Three officials of FINA and LEN face serious accusations because of the financial irregularity at the European Federation of aquatic sports (LEN), American website Swimming World Magazine published today.
Paolo Barelli, LEN president and a vice-president of FINA, David Sparks, LEN general secretary, and Tamas Gyarfas, LEN treasurer, who are both members of the FINA Bureau, are involved in this controversial matter.
After disputes within LEN, that lasted for months, files have been submitted to prosecutors in Italy and Switzerland and to two sports ethic panels.
Swimming World Magazine (www.swimmingworldmagazine.com) writes that Frankfurter Allgemeine (Germany), The Sunday Telegraph (Australia), The Times (London), and themselves have seen a dossier.
The matter was submitted to prosecutors since the complainant felt that his attempts to have matters resolved within LEN, and then FINA, were being blocked, Swimming World Magazine writes.
Barelli, Sparkes and Gyarfas are cited as signatories to a contract (made in 2016) with an insurance company, registered in Italy, “Elevan” in which a percentage of broadcast-rights revenue is promised in return for securing an increase in fees. According to the files sent to prosecutors, “Elevan” also received fees in 2016 and 2017 for “identification and assistance activity” related to a gainful LEN sponsorship deal with insurer “UnipolSai”.
The “UnipolSai” support is worth 850,000 euros and it helped LEN when Barelli led efforts to get the federation out of financial crises.
A part of the efforts is revenue from the rights to broadcast of aquatic sports on television. The contracts between LEN and the European Broadcast Union (EBU) run to more than 13 million euros since 2013. Still, the EBU says that it never negotiates with or through third parties and that was unaware of any company called “Elevan”.
In fact, “Elevan” is one of three companies that only Barelli, Sparkes and Gyarfas, who runs the FINA Aquatics magazine appear to have been aware of, Swimming World Magazine writes.
The LEN’s internal investigations about the contracts started a few months ago.
A Swiss Bartolo Consolo, former president of LEN (from 1990 to 2008), honorary member of the FINA Bureau, received an anonymous letter last year containing allegations of financial irregularity. Consolo started to research 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 Italian companies, “CIR-AUR” and “Eurozona”, in a string of payments worth between 20,000 – 24,400 euros for “organization logistics services activities” and “commercial assistance”. Barelli is major owner of CIR-AUR.
A senior source at LEN told Swimming World Magazine that “there is no case to answer”, while six members of the LEN Bureau signed a “Letter to the President” that states: “We are extremely satisfied with the explanations provided” by Barelli.
In his “Confidential LEN Dossier” of December 27, 2019, Consolo expresses a wish to have the matter resolved within LEN. He alerted the other members of the LEN governing bodies.
In submissions to prosecutors, that Swimming World Magazine has been made aware, of through legal sources, he asked fellow Bureau members to help find answers.
The dossier – which was also submitted with other materials to the ethics panels at FINA and the Italian Olympic Committee (CONI), 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, including 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”
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 the 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”.
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, 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.”
When journalists contacted Consolo , he confirmed that the dossier and other materials in the hands of legal sources and now a part of complaints to prosecutors were his.
The Swiss said 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, 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 (vice-president), Joe Caruana Curran, Dimitris Diathesopolous, Aleksandar Sostar, Andrew Vlaskov, and Noam Zwi, 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”.
Swimming World Magazine underlines that 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.
Consolo said Swimming World this week:
“If these payments were legitimate, why did the Bureau not know about them or the companies”.
Consolo personally notified the global sport’s president Julio Maglione in February about the matter and was dismayed that it was not forwarded to FINA’s Ethics Panel, which is authorized 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, Swimming World Magazine writes.
The Sunday Telegraph cited a source from FINA and writes 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.
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”.