Was honoraria used to mean kickbacks?
Athletics
By
Omulo Okoth
| Feb 29, 2016
Kenyan authorities believe the item on the Athletics Kenya (AK) - Nike contract known as Honororia was a cover for unauthorised kickbacks, which was eventually entered into the contract.
The current contract between the Americal sports apparel manufacturer and AK started in 2003, but was renegotiated in 2005 to run to 2020.The original payment of Honororia amounted to $72,000 between 2005 to 2009. That amounted to $360,000 (Sh28,440,000). It was later increased to $100,000 (2011-2012 - $200,000 - Sh16m). That brings total honororia to $560,000 (Sh44,440,000).
Another payment authorities treated with circumspection is Commitment fee of $500,000 (Sh40 million). Complicating the matter further was the Sh16 million payment from Pamodzi after AK declared interest in Chinese kit, Li Ning. Authorities were therefore focusing on Sh100,440,000, which they are treating as unaccounted for.
Investigators said the amount was never declared to the AK Executive Committee, specifically honororia. Even signing bonus of $500,000 was not declared to the executive and was illegally withdrawn and was not reflected in the books of accounts.
A source familiar with the developments confided that Nike should be held accountable as much as the three Kenyans now serving suspension.
“Attention is on the three Kenyans – yet the source of the money and the purpose for which it was wired is not being probed,” he said. “The focus should be on Nike also to explain these two items,” he said.
Nike did not specifically respond to our questions, which included whether AK sends them their annual financial reports and why these two items – Honororia and Commitment Fees – are never reflected in the books of accounts.
If it is established that indeed these items amount to kickbacks, as is widely believed, it could put the American company at loggerheads with US federal bribery laws.
Last year, US Security and Exchange Commission launched investigations in the behavior of several companies with links to Fifa or other football bodies caught up in major corruption scandal, Reuters reported last July.
The wire media agency reported SEC probe centred on publicly-traded companies who have been involved in soccer contracts, such as athletics shoes and sportswear company Nike Inc.
WRONGDOING
“Although Nike has not been specifically named or charged with any wrongdoing, the company was swept into the scandal when US prosecutors in the indictment exercise that netted nine soccer officials in late May – most of whom held positions at Fifa – and five executives for a range of offences related to more than $150 million of alleged bribes and kickbacks, described bribes and kickbacks in connection with a landmark 1996 Nike deal in Brazil.
“The description of the $160 million, 10-year deal signed by “Sportswear Company A” matched exactly the details of Nike’s agreement to become the footwear and apparel supplier and sponsor of the Brazilian national team, which at that time, was the most successful in the world.
Security experts told Reuters the SEC could potentially have a hook in the case through the Foreign Corrupt Practices Act (FCPA), an anti-bribery law.
The SEC and the US Department of Justice both have to bring FCPA cases, with the SEC’s jurisdiction centering on violations by public companies.
The law’s core anti-bribery provisions only apply to payments to governments or government officials.
Like AK, the Brazilian Football Confederation (CBF), which signed the 1996 deal with Nike, is a private organization.
But the law contains a corporate books and record-keeping requirement that applies to other kinds of illicit payments – such as commercial bribery – that may not be related to government corruption.