The International Boxing Association (Aiba) has confirmed it has secured an out-of-court settlement to end a legal fight over a critical $10m (€8.18m) loan by one of its biggest creditors, stating the agreement will avoid the threat of bankruptcy.
Azeri company Benkons has been seeking repayment of the $10m loan, which dates back to 2011 and relates to the Americas Operation of the World Series of Boxing (WSB).
In a joint statement, Aiba’s newly named interim president and executive vice-president, Gafur Rahimov and Franco Falcinelli, said: “The settlement that Aiba has reached with Benkons represents a significant step toward restoring the financial confidence and proper governance at Aiba because if the matter had been left open we could have faced bankruptcy.”
The agreement calls for the reimbursement of part of the funds, beginning in 2021, while another portion of the amount will be converted into sponsorship.
“This will effectively reduce and delay Aiba’s overall cash payments at a time when we are cash-strapped,” Rahimov, who led the effort to achieve the agreement before he was named as the interim president at the weekend, added. “And it will put an end to the single biggest challenge that Aiba has been facing.”
Benkons confirmed the settlement on Wednesday and said: “We had already initiated legal action against Aiba, but we agreed to the Aiba proposal as it is favourable for both parties.”
Aiba has been plagued by financial mismanagement and a lack of transparency, which led to the resignation in November of president Ching-Kuo Wu. Accounting irregularities at Aiba have also raised the attention of the International Olympic Committee (IOC), which in December asked Aiba to submit a plan to address its governance and financial issues by January 31.
“Clearly we are pleased to announce that this settlement has been reached,” Falcinelli added. “This news, of course, is included in our overall report to the IOC, which also provides a detailed update about the six issues they asked us to address: governance, management, financial, judging, refereeing and anti-doping.”
Rakhimov has committed to a new era of transparency at Aiba, but his appointment at the weekend drew further criticism, with US authorities describing him as “one of Uzbekistan's leading criminals”.
Aiba made the announcement following a one-day congress held on Saturday to address allegations of mismanagement under former president Wu. Aiba maintained that Rakhimov, its longest serving vice-president, was appointed according to its statues following the unexpected resignation of interim president Falcinelli at the Extraordinary Congress held in Dubai.
The U.S. Treasury Department in December froze any assets Rakhimov held under American jurisdiction. “Rakhimov has been described as having moved from extortion and car theft to becoming one of Uzbekistan's leading criminals and an important person involved in the heroin trade,” the U.S. Treasury Department said.
Rakhmov is set to lead Aiba for the next nine months until a scheduled election in Moscow. In response to Aiba’s latest decision, the IOC said at the weekend that it was “extremely worried” about the organisation’s governance adding that it will “decide on further measures” at a meeting this weekend in South Korea which was already due to assess Aiba’s ongoing issues.