LEN maintains that all its bodies have always respected a conduct in line with the principles of good governance and transparency.

How The Dispute developed

In his “Confidential LEN Dossier” of December 27, 2019, Consolo expresses a wish to have the matter resolved within LEN. In submissions to prosecutors that Swimming World has been made aware of through legal sources, he asks fellow Bureau members to help find answers.

In an exchange with Christa Thiel, the vice-president of the German Olympic Sports Confederation, former president of the German swimming federation and ex chair of the FINA Legal Commission, Stefan Kuerten, the Executive Director of Sport for the EBU, is cited as saying that he is unaware of any third party in its negotiations with the swim federation.

The dossier – which was also submitted with other materials to the ethics panels at FINA and CONI, the Italian Olympic Committee, in February – sparked a call for inquiry from seven members of the LEN board on January 17. In a note penned by Consolo and signed by all seven members, the group noted:

“We are very worried about the present state of affairs. Should this become public knowledge it would have a dramatically negative effect on LEN”.

LEN

Attempts to resolve the matter should be “done internally”, seven members of the Bureau agree in a letter carrying their signatures. After a meeting a day later at which Barelli, who is credited with pulling LEN out of a financial hole in the past eight years, presented his version of events, Consolo pressed for further action but was dismayed to find fellow board members changing their minds, so much so that a week later the hunter had become the hunted.

In a “Statement to the LEN President” dated January 25, 2020, six members of the board, including five supportive of Consolo on January 17, now backed Barelli and explanations that payments reimbursed him for work he had carried out for securing euros 100,000 in support for LEN from Energy Standard, the company owned by ISL founder Konstantin Grigorishin, and for securing the 850,000 euros sponsorship with UnipolSai.

Further, Barelli told members, Elevan had helped renegotiate TV rights, while the payments to CIR-AUR were reimbursements to him years after he had spent “a very large amount” of his own money and funds from the Italian Swimming Federation (FIN) shoring up LEN at a time where the European body was struggling to keep its head above water.

LEN members accused Consolo of “manipulating” the information in his dossier “to shed a bad light on the President and Officers at LEN”.

Those senior offers are signatories to an agreement with Elevan in which the insurance company is promised a 5% or 6% cut (depending on the length of deal secured) of any increase in the broadcast rights fees payable to LEN with each contract renewal. The gain in the past three contracts of LEN, according to Consolo is 2.3 million euros.

It is unclear whether Elevan was ever paid commissions as pledged.

Reference to the dispute was made in a passing reference in early March in an Italian publication, triggering questions from other journalists keen to know what was at the heart of Consolo’s complaint and a dossier stating that the Directors of LEN had been left in the dark. In one reference, a director is cited as saying that he had “never wanted to sign payments on my own for these companies that I did not know the owners [of] or the services they provided to the LEN”.

Paulo Frischknecht, the Director of LEN until January 2018, declined to comment but pledged to cooperate with any official investigation, noting: “I have nothing to hide but I have no intention of breaching the confidentiality agreement with LEN that I’m still bound by. I will be happy to disclose any information I have that may assist investigations if I’m called to provide evidence to an official inquiry.”

Barelli declined to comment, while there was no reply to requests for comment from Gyarfas and Sparkes.

Meanwhile, on the cusp of an emergency web-meeting yesterday, Saturday, at which LEN board members were due to approve a new, 33-page, protocol for managing LEN payments and hear a report from LEN Internal Auditor Ray Kendall, of Ireland, a senior source from LEN said:

“The Audit Committee can vouch for everything. We’re confident there’s no case to answer.”

Consolo begs to differ. When contacted by the journalists investigating, he confirmed that the dossier and other materials in the hands of legal sources and now a part of complaints to prosecutors, were his.

He emphasised that he had “only ever wanted to resolve the matter internally” but when fellow Bureau members had rounded on him in their “absolutely incredible and absolutely unacceptable” statement in support of the LEN executive, he had had no choice but take it “to a higher level”.

That meant the FINA Ethics Panel. In email and other exchanges seen by Swimming World, Consolo, 70, comes under pressure to call a halt to his campaign “to seek truth for the sake of the dignity and integrity of swimming and the associations I have dedicated myself to for very many years”.

In their letter of support for Barelli and the other officers, Bureau members Fernando Carpena Perez (of Spain and a vice-president), Joe Caruana Curran (Malta), Dimitris Diathesopolous (also the Greek member of the FINA Bureau), Alexandar Sostar (Serbia), Andrew Vlaskov (Ukraine) and Noam Zwi (Israel), set out the explanations given by Barelli and lend their support to them. Elevan, they state, was involved in the renegotiation of the TV rights.

“The agreement was based on the successful conclusion of an improved contract. And it was agreed that the company would receive a fee based on the additional amount of the previously agreed terms and the extension of the period.”

“CIR AUR was only used to issue invoices based on rental costs for the Rome office of the LEN president…”

“We are extremely satisfied with the explanations provided,” conclude the six members, who also call on Consolo to face “serious measures”, otherwise LEN “will be appearing to accept that people can throw mud towards others who act in good faith in the interests of LEN”. They recommend “serious disciplinary action … to ensure the good name of LEN is protected”.

No explanation is given in the letter as to why they and other members had not previously known about three companies at the heart of the dispute nor the agreement with Elevan on broadcast rights.

In a letter to vice-presidents of LEN, Thiel and Sweden’s Sven von Holst, both signatories to the January 17 letter calling for further inquiry but absent from the January 25 letter of support for the executive, Consolo writes:

“My colleagues of the Bureau have lost their sense of reality and dignity in evaluating what happened.”

He told Swimming World this week:

“If these payments were legitimate, why did the Bureau not know about them or the companies. The executives get 1,000 euros every month for their expenses and can make claims beyond that. We have a transparent system in place. Why was it not used?”

The FINA Ethics Panel

The FINA Handbook

Consolo personally notified the global sport’s president Julio Maglione on February 28 about the matter and was dismayed that it was not forwarded to FINA’s Ethics Panel, which is authorised to independently investigate any alleged violation of the Code of Ethics.

“It is strange that they don’t act immediately when confronted by something of a big and significant financial matter with a lot of implications for the governance of the aquatics sports,” Consolo writes in one of the notes in his dossier now with prosecutors.

He believes that LEN has been managed like a “personal company without any respect for the obligations deriving from [the constitution]: collegiality, transparency, respect for sporting and civil rules”, before adding:

“… paradoxically, the culprit is me Init was even proposed that I withdraw [my membership], and this forces me to defend my name, my sporting history, my reputation, in all venue, with all necessary actions.”

After writing that letter to fellow Bureau members, he instructed lawyers “to prepare the Appel to the FINA Ethics panel”.

FINA has not commented on the report but any suggestion it didn’t ask the Ethics Panel to investigate accusations of financial irregularity by its own members will only add fuel to the criticism about the lack of transparency of how the sport is run.

For years, critics have been calling for the introduction of a fully independent integrity unit that can conduct investigations without the approval of the executive, removing any hint of bias or questions of transparency.

Sources within FINA have told The Sunday Telegraph in Australia that the vast majority of members support the introduction of major reforms but the small group of leaders who hold all the power won’t budge.

Should FINA’s Ethics Panel open inquiries into Consolo’s complaint, that it likely to raise renewed calls for an IndependentIntegrity Unit to be appointed to consider not just the matters being raised at LEN but return to the unresolved issued of Husain Al-Musallam, the first vice-president and heir to the FINA throne, who in 2017 was cited by the U.S. Department of Justice as a co-conspirator in the guilty-plea case of Guam soccer official Richard Lai. Among payments made to Lai were sums amounting to more than $800,000 that a DoJ case file claims to have been sent from a bank account in the sole control of Al-Musallam and his boss at the Olympic Council for Asia Sheikh Ahmed Al-Fahad Al-Ahmed Al-Sabah.

Both men deny any wrongdoing. The matter that yet to be tested in a court of law.

New Protocol: Financial and Administration Policies and Procedures

In the past week, as prosecutors considered the material sent to them, LEN leaders were presented with a draft of a new protocol for handling finances at the federation. The “Financial and Administration Policies and Procedures”. The draft document, dated March 23, 2020, notes:

“The basic principles of good governance include accountability, transparency and integrity and these values should underpin all the activities of LEN. … The President, the Treasurer, all Bureau Officers and Members, the Executive Director, the Operations Manager, the Financial Manager and the Audit Committee have a responsibility to ensure that an adequate and appropriate internal control system operates within LEN.”

The protocol, seen by Swimming World, deals with matters of banking, use of credit cards, reporting, authorisation of payments, Per Diem allowances, salaries, petty cash, risk management and “Treasury Protocol”.

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