Nigel Short's column in New In Chess 2014#2

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n September 2012, in Istanbul, the FIDE General Assembly dutifully passed an agreement, selling the commercial rights of most of the main FIDE events, including the World Championship, to Agon – an offshore company founded in January 2012, in Jersey, and ostensibly owned by the American fashion photographer Andrew Paulson. he contract runs to 11 pages and requires considerable thought as to its implications – even assuming the reader is fluent in English, which, of course, many Delegates are not. Occupied as I had been with playing, I had no time to cast more than a cursory glance at the document. Instead, I asked Ank Santens, the Belgian lawyer from White & Case, who had largely drafted the new FIDE statutes, what she thought of it. In her view, it was simply awful: far too much was being given away, for too little, for too long (over a decade and with easy terms for renewal). In no way was this agreement in FIDE’s proper interest. posed a few questions from the floor, to Andrew Paulson, concerning the capitalisation of the company. These were deftly evaded – perhaps unsurprisingly given that the equity of Agon is a non-confidence-inspiring $2. Tomasz Sielicki, of Poland, made the important point that Agon was already in breach of the contract as it had failed to meet the deadline for the initial payment of $500,000. Anyway, it was clear from the mood of the house that this vigil, in defence of FIDE’s finances, was in vain: the agreement was going to pass willy-nilly, which it duly did. iven that the official contract was so bad, there were suspicions, right from the beginning, that there might be a side agreement. In March 2013, I stayed with Raymond Keene during the London Candidates, which was organised by Paulson, and where I acted as a commentator. I asked Ray, over a delicious breakfast, whether he thought that Kirsan had a share in Agon. He answered phlegmatically ‘yes, of course’ and that Andrew had told him as much. Previously, over lunch at the Garrick Club, in London, Andrew Paulson had described the Agon-FIDE agreement to me as ‘asset-stripping’. A picture was beginning to emerge. uring the summer of 2013, Andrew Paulson decided to run for the Presidency of the English

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Chess Federation and was eager to solicit my support.

You may look askance as to why an American, who has never even played a game of chess in the country, should be allowed to run for the federation’s most important post (my previous opponent for the position of ECF Delegate was a representative of Papua New Guinea. I do sometimes think we English take our liberality too far). Anyway, be that as it may, Andrew and I spoke by Skype in August. He was in India at the time whereas I was working as a commentator in Tromsø, Norway. asked him about Agon. He candidly admitted that he (A.P.) had initially proposed to take all the rights (plus some financial risk) but then Kirsan had entered, wanting his share of the pie.

This had apparently caused Nigel Freeman, FIDE’s treasurer, a degree of consternation. Paulson explicitly stated that Kirsan (at the time our conversation was taking place, at least) was the majority shareholder. He also said that a Russian business associate of Kirsan’s was also involved in the deal – although no name was given. was shocked by this, to be honest, although by now nothing that the FIDE President does ought to surprise me anymore. Assuming what Paulson had told me was true, the deal was undoubtedly unethical and possibly illegal too. If a CEO gives away some of the principal assets of his company to a private offshore company, which he majority-owns, and fails to inform his shareholders of his own financial interest in the deal, he is guilty of fraud. People go to prison for that.

To use a sporting analogy: it was as if Sepp Blatter had awarded himself the rights to the FIFA World Cup. s I hadn’t recorded the conversation, I had no proof – only the knowledge of what I had heard.

It was clear to me, however, that Paulson was totally unfit to be ECF President. Unfortunately, his opponent in the election was the thoroughly uninspiring incumbent Roger Edwards, who, when he previously ran unopposed, had barely defeated Mr. ‘none of the above’. His only known policy was to oppose the very successful membership scheme. In the words of Steve Giddins, it was a choice between a man who promised nothing and was guaranteed to deliver, and another man (Paulson) who promised the Earth. Few people believed everything Paulson said, but if he was successful with just some of his grand schemes, it was

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‘To use a sporting analogy: it was as if Sepp Blatter had awarded himself the rights to the FIFA World Cup.’

a no-brainer: he was elected convincingly. short while later I became aware of the existence of a secret, signed memorandum between Paulson and Ilyumzhinov. At first I heard only snippets of the terms, which confirmed what I already knew from the ECF President. There were some delightful additional details – Paulson was apparently a salaried employee of Ilyum­ zhinov’s, earning 240,000 euros per annum. FIDE Deputy President Georgios Makropoulos was to be paid 150,000 euros yearly in his capacity as consultant. Geoffrey Borg’s Global Chess also made an appearance as a beneficiary, which came as no surprise at all to those familiar with the workings of FIDE. Unfortunately, it took me some months to actually get my hands on a scanned copy of the document. informed the Sunday Times, who said they were very interested in running the story. In the process of their research, I learned a few things. Agon has the right to issue 10,000 shares but only two had been – both to

­ ndrew Paulson. Outwardly A this would seem to provide conclusive proof that Paulson is the 100% owner of the company. However, under Jersey law, this does not preclude the possibility of a sidearrangement. Indeed, I was told by a senior figure at Deloitte that this is rather common. For such an arrangement to be legal, the only requirement is that the financial authority is informed. lyumzhinov, Paulson, Makropoulos and Freeman (the latter two being the FIDE representatives of the ‘Interface’ – the only people with access to Agon accounts, according to the official agreement) were contacted by the Sunday Times on Thursday 16th January. Ilyumzhinov and Freeman declined to answer any questions. Paulson, who was in Berlin, said he would speak to the reporter, Tim Rayment, at length, on the following Tuesday. The suspicion was he was stalling for time but, being out of the country, he had a legitimate excuse. The newspaper decided to hold the story for a further week. n the face of potentially devastating revelations, one could expect vigorous efforts would be made to deflect attention from the main story. Over the next 48 hours, the apparently non-existent ‘Bill Warth’ leaked a hacked draft contract between Garry Kasparov and Ignatius Leong, concerning campaign finance, which gave the impression of impropriety.

Andrew Paulson then vigorously circulated Mr. Warth’s disclosure to numerous journalists. A major story would soon appear in the New York Times. Crucially, unlike the secret Agon Memorandum, this document was unsigned. Kasparov himself published the final contract at a press conference in Andrew Paulson and Kirsan Ilyumzhinov at the 2012 London Grand Prix.

Wijk aan Zee a few days later and Offering their services or filling their own pockets? called upon his opponents to be open and do the same. This quelled

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‘Even if this draft were only valid for a day, it means that Paulson proposed, and Kirsan accepted, an unethical deal.’

the uproar, but not without Kasparov suffering some reputational damage. The pro-Kirsan forces had got their blow in first. aulson answered the Sunday Times’ initial questions through his lawyers.

He also spoke to the ECF Board of issuing an injunction. ­Nevertheless, he did meet the journalist, for three and a half hours, as promised. When the story eventually appeared, however, it was wishy-washy and lacking in all coherence. I expressed my disappointment to the author. He replied saying that he couldn’t bear to look at the printed version himself.

I asked whether I could ­infer that there had been late threats of ­litigation. He didn’t reply – the only time this particularly diligent ­correspondent did not do so. hus far the signatories of the memorandum had escaped relatively unscathed. It wasn’t long, though, before the actual document appeared on the Internet, in a thoughtful, excoriating piece by Peter Doggers of ChessVibes. This provoked a how-dare-you-cast-aspersions response from the fide.com website, entitled ‘The Truth about the FIDE-Agon Contract’. e were told, with considerable emphasis, that this was just one of several drafts submitted by Andrew Paulson. As you will recall, this fits in with what Paulson had told me, by Skype, in August 2013, about proposing to take all rights himself, before Kirsan came in wanting his share of the pie. It notably failed to explain why the President of FIDE signed the ‘draft’ awarding himself 51% of the rights to the most important FIDE events, because signing is not what people generally do, unless they intend to adhere to the terms. Even if this draft were only valid for a day, it means that Paulson proposed, and Kirsan accepted, an unethical deal. e were then told that Mr Makropoulos himself rejected the terms of this ‘draft’ – presumably because he objected to being paid 150,000 euros a year, according to a secret contract that most likely no one would ever know about, for doing next-to-nothing. Mr Makropoulos is very well known in the chess world and I will let others draw their own conclusions about the plausibility of this claim. It is certainly not possible to disprove it without seeing the Agon accounts. Alas, only

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Makropoulos and Freeman have this access from the FIDE side – and neither has been particularly forthcoming. ow much money has FIDE earned by ‘selling’ the commercial rights to Agon in 2012?

The initial $500,000 has never been paid, which begs the question as to why FIDE has not terminated the contract. At a Presidential Board meeting last year, the Board accepted Makropoulos’ proposal that Kirsan decide what to do about this money owed to FIDE. If Kirsan did indeed own the majority of Agon, and therefore he himself owed the half million dollars to FIDE, the decision to do nothing (i.e. what happened) would, of course, be readily explicable. In the meantime, numerous high profile events – the six FIDE Grand Prix tournaments in London, Tashkent, Zug, Thessaloniki, Beijing and Paris; the London Candidates; the Tromsø World Cup and the Anand-Carlsen World Championship match – have all taken place. Money has been paid for commercial rights by the organisers of some, if not all, of these events. That’s a lot of funds. Where has it gone? Has FIDE made a single penny from giving away its crown jewels? Or is everything disappearing into the black hole of Agon? The chess world deserves some proper answers. s the secret, signed Agon Memorandum an ephemeral, insignificant draft – just one of many – as FIDE asserts? If it were, it would be hard to understand why Paulson spent thousands of pounds in lawyers’ fees attempting to prevent its publication. The alternative hypothesis is that the agreement is, or was, at least until recently, valid and in operation. That would explain why such a poor official deal was negotiated originally and why that agreement has never been terminated by FIDE, despite Agon being in flagrant breach of the terms. This scenario also fits in precisely with what Paulson privately confided to not only Raymond Keene and myself, but also to Malcolm Pein, as recently as October 2013 – that Kirsan is the majority shareholder. Even if you are prepared to give the President of FIDE the benefit of the doubt, he still has plenty of explaining to do. His signature proves that either he does not understand, or does not care, what is a gross conflict of interest. n

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