AMS played a ‘central and essential role’ in deals used to embezzle sponsorship money
NEW YORK/PARIS, Aug 28, (RTRS): French authorities investigating corruption in international sports believe a Swiss partner of Japanese advertising giant Dentsu Inc played a “central and essential role” in deals used to embezzle sponsorship money and have asked Switzerland to raid its office and seize evidence, according to a person with knowledge of the probe and documents related to the case reviewed by Reuters.
French investigators have not accused Dentsu or its partner, Lucerne-based Athletics Management & Services, of wrongdoing. The companies work together on marketing and media rights for the International Association of Athletics Federations, the Monaco-based governing body for track and field. The IAAF’s former president, Lamine Diack, and his son, Papa Massata, have been charged with embezzling from sponsorship and broadcast deals for those rights and other financial crimes in an inquiry that wrapped up in June and is set to go to trial.
The role of Dentsu and AMS could come under scrutiny in a second, ongoing inquiry by the French into alleged bribes related to the Olympics and the World Athletics Championships, the IAAF’s biennial flagship event, the person with knowledge of the probe said. French investigators suspect that Tokyo’s bidding committee bribed the Diacks to secure votes to host the 2020 Olympics – an allegation the committee has denied.
The 89-page indictment – known as an “ordonnance de renvoi” in French – signed by French prosecuting judge Renaud Van Ruymbeke says AMS played a “central and essential role in the process” that diverted sponsorship funds to Papa Massata Diack. AMS ceded to him IAAF rights for parts of the world and partnered on deals that Diack used to pocket “exorbitant” commissions, the indictment says.
AMS declined to respond to a detailed list of questions from Reuters. Dentsu said it had been unaware of the allegations in the indictment and had not been questioned in connection with the probe. “Dentsu is not aware of any details of the indictment,” Dentsu spokesman Shusaku Kannan said in a written response to Reuters.
Van Ruymbeke signed a request in May 2018 that was sent to Swiss authorities asking them to raid AMS’s Lucerne office and question its executives, but to date the Swiss have not acted on it, according to a copy of the legal assistance request seen by Reuters and the person with knowledge of the probe.
The request to Switzerland and details from the indictment about AMS have not been previously reported. They highlight how a four-year-old French investigation has moved beyond a probe into governance at the IAAF and a cover-up of Russian doping into whether consulting and sponsorship contracts were used to funnel bribes to the Diacks.
France’s request asked the Swiss to secure contracts between AMS and Dentsu, AMS and Papa Massata Diack’s companies, and those related to five companies that struck IAAF sponsorship or broadcasting deals: Russia’s VTB Bank, China Petroleum & Chemical Corp, South Korea’s Samsung Electronics Co Ltd, China Central Television, and Abu Dhabi Media Corporation. It also asked for an explanation of payments tied to those contracts.
Switzerland’s attorney general and its Department of Justice separately told Reuters they had received the request but referred detailed questions to the French. Van Ruymbeke and the French Financial Prosecution Office declined comment. Samsung said it sponsored IAAF events to build its brand and promote international sports and was unaware of the embezzlement allegations. VTB denied involvement in any illicit activities and said its IAAF contracts were “an effective instrument to promote VTB in the international arena.” China Central Television and Abu Dhabi Media Corporation did not respond to inquiries. China Petroleum & Chemical Corp, a state oil refiner known as Sinopec, declined to comment.
Sports federations like the IAAF typically do not have the know-how to deal with the complex business of managing marketing and broadcasting rights and gathering sponsors, so they outsource the task to agencies like Dentsu.
Tokyo-based Dentsu, the world’s fifth-largest advertising agency, has made sports marketing a centerpiece of its business. The company, which also works in public relations, market research and polling, was an advisor to Tokyo’s successful bid to host the 2020 Olympics and has helped Japan raise a record-setting $3.1 billion from domestic sponsors as marketing agent for the event. Dentsu also maintains close ties to Prime Minister Shinzo Abe’s ruling Liberal Democratic Party. Abe’s wife, Akie, once worked at Dentsu, as did the party’s head of public relations.
Dentsu acquired most of IAAF’s global rights in 2001 following the bankruptcy of International Sport and Leisure, a Swiss sports marketing company which had held them. Dentsu brought on AMS, newly formed by former ISL employees, as a partner to service the IAAF contract.
Dentsu does not own a stake in AMS. But the partnership had become so close that Dentsu Executive Officer Kiyoshi Nakamura said in a November 2016 meeting in Tokyo that the two were “completely integrated”, according to a letter submitted to Van Ruymbeke by IAAF lawyer Regis Bergonzi in July 2017. “AMS is Dentsu,” Nakamura told then IAAF Chief Executive Olivier Gers at the meeting, according to the letter, which was part of a submission by Bergonzi to French authorities referenced in the indictment reviewed by Reuters.
Kannan, the Dentsu spokesman, denied Nakamura ever made such a comment and said Dentsu and AMS had a “working business relationship”. Bergonzi referred Reuters to the IAAF, which did not address the episode. As part of its partnership, AMS came to acquire IAAF rights for some territories from Dentsu. Starting around 2007 AMS transferred the rights for some markets to Papa Massata Diack, who earned millions of dollars, much of it through commissions from AMS, securing marketing and broadcasting deals in Russia, Asia and the Middle East, the indictment says.
The younger Diack was paid through his company, Pamodzi Sports Consulting, even as he was separately being paid as a marketing consultant for the IAAF, according to the indictment. His biggest payday came from a $30 million contract with VTB’s agent, Russian sports marketing agency Sportima, for the bank to sponsor IAAF events from 2007 to 2011. The indictment says he kept about $10 million of that total based on an analysis by French authorities of the contracts between the firms. In a statement to Reuters, VTB said it had no control over how the “receiving party” used its funds. Sportima’s Director General Oleg Manzha told Reuters he could not comment because of a non-disclosure agreement.
Papa Massata Diack was also slow in paying AMS money owed to the firm under their contract and may not have paid fully, according to transactions and correspondence cited in the indictment. With AMS passing on most of the funds to Dentsu, any such delays or shortfalls could reduce what IAAF earned under a profit-sharing agreement that kicked in after Dentsu collected revenues above a minimum threshold, according to contracts referenced in the indictment.
Papa Massata Diack is in Senegal, which has refused extradition requests and declined to provide banking records to French investigators. He told Reuters he “doesn’t recognize” the French inquiry. “Senegalese are known to be very smart and determined,” he wrote in an Aug 8 email. “This investigation is bound for failure!!!”
Diack said he was “fully cooperating” with a separate and ongoing investigation in Senegal. A spokesman for Senegal’s justice ministry did not respond to questions about cooperation with the French. Like his son, Lamine Diack has consistently denied wrongdoing. The 86-year-old former long jumper is under house arrest in Paris. His lawyer did not respond to questions from Reuters.
Dentsu and the IAAF renewed their contract in September 2014, a year before Lamine Diack’s 16-year tenure was due to end. The deal extended Dentsu’s control of the IAAF’s rights to 2029 and extended an agreement benefiting the son, the indictment says.
“In this way, Lamine Diack was sustaining the system in place before his departure,” the indictment says. “He was tying the IAAF’s hands for 15 years.”
IAAF spokeswoman Nicole Jeffery said the IAAF had reformed its governance under Sebastian Coe, who replaced Lamine Diack as president. She said the IAAF was considered a victim in the case, entitling it to possible compensation, and deferred to French prosecutors as “best placed to investigate, substantiate and ultimately bring to a conclusion any and all allegations.”
Van Ruymbeke closed out the first inquiry in June after charging the Diacks with corruption, money laundering and breach of trust. Four others – Gabriel Dolle, former head of the IAAF’s anti-doping unit; former IAAF treasurer and former president of the Russian athletics federation Valentin Balakhnichev; Alexei Melnikov, a coach for Russian distance runners; and Habib Cisse, Lamine Diack’s former legal adviser – were charged with corruption. Balakhnichev said, “I don’t consider myself guilty of what I am being accused.” Melnikov did not respond to requests for comment. Lawyers for Cisse and Dolle, who has sought preferential treatment in return for a guilty plea, also did not respond to questions from Reuters. A trial date has not been set.
Van Ruymbeke has since retired and handed the investigation to Benedicte De Perthuis, the judge overseeing the ongoing inquiry into whether bribes were paid to influence the awarding of the Olympics and the World Championships, according to people with knowledge of the investigation.