Money Given to Kenya, Since Stolen, Puts Nike in Spotlight - The New York Times - 0 views
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When a Chinese clothing company swooped in and offered to sponsor Kenya’s famed runners, Nike panicked, Kenyan officials say.
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Kenya’s athletics federation — has led to a major scandal in Kenya, a country in the midst of its biggest war against corruption in years.
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In a contract signed several years ago, Nike agreed to pay hundreds of thousands of dollars in honorariums and a one-time $500,000 “commitment bonus,” which the former employee called a bribe.
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money was supposed to be used to help train and support poor Kenyan athletes who dream of running their way out of poverty.
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immediately sucked out of the federation’s bank account by a handful of Kenyan officials and kept off the books.
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For more than 20 years, Nike Inc. has been paying the Kenyan national runners’ association millions of dollars in exchange for the Kenyans wearing Nike’s signature swoosh, superb advertising in the running world.
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Ethiopian runners, who also excel at middle- and long-distance races, have a sponsorship agreement with Adidas, but an official there said their contract contained no commitment bonus
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In a sworn statement provided to Kenyan investigators, the former assistant said the $500,000 commitment bonus was “bribe money from Nike” so that the top officials could pay back the $200,000 from the scuttled deal with the Chinese company and then make even more by agreeing to sign up again with Nike.
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Nearly every day there seems to be allegations of some new scandal: a government ministry buying plastic pens for $85 apiece, a Supreme Court judge taking a $2 million bribe, questions about what exactly happened to the proceeds of a multibillion-dollar bond deal.
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Western nations have threatened sanctions, and the United States government has been especially vocal about corruption, with White House officials unveiling a 29-point plan to root it out.
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But those complaints may have been a ruse by Kenyan officials to get out of the Nike contract so they could receive a bribe from another company, said a member of the executive board of Kenya’s track and field federation, known as Athletics Kenya.
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The sports-marketing agent who made the payment, Papa Massata Diack, was recently banned for life by the International Association of Athletics Federations, a global governing body for track and field.
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After they received a letter from a Nike lawyer saying there were no legal grounds to terminate the contract, the Kenyan officials abruptly changed course.
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They negotiated a new contract in which Nike agreed to pay Athletics Kenya an annual sponsorship fee of $1.3 million to $1.5 million — plus $100,000 honorariums each year and a one-time $500,000 “commitment bonus.”
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Nike executives refused to discuss the contract, issuing a short statement that the money paid to Athletics Kenya was supposed to support the athletes. It said that Nike conducted business with integrity and that “we are cooperating with the local authorities in their investigation,” a point the Kenyan detectives dispute.
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Kenyan athletes were so outraged when they learned in November that hundreds of thousands of dollars from Nike had been stolen by their bigwigs that they staged a protest at their headquarters in Nairobi, with elite athletes camped out in the grass and holding up signs that read “blood sucers.” (Some of the runners never finished school.) Advertisement Continue reading the main story
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He said corruption in the athletics federation was so ingrained and so brazen that officials routinely extorted money from athletes who failed drug tests. He also said the organization’s chairman, Isaiah Kiplagat, had asked Nike to wire the bonus directly to his personal account, a request that Nike refused.
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Within days, according to bank records, the $500,000 was withdrawn by Athletics Kenya’s top officials. There were no major track and field activities going on at the time, and the board member and the former administrative assistant said just about all of the money had been concealed from Athletics Kenya’s executive committee, including $200,000 sent to a bank account in Hong Kong.
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Analysts said this case was especially tricky because it did not appear to fall under the Foreign Corrupt Practices Act, the American law that covers crimes involving American companies and foreign government officials.
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The Kenyan running association, while it receives some government money, is not a Kenyan government agency.
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He noted that sports federations, like Athletics Kenya and FIFA, international soccer’s governing body, which is embroiled in its own corruption saga, often fell between the cracks of the rules that governed businesses, public agencies and traditional nonprofit organizations, even though sports federations have qualities of all three.