IOC hit by alleged embezzlement at Olympic Museum
LOS ANGELES, December 2, 2011 - The International Olympic Committee has been rocked by the discovery that as much as $1.85 million has allegedly been embezzled from the accounts of the Olympic Museum, multiple sources confirmed Thursday.
Swiss police and prosecutors in Lausanne, Switzerland, the IOC's base, have launched an investigation, targeting the former head of the boutique at the Olympic Museum, Hiroshi Grieder. He is believed to be in custody, a source close to the investigation said.
The IOC has fired the three people who oversaw the museum's financial controls. The money — somewhere between 1.4 to 1.7 million Swiss francs — was tied to a scheme that dated back to the late 1990s, multiple sources said, speaking for publication on condition of anonymity.
The IOC's director of finance and administration, Thierry Sprunger, who had been on sick leave since Nov. 1, returned to work Thursday. He tendered his resignation to IOC president Jacques Rogge a few days ago; a formal announcement will be forthcoming in the next few days, amid meetings of the IOC's finance commission and policy-making executive board.
Sprunger, a member of the IOC staff since 1994, has not been accused of misconduct.
In an unrelated development, the IOC's protocol director, Paul Foster, also left the committee.
The discovery of something potentially amiss at the Museum has posed one of the most significant tests to the IOC leadership since the Salt Lake corruption scandal of the late 1990s; it revolved around revelations that IOC members or their relatives had been given more than $1 million in cash, gifts and other inducements by bidders for Salt Lake City's winning campaign for the 2002 Winter Games.
That affair saw the resignation or expulsion of 10 IOC members, and the enactment of a 50-point reform plan that included a ban on visits by IOC members to cities bidding for the Games.
This shows just how different the IOC is now than it was then.
Now institutional mechanisms are in place for the IOC to deal with a potential crisis, and in an intelligent manner.
"This is not Salt Lake City," a senior IOC source said, adding, "There is full transparency. We could have tried to hide the facts. We decided to address it. Let's get to the bottom of it. Let's clean it up. Let's take the consequences. All that has been done."
When he assumed the IOC presidency in 2001, Jacques Rogge — like everyone in Olympic circles — was keenly aware of the Salt Lake affair, and the stain of corruption. He has spent his two terms in office trying to put all that behind the IOC.
The IOC calls its CEO job "director general." Christophe de Kepper took the post earlier this year.
This, then, marked one of his first serious challenges — and just as an Olympic year, with the London 2012 Games, is just about to start, with the world's attention turning relentlessly again towards the IOC.
De Kepper, who had previously been Rogge's chief of staff, has long been a formidable executive. Getting this wrong could undermine him. But getting it right, of course, could make him even stronger.
The alleged embezzlement was discovered in September, when there was a change in management at the Museum boutique. The books didn't seem to match up; de Kepper launched an audit, then an investigation that pointed toward fraud.
Details remain to be made fully public. But, sources said, it appears that the long-running scheme involved either cash advances on an IOC-issued credit card that were misappropriated, or false invoices to companies that never existed.
Over the years, IOC internal controls failed to pick up any discrepancies; de Kepper moved decisively to dismiss the three officials.
A few days ago, de Kepper wrote IOC staff in an e-mail, "I regret to inform you that we have discovered financial irregularities in the management of the Olympic Museum shop."
That e-mail goes on to say, "We have undertaken a full and immediate investigation of the facts, and already taken a number of measures, including dismissals and the launching of a criminal complaint against a former IOC employee. Transitional measures will be put in place for the management of the sections impacted.
"Whilst these facts are clearly not good news for the IOC, they should remind us all of our duties in terms of responsibility, efficiency and transparency and underline our strong determination to deal effectively with any matters that could damage the organization."
The Museum developments may yet hold consequences for IOC politics, in particular the race — just now developing — to succeed Rogge. The IOC presidential election will be held in September, 2013, in Buenos Aires.
A short list of expected candidates would include, among others, Thomas Bach of Germany and Richard Carrion of Puerto Rico.
Earlier this year, Carrion led the negotiations that brought the IOC the $4.3 billion NBC TV rights deal that runs from 2014 through 2020; that deal secures the IOC's financial base. At the same time, he is also chairman of both the IOC finance and audit commissions, and it's inevitable questions will now be asked about what he knew, and when, if anything, about the Museum finances.
Carrion said Thursday, "When this came up, we said, 'Let's investigate.' The investigation went on. We took action right away. The director general took strong and decisive action."
At the IOC's annual assembly this past summer in Durban, South Africa, longtime member Dick Pound of Canada suggested that — strictly as a matter of best governance practice — the chairmanship of the audit and finance commissions ought to be split between two people. That issue probably will now be put to renewed review.
The Museum, situated on a rise overlooking Lake Geneva, opened in 1993 and is consistently ranked among Europe's top tourist attractions.
In an unrelated development, the IOC said Thursday the Museum will offer free admission until the end of January before closing for a long-planned facelift. The renovation is due to last 20 months.