Search

Breaking Point YEARS OF GREED AND CORRUPTION HAVE CAUGHT UP AT LAST WITH THE INTERNATIONAL OLYMPIC COMMITTEE

Feb. 01, 1999
Feb. 01, 1999

Table of Contents
Feb. 1, 1999

Faces In The Crowd

Breaking Point YEARS OF GREED AND CORRUPTION HAVE CAUGHT UP AT LAST WITH THE INTERNATIONAL OLYMPIC COMMITTEE

April 1991, Birmingham, England. A stocky, white-haired Yugoslav
businessman named Artur Takacs was quietly making his rounds at
the limousine-encircled Hyatt Regency, site of the International
Olympic Committee meeting that would determine the host city for
the 1998 Winter Olympics. Takacs, 72 at the time, was well known
to the delegates. One of IOC president Juan Antonio Samaranch's
closest advisers, he sat beside Samaranch during most IOC
meetings, a striking breach of protocol for a nonmember. Takacs
even dressed like Samaranch, wearing a blue blazer of a specific
cobalt shade, adorned by a single row of gold buttons. He was
Samaranch's confidant, his sounding board, his friend.

This is an article from the Feb. 1, 1999 issue Original Layout

Takacs had identified a handful of the 94 IOC members at the
time (the number of members fluctuates, but their ranks have
swelled to as many as 115 since 1991) who could swing the
election between the bids of the two leading candidates, Nagano
and Salt Lake City. All the members had been lavished with
extravagant last-minute gifts from the various bid
cities--expensive Italian luggage, Stetson hats, handblown
glassware, laptop computers--enough stuff that the IOC had set
up a parcel post station in the hotel to make it easier for
delegates to send their booty home. At the gala reception the
night before the big election, Takacs tracked down the swing
voters one by one and discreetly told them, in more or less the
same words, "It would be difficult for the Olympic movement and
inconvenient to His Excellency to have the Games in North
America once again." His Excellency is the title by which
Samaranch chooses to be addressed.

Takacs didn't mention that his son, Goran, had been employed as
a lobbyist for Nagano, commanding a fee of $363,000--plus a
substantial bonus if Nagano's bid were to win. Nor did the elder
Takacs divulge that one reason it would be "inconvenient for His
Excellency" if Nagano lost was that a consortium of Japanese
businessmen had pledged, but not yet delivered, some $20 million
toward the construction of a new Olympic museum in Lausanne,
Switzerland, Samaranch's pet project. Takacs didn't need to. If
His Excellency (who doesn't vote on bid cities unless there's a
tie) wanted the Games in Nagano, that was enough reason to
support it.

Alerted to Takacs's movements, the Salt Lake City contingent,
which included U.S. Senator Orrin Hatch, nervously watched as
Takacs worked the room. They would demand, and later receive, a
letter of apology in which Takacs conceded that his actions were
improper: He should not have purported to speak for Samaranch.
But the damage had been done. When the votes were cast, Salt Lake
City's worst fears were realized. Nagano won by four votes.

Members of the Salt Lake City bid team knew why they had lost,
and they were determined not to lose again. Thus were sown the
seeds of the crisis in which the Olympic movement finds itself
today: a maelstrom of embarrassing revelations that have brought
into bold relief a culture of unchecked corruption and greed
within the IOC.

Over the next four years the Salt Lake City bid committee,
headed by businessman Tom Welch, gave close to $400,000 in
inappropriate "material benefits" to 14 IOC members (one of whom
has since died) to help secure the 2002 Games, according to an
investigation by a six-member IOC commission whose findings were
released on Sunday. The "benefits"--which commission chairman
Richard Pound, a Montreal lawyer and IOC vice president, refused
to call bribes--included cash payments, free housing,
scholarships and jobs. Six of the members (from Chile, Congo,
Ecuador, Kenya, Mali and Sudan) were asked to resign under
threat of expulsion at a special IOC session scheduled for March
17 and 18 in Lausanne. Three others (from Finland, Libya and
Swaziland) had already resigned. Samaranch said the IOC will
continue to investigate three more, including two of its most
prominent members, Kim Un Yong of South Korea and Vitaly Smirnov
of Russia. A source close to the IOC probe told SI that the most
damaging allegation against Smirnov is that on the eve of the
vote for the 2002 Games, he offered his support to Salt Lake
vice chairman Dave Johnson for $35,000. That offer was made
through an intermediary: Goran Takacs. Johnson didn't accept,
according to the source. Smirnov refused to comment on the
charge. Takacs called it "preposterous."

"I am sincerely disappointed that IOC members were involved in
the events revealed in this investigation and am deeply saddened
by their conduct," Samaranch said on Sunday. He said that the
IOC executive board had decided to form an ethics commission
made up mostly of distinguished non-IOC members to "introduce
globally accepted guidelines and procedures to ensure that the
IOC conforms with the world's best practices in self-governance."

Samaranch also called for substantial reforms in the IOC's
host-city selection procedures. The proposed changes, which must
be passed by a two-thirds vote of the entire membership at the
March session, would scrap the current system, in which all IOC
members vote, and replace it with one in which a 15-person
election committee would select Olympic cities. Five of the
voters would come from outside the IOC; three would be athletes
picked by the IOC's Athletes Commission. "We must use a simpler
system to choose the city," said Samaranch. "To have 114 members
voting is too much, and we will change."

But as significant as these proposals appeared to be, there's
reason to question the IOC's commitment to cleaning up its mess.
In a startling admission that calls into question the
thoroughness of his panel's investigation, Pound said no one had
talked to two lobbyists the Salt Lake Organizing Committee
employed to help gain favor with IOC members. One is Mutaleb
Ahmad, a Kuwaiti who was paid $57,600 as a consultant, according
to SLOC records. The other is Mahmoud El-Farnawani, a former
national volleyball coach from Egypt who lives near Toronto.
El-Farnawani was paid $161,000 for helping provide access to
northern African IOC members. His testimony would appear to be
useful since in 1995, shortly after Salt Lake City easily won
the 2002 Games on the first ballot, he told the Toronto Sun, "I
signed a contract with Salt Lake City and assured [it] of all
the Arab votes."

So why wasn't he questioned? "El-Farnawani has been out of the
country [Canada] since mid-December," Pound said. "We haven't
been able to get in touch with him." SI had no such
difficulties, talking to El-Farnawani on three occasions by
phone between Jan. 12 and 16 at his residence outside Toronto
and then dining with him in Toronto on Jan. 18. "I was pleased
but puzzled I never heard from Mr. Pound," says El-Farnawani.
"The Salt Lake people, after what happened in Birmingham, wanted
to take no chance. My relationship with the six North African
IOC members is very valuable. That's why cities hire me. This is
a kind of war, and you have to have all the weapons you can to
win. I was just one weapon."

"We see our report as a beginning, not an end to this issue,"
Pound said last Thursday, announcing that his panel would
broaden its probe to look into all bids up to and including
those for the 2006 Winter Games, which will be voted on at a
June IOC meeting in Seoul. "We will do whatever it takes to put
our house in order."

The wisest course of action might be to burn the house down and
start over. Through the years, as rumors of under-the-table deals
involving its members circulated, IOC higher-ups seemed notably
uninterested, preferring to pontificate against cheating by
athletes. At best the IOC has followed a don't-ask, don't-tell
approach. At worst it is guilty of top-to-bottom corruption.

Last week new allegations of bribes and improper solicitations
emanated from all corners of the globe. In Ostersund, Sweden,
which lost out to Salt Lake City, bid committee officials said
one IOC member was lent a Saab so he could visit Ostersund's
cross-country venue and balked at returning the keys, assuming
the car was a gift. Another asked for a Volvo.

A source close to the Paris committee that lost to Barcelona in
the 1992 Summer Games bidding (box, opposite page) told SI that
IOC member Ashwini Kumar of India asked for--and got--a free tour
of Loire Valley castles for himself and his daughters. The source
said IOC member Lamine Keita of Mali, one of those recommended
for expulsion, requested and received use of a large apartment in
Paris, where he spent six weeks, treating it so abominably it had
to be renovated.

Nor is Sydney, site of the next Olympics, the 2000 Summer Games,
free of the spreading taint. Australian Olympic Committee
president John Coates admitted that on the night before the vote
on the 2000 Games, he offered $35,000 each to IOC members Charles
Mukora of Kenya (one of those recommended for expulsion) and Maj.
Gen. Francis Nyangweso of Uganda. The offer was accepted, and
though the money was earmarked for sports programs in Kenya and
Uganda, the underlying purpose of the gifts, said Coates, was to
"encourage [Mukora and Nyangweso] to consider their votes for
Sydney." His timing was exemplary. The next day Sydney beat
Beijing by two votes.

Sources close to the Berlin group that bid on the 2000 Summer
Games told SI that during the bid process, the Berlin committee
sent two $6,000 plane tickets to Seiuli Paul Wallwork, an IOC
member from Samoa, for him and his brother to travel to London.
The brother didn't go, and the extra ticket was never returned.
The sources also said arrangements were made for Kim's pianist
daughter to rehearse with the Berlin Philharmonic. The daughter,
a musician of modest attainments, performed with the Melbourne
Symphony in 1990 when that city was in the running for the '96
Games (and with the Utah Symphony in '95). According to Shane
Maloney of the Melbourne committee, six African delegates asked
his group for new cars and the services of prostitutes in
exchange for their votes, a request he says was refused.

One agent told the bid committee from Sion, Switzerland (the
favorite to host the 2006 Winter Games), that he could deliver
25 votes for $2 million, according to The Wall Street Journal.
Nagano? Services of geishas, stays at hot-springs resorts and
helicopter tours have all been reported as items in its bid
committee's $9.6 million promotion budget, though the exact
gifts and expenditures may never be known. Sumikazu Yamaguchi,
vice secretary general of the bid committee, ordered bid records
destroyed in 1992.

Former U.S. Olympic Committee president and IOC member Robert
Helmick, a Des Moines lawyer who in 1991 resigned from both
positions after he was accused of conflicts of interest for his
involvement with various sports-related businesses (the USOC
later cleared Helmick), remembers shopping sprees in which bid
cities bought IOC members' wives fur coats and jewelry worth as
much as $8,000--far in excess of the gift limit of $150
established in 1986. "Each bid city is expected to provide each
IOC member and his wife free first-class tickets," says Helmick.
"Then when you get to the city, you're treated like royalty,
with limousines, wining and dining, a hotel suite. My wife would
be afraid to go out on shopping trips. She found if she said she
liked something, the next day it would show up in her room.
Pearl brooches, five-ring pendants. And nothing is done to
discourage it. You start thinking you deserve this. What you
have is a group of good people caught up in a system that has
become corrupt."

But Helmick sees even greater potential for graft in the
construction of Olympic facilities, the selling of corporate
sponsorships and the like. "The press is focusing on the bid
cities," he says. "The bigger scandal is the huge contracts that
are available. Offers of consulting fees, offers of contractual
opportunities."

Jean-Claude Ganga, a powerful IOC member from the Congo who is
another of those that Pound's panel has threatened with
expulsion, said essentially the same thing last Friday night
while defending himself against corruption charges. The $70,000
from the SLOC that went into his personal bank account? Ganga
said this was done "because transfers are practically impossible
between Salt Lake and Brazzaville" and that he distributed the
funds to three sports federations in the Congo for which the
money was intended. His hospital treatment for hepatitis in Salt
Lake City? He said he tried to pay the bill but found it had
been taken care of by the SLOC. The deal an SLOC official set up
in which Ganga purchased three residential properties in a
suburb of Ogden, an investment that brought him a $60,000
profit? Ganga said he paid for this out of his personal checking
account. "These scholarships and hospital stays, this is only
the tree hiding the forest," Ganga says, pointing a finger back
at his accusers, specifically Pound, the chief negotiator for
the IOC's television commission. "Who signs the contracts for
the TV rights? Who signs the contracts for sponsors? That's
where you have to look for the people [in the IOC] who make
money, not into scholarships and hospital stays. I am a member
of the sponsor commission [the Commission of New Sources of
Financing, also chaired by Pound], and I never see a television
contract or a sponsor contract. I went to complain. I was told
to keep quiet. A contract of that kind, $2 billion for TV
rights, and only seen by two or three people? Is it right?"

Actually, NBC is paying the IOC $3.5 billion for the U.S.
television rights for all Olympics through 2008, a deal Pound
says is a terrific one for the IOC. However, rival networks,
which were not given the opportunity to submit proposals for
Games beyond 2000, remain suspicious of the two swiftly
negotiated 1995 contracts that locked up the Olympics for NBC.
Rumors of additional multimillion-dollar payments and huge
consulting fees have smoldered around the deals, though no one
has produced evidence of wrongdoing.

The IOC invites such suspicions because it is rife with
political logrolling and conflicts of interest. How could the
IOC fail to see at least the appearance of impropriety in the
two hats worn by Alex Gilady, an IOC member from Israel who sits
on the Olympic body's television commission while also serving
as a senior vice president at NBC Sports? Jim Easton of the
U.S., the president of the International Archery Federation and
an IOC member since 1994, is also president of Easton Sports,
which makes, among other sporting goods, archery equipment.

"There are no IOC regulations regarding conflicts of interest,"
says Helmick, who says he was once asked by Adidas to represent
it. Helmick says that when he questioned whether that would be
appropriate, given that Adidas and the IOC's marketing partner,
ISL, were both owned by Horst Dassler, Helmick was told by Adidas
that it had other IOC members under contract. Published reports
have identified one of those members as Pound, an allegation
Pound denies. He admits that his law firm occasionally bills the
IOC for legal work but says he personally gets no money from the
deals or the IOC's television negotiations.

Still, little effort is made to discourage the appearance of
conflicts, a failing that contributes to a sense that the
ultrasecretive IOC is fundamentally corrupt. Protestations by
top-level IOC members--Samaranch, Pound and other members of the
executive board--that they had no evidence of malfeasance before
the stories began coming out of Salt Lake City are nonsense. In
1986 Wolf Lyberg, secretary general of the Swedish Olympic
Committee, wrote Pound to complain that an IOC member had asked
for sex from a woman member of the committee representing the
city of Falun in its bid for the '92 Winter Games. Pound
reportedly wrote back saying that while he was sympathetic,
"without a formal request it's very difficult to do anything."
Why the IOC would have to wait for a "formal request," whatever
that means, to look into such an accusation is unclear. For
years SI (Oct. 27, 1986 et seq.) and other media outlets have
written about the shameless excesses and alleged improprieties
of IOC members and bid committees, reports largely ignored in
Lausanne.

Samaranch has set the tone for the IOC's arrogance and sense of
entitlement. Before he took over the presidency in 1980, IOC
representatives had to pay their own way to cities bidding for
the Games. Within a year they were getting not one but two
first-class tickets from prospective cities, plus all expenses.
In '83 spending money of $100 a day was added to the package
required of bid cities. His Excellency has long insisted on
being treated as a head of state. A sedan and a driver aren't
good enough; a limousine has to meet him everywhere. He demands
not just a suite, but the presidential suite, the finest hotel
room in the city. The IOC, at a cost of some $500,000 a year,
rents a massive suite that takes up half the top floor of the
Palace Hotel to house Samaranch when he stays in Lausanne.

Can the IOC cleanse itself? Despite the brave words from
Lausanne, words meant partly to calm the queasiness of corporate
sponsors (of which Time Inc., the parent company of SI, is one),
there's reason to wonder. In the final analysis Samaranch's
organization answers to no one but itself. Of the remaining 112
members (as of Monday), 90 have been appointed by Samaranch.
They have been weaned in an Olympian culture of greed. If
Samaranch steps down--as has been urged, understandably, by a
growing chorus--his successor, if chosen from within the IOC,
could prove to be just as bad. Or worse. Even Pound, whose
reputation for integrity long has distinguished him from many
other senior IOC members and who is Samaranch's most likely
successor, has been tainted by recent events

Marc Hodler, the 80-year-old Swiss member whose public diatribe
in December against corruption jump-started the IOC
investigation, says, "No revolution has been possible without
scandal. We have a great opportunity at this time. Let us make
changes." The operative word is revolution. Mere changes aren't
enough.

COLOR ILLUSTRATION: PHOTO ILLUSTRATION BY JEAN-FRANCOIS PODEVIN [Drawing of five hands clutching money while pulling apart each ring of the Olympic logo]COLOR PHOTO: DESERET NEWS/GAMMA LIAISON Smoking gun Samaranch (below, receiving box) has drawn fire for accepting a pricey pistol from the SLOC's Welch in 1991. [Juan Antonio Samaranch accepting gift at table while others look on]COLOR PHOTO: JOHN BIEVER Closing thought As the 1998 Games ended on a note of goodwill, the U.S. team invited the world to a city about to be rocked by scandal. [American athletes holding banner reading "Thank You NAGANO See you in SALT LAKE CITY]

Getting in the Games

In the last two decades, virtually every election to choose an
Olympic host city has been marked by backroom political deals and
questionable gifts to IOC members or their pet causes. Here are
four noteworthy examples.

1988
SUMMER
SEOUL

Fully refundable first-class tickets to Seoul are sent to IOC
members shortly before the election, helping to tip the balance
in the race against favored Nagoya, Japan.

1992
WINTER
ALBERTVILLE

Falun, Sweden, has the superior bid--it earns glowing reviews
from the IOC's site-evaluation committee--but IOC members bend
to the wishes of president Juan Antonio Samaranch and choose a
French city. That effectively eliminates top candidate Paris
from contention for the 1992 Summer Games, which go to
Samaranch's home city of Barcelona.

1996
SUMMER
ATLANTA

Athens raises stakes in gift-giving game by reportedly preparing
a dossier detailing IOC members' preferences, from culinary to
sexual. Manchester bid chief boasts of knowing shoe size of one
IOC member's second daughter. Coca-Cola boosts Atlanta with
financial support, but power broker Andrew Young clinches bid by
cultivating links with African members, to whom he has the bid
committee provide athletic gear and other sports-related aid.

2000
SUMMER
SYDNEY

On election eve, Sydney bid chief John Coates, fearing the vote
is slipping away to Beijing, offers $70,000 to fund sports
programs in home countries of two IOC members. Sydney wins Games
by two votes. Admits Coates, "We didn't get the Games because of
our great facilities or beautiful location."

"THIS IS A KIND OF WAR," SAYS AN OLYMPIC LOBBYIST. "YOU HAVE TO
HAVE ALL THE WEAPONS YOU CAN TO WIN"
NEVER MIND THE BID CITIES, SAYS HELMICK, "THE BIGGER SCANDAL IS
THE HUGE CONTRACTS THAT ARE AVAILABLE"