Boxing Hit by Huge London 2012 Corruption Scandal

The International Boxing Association (AIBA) has been rocked to the core after BBC Newsnight alleged tonight that it has uncovered evidence of secret payments of millions of dollars from Azerbaijan in exchange for two boxing Olympic gold medals at the London 2012 Olympics.

The allegations claim that an individual from Azerbaijan paid $9 million (£6 million/€7 million) to the World Series Boxing (WSB) which is the professional tournament owned by AIBA.

AIBA have admitted that an Azeri national did indeed pay one of their competitions the money but they deny any deal to fix medals.

AIBA President CK Wu has stated that the allegations are “totally untrue and ludicrous” and that the “WSB is conducted in a totally transparent way”.

He added that AIBA had a zero tolerance policy on corruption and that he would conduct an immediate investigation into the allegations.

The accusations revolved around Ivan Khodabakhsh – the WSB chief operating officer – with Newsnight claiming that whistle-blowers revealed that he had resorted to desperate measures after the WSB ran into financial difficulties in the United States and was in urgent need of funding.

The insiders said Khodabakhsh told them that a secret deal had been done to secure funding from Azerbaijan in return for the guarantee that two Azerbaijani fighters would win Olympic gold at London 2012

An unnamed insider said: “Ivan boasted to a few of us that there was no need to worry about World Series Boxing having the coin to pay its bills.

“As long as the Azeris got their medals, WSB would have the cash.”

Khodabakhsh has already reacted to the claims calling them “an absolute lie”.

“I deny that I have offered anyone two gold medals or have any understanding that anybody else has offered two gold medals to Azerbaijan,” he said.

The AIBA had previously claimed that the money for WSB America came from a private Swiss company but documents show communications between Khodabakhsh, AIBA chief executive Ho Kim and Azerbaijan’s Minister for Emergency Situations Kamaladdin Heydarov about an investment agreement for a $10 million (£6.5 million/€7.5 million) loan.

These include an e-mail from Khodabakhsh to the Ministry in Azerbaijan with the following request: “Please transfer the investment money soonest possible to the WSB America account”.

AIBA say that Government Minister Heydarov introduced a private Azerbaijani investor to WSB and that the Minister and his assistant acted as the interface between the two since the investor did not speak good English.

Sporting events promoter Barry Hearn was asked to look at the economics of WSB when it was first mooted in 2009 and came to the conclusion that it could not make money.

“If an investor comes into this scheme with $10 million (£6.5 million/€7.5 million) I can only think he’s arrived from another planet,” said Hearn.

Following the BBC Newsnight programme, AIBA released a statement on the allegations which said: “In 2010, an agreement was signed between WSB SA, a Swiss incorporated company which runs the World Series of Boxing competition under the auspices of the AIBA, and a Swiss investment company for a loan in respect of the operation of WSB’s American franchises.

“The Swiss investment company facilitated the making of the loan, which originated from an Azerbaijani investor.

“The loan was not ‘secret’ and nor was there anything improper about it.

“It was an arm’s length transaction between two entities made on a commercial basis and with a view to a commercial return for the investor.

“While that investor prefers not to be named, as is their right under the terms of the agreement, AIBA/WSB can confirm that they are a private investor and are not the Azerbaijani Government (whether the Ministry of Emergency or any other arm of the Government) and that none of the funds were derived from Azerbaijani Government.

“Any suggestion that the loan was made in return for promises of gold medals at the 2012 Olympics is preposterous and utterly untrue.

“AIBA/WSB believe that such allegations have been made by individuals with an axe to grind, who are totally discredited.

“As well as unjustifiably imputing corruption to AIBA/WSB, they demonstrate a complete misunderstanding of the procedures which lead to the award of Olympic boxing medals and the impossibility of influencing these.”

The allegations are set to cast a huge shadow over the organisation at the worst possible time with the AIBA 2011 World Championships – a qualifying event for the London 2012 Olympics – set to get underway this week in the Azerbaijan capital Baku.

AIBA had already scheduled an Extraordinary Congress ahead of the competition for Saturday (September 24) which now looks set to be dominated by these allegations.

The allegations are also set to overshadow Baku’s bid to host the 2020 Olympics and Paralympics.

Contact the writer of this story at  tom.degun@insidethegames.biz This story was originally reported on the insidethegames.biz blog on Sept. 22, 2011.  This blog is affiliated with the London organizers of the 2012 Summer Games.  It is but one more example of corruption that seems endemic to the world of sport.