French authorities suspect Diack embezzlement in IAAF probe

French investigators looking into the commercial dealings of the International Association of Athletics Federations (IAAF) asked Swiss authorities to raid the offices of Athletic Management Services (AMS) alleging that the company played a “central and essential role” in deals used to embezzle sponsorship and media money from the governing body for athletics.

AMS is the Lucerne-based agency made up of International Sport and Leisure (ISL) alumni mandated by the IAAF to co-manage the federation’s marketing and media rights as part of its current 10-year commercial deal (2010-19) with the Japanese agency Dentsu.

Reuters reports that French investigators have not accused AMS, or Dentsu, of any wrongdoing but allege that AMS played a “central and essential role in the process” that diverted sponsorship and media funds to Papa Massata Diack the controversial son of the former IAAF president Lamine Diack. The father and son have been charged with embezzling from sponsorship and broadcast deals as part of an enquiry that finished in June and is set to go trial either later this year or early next.

In an 89-page indictment, French prosecuting judge Renaud Van Ruymbeke says AMS ceded certain sponsorship and broadcast rights to Diack junior’s company Pamodzi Consulting (PMD), allowing him to benefit from “exorbitant” commissions.

Reuters reports that the investigating judge signed a legal assistance request in May 2018 calling on Swiss authorities to raid AMS’s offices and question its executives but that the authorities have yet to act on the request. Ruymbeke asked the Swiss to secure contracts between AMS and Dentsu, AMS and PMD and contracts relating to five broadcast and sponsorship deals with Chinese petroleum giant Sinopec, Russian bank VTB, Chinese broadcaster CCTV and Abu Dhabi Media.

SportBusiness has seen a copy of an earlier letter from the IAAF’s lawyer, Régis Bergonzi, to Van Ruymbeke, dated July 2017, in which he related his concerns that different “corporate strata” were taking “significant shares of the profits from the rights granted” to Dentsu in the 2010-19 deal.

He said that in a meeting of the IAAF steering committee in 2016, AMS’s owner and the former head of athletics and basketball at ISL, Stephan Brubacher, explained that in some transactions AMS did not deal with the sponsors or media companies directly, working instead with PMD, which had the right to grant a “sub-licence” of the rights to the partners.

The IAAF’s lawyer wrote that he was bemused that the structure was adopted, “despite the fact that Dentsu and AMS were well aware that Papa Massata Diack had entered into a consulting contract with the IAAF, and was working as a sales agent for AMS, and would therefore benefit from both sides of the transaction.”

Diack reportedly kept $10m of a $30m deal with VTB’s agent, Russian sports marketing agency Sportima, for the bank to sponsor IAAF events from 2007 to 2011.  There is no suggestion that any of the partners are involved in any wrongdoing.

SportBusiness contacted the IAAF for comment and the organisation responded with a written statement.

“The IAAF has, and continues to, provide all information requested by the French prosecution in all areas of their investigation and advises all organisations associated with the IAAF to do the same,” the statement said. “As ‘partie civile’ to the case, we are not able to comment on any specific allegations or information provided but believe the French prosecution is best placed to investigate, substantiate and ultimately bring to a conclusion any and all allegations.”

The French legal assistance request is the latest development in an investigation that began as a probe into allegations that the IAAF, under Diack, covered up positive Russian doping tests. Reuters reports that AMS and Dentsu could be brought into a second ongoing French enquiry into alleged bribes related to the award of the Tokyo 2020 Olympics and World Athletics Championships. The investigators suspect the Tokyo bidding committee bribed the Diacks to secure votes to host the event. The bidding committee denies the allegations.