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Breaking Point

Years of greed and corruption have caught up at last with the international olympic committee

By E.M. Swift Special reporting by Brian Cazeneuve, Lester Munson, Anita Verschoth and Don Yaeger
Issue date: February 1, 1999

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.

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.

Issue date: February 1, 1999

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