Reports | August 05, 2010 23:00

FIDE treasurer Nigel Freeman answers follow-up questions to his interview

FIDE treasurer Nigel Freeman answers follow-up questions to his interviewAn interview with Nigel Freeman was published this week by different chess media, in which he talks about his achievements in four years as FIDE treasurer, and comments on allegations by the Karpov2010 campain team. Puzzled about a number of issues, we decided to send a few follow-up questions, which Mr Freeman was happy to answer as well.

Last Monday we received the following interview from Mr Nigel Freeman, President of the Bermuda Chess Association and Treasurer of FIDE. It was also published on the Ilyumzhinov campaign website and by several chess media.

Four years ago you became FIDE Treasurer, was the work what you expected?
The time I have spent has been much more than expected, I probably have to spend about two hours of my free time most days on FIDE’s business. However, I was lucky in that my predecessor, David Jarrett, who is now FIDE’s Executive Director, left me with the accounts in good order.

Is there anything particular that you think you have achieved in the four years?
I believe that the main achievements are that FIDE now pays its own way and can pay the much higher budgeted amounts to Commissions, for instance, CACDEC budgeted monies are up from EUR 84,000 in 2006 to EUR 200,000 in 2010; that the debts are down with Federations now paying their arrears more speedily than before; and that we try and ensure that no one in the FIDE Commissions has to pay out of their own pockets for work done on FIDE’s behalf.

You are now standing for reelection on Kirsan Ilyumzhinov’s ticket, do you have any comments on the elections so far?
The Karpov team strategy has been completely negative, which I find very disappointing. I do not quite understand their strategy, which seems to have been to put everything on winning in the Russian Federation and then when that did not succeed, going to the law courts. They have come up with no concrete plans, just vague assertions, many of which are not backed up with any facts and are highly damaging to the reputation and the finances of the Organisation that they are trying to take over. They obviously do not understand FIDE and how it works and their plans for its future are in no way well thought or costed out. Particularly their plan to have FIDE’s Head Office in Moscow and open offices in Paris and the New York, the tax implications of which have obviously not been taken into account.

Karpov has claimed FIDE is corrupt, what do you have to say about this?
He knows full well that this accusation is unsustainable and when questioned in Sofia was unable to answer, but in their typical mean spirited way, they have not formally withdrawn the claim. Our accounts are probably more open than any other sporting body, they are examined by our own internal Verification Commission and audited by Ernst & Young in Greece and Switzerland.

The Ernst and Young audit didn't include fraud detection of source verification. Why not?
FIDE is not one of Ernst & Young's larger clients and thus is not a priority for them. You will have to ask the auditors what procedures they took.

Karpov claims that EUR 400,000 is missing in 2008, what do you have to say about that?
Because neither he, nor his advisors, appear to understand accounts, it took me quite some time to understand what he is getting at. As it is the only figure near this is the EUR 363,000 that income is higher than expenditure, I assume that is what he is referring to. Of course the amount is not missing, it is in FIDE’s bank accounts and shows prudent management.

He also says that Kirsan Ilyumzhinov did not put much money into chess as he cannot find it in the accounts, do you have any comment on that?
NF: He knows full well that most of the money went directly to the players as quite a large percentage was sent to several of his bank accounts. All FIDE would have in its accounts are the percentages paid to FIDE from various prizes.

Have you any comments on the fact that Karpov claims that too much money is being spent on lawyers fees?
He has quite a nerve to say this as most of these fees were spent on law cases involving his friends or himself and he now seems to be ensuring that this is the case. Until recent events, the most expensive recent case was the Touze and Belfort case. Much to the surprise of most of those attending, especially the Germans and Americans who led the complaints, Karpov stated that he was there the whole time and the organization was as good as the similar event that he attended, though how he could compare the present World Youth events to those of 1969 shows how out of touch he is. So, USCF and DSB, if you vote Karpov, you get Touze! Another example of how out of touch he is that he keeps repeating that our Athens Office is up some mountain in Greece, outside Athens. The FIDE Office is so centrally situated in Athens that it would have been in downtown Athens in Pericles’s time!

The New York Times quoted Kasparov as saying : “The treasurer [of FIDE] is from Bermuda — and you can tell me what normally financial consultants from Bermuda do.” Do you have any comments?
Well, I do not normally describe myself as a Financial Consultant, but in Bermuda, they are well known for giving prudent advice and looking after their clients’ interests. In 2002 Kasparov approached me to assist in a project of his and in the summer of 2003, he felt that the project was likely to be successful and so asked me to come to Moscow at his expense to help finalise it. Unfortunately, the project was not finalised and not only did Kasparov not thank me for assistance, nor respond to any correspondence, he also failed to pay any of the expenses. I certainly know what “normally ex-World Chess Champions of the 80s and 90s from Russia do.”

Do you have any final comments to make on the Elections?
Judging from the number of Federations openly supporting each candidate, it looks likely that Kirsan Iyumzhinov’s ticket will win and Karpov’s campaign does not seem to be progressing far in persuading Federations to support him. Their task was made harder by their comments that small nations should not have the same number of votes as large nations. It is like saying that because I am wealthier or bigger than you, I should have more votes in a democratic election than you. FIDE is made up of Federations, with each having one vote. They do not seem to understand FIDE, nor want to understand FIDE. Their bringing the FIDE Secretariat into matters shows that they fail to understand how FIDE works or David Jarrett. When Karpov’s candidacy was announced, I received an email from Ron Henley addressed to me hoping that the Jamaican (!) Chess Federation would support Karpov’s candidacy. QED!

This interview left us puzzled about several issues, and so we decided to send Mr Freeman a number of follow-up questions, which he answered as well:

You're saying "Our accounts are probably more open than any other sporting body, they are examined by our own internal Verification Commission and audited by Ernst & Young in Greece and Switzerland." How much money has Ilyumzhinov paid into FIDE accounts since you became treasurer?
FIDE would have received its percentage for the World Championship Topalov-Kramnik (€ 169,000) and for the Elista Grand Prix (€42,500). His costs for the two events would have been well over €2,000,000, including prize funds, which would have been paid into our accounts and then disbursed by ourselves. The same would have happened with his proportion of the Candidates prize funds, which FIDE also paid part.

How much of FIDE's income comes from Federation fees and how much from outside sponsors (including Ilyumzhinov)?
Look on our website and you will see from the latest published accounts (2008) exactly from what sources FIDE money comes. On the FIDE website, go into Minutes and you will see the 2008 accounts with comments.

Why are you referring to the 2008 accounts? Isn't 2009 available? Shouldn't that have been ready May 31st?
The 2009 accounts have only just been audited and will be published soon.

You're saying "He knows full well that most of the money went directly to the players as quite a large percentage was sent to several of his bank accounts." Did you mean to say that often money went directly from Kirsan's accounts to the players' accounts? How can this be justified? Do you have accounts that prove these payments? How much money are we talking about?
Normally what happens is that FIDE acts as an agent for Prize Funds, they are paid in advance to FIDE and then we pay them out to the players. I understand that was not always the case in the past and as you can see from 5 below, he has paid money direct to players. For the Groningen/Lausanne, Las Vegas, Delhi and Moscow events, he was the Organiser and it is quite justified for the Organiser to pay directly to the players. Each of these events if my memory serves me has prize funds of $5,000,000 (plus high organising costs) - you can look up the amounts of the prize funds - and no player is complaining that they have not been paid in full.

When Ilyumzhinov pays the debts of a federation, what do you write in the accounts?
For all amounts paid for Federations we put in accounts as cash received as they are paid into our bank accounts, who they are paid by, we do not enquire, as many Federations fees are paid by individuals. I have no knowledge of Ilyumzninov paying any debts.

Ilyumzhinov says on onefide.com: "For the last 15 years I have sponsored him. Several millions of US dollars. I, personally, and the money of my friends-businessmen were aimed at the improving of living conditions of the 12th World champion, including the renovation of his apartment, buying chess and other materials which would raise his professional activities as a chess player." He also mentions CNC having spent $1,000,000 on preparing a project. Whose money was this? What exactly has been done with it?
You seem to be confusing two issues. What Kirsan has paid to Karpov personally is none of our business, we do know that he received his prize money for the Kamsky Match and the Lausanne Match, you can look up the amounts as I do not have them on me because I am travellng at present. CNC is a company formed together with Chess Lane in which FIDE owns 12.5%, but FIDE has paid in no capital. It's aim is to develop projects and find sponsorship for chess. Chess Lane has spent the spent the $1,000,000.

Concerning CACDEC: can you respond to the claim by the Karpov website that many federations receiving that money pay in more than they get out? About how much the money depends on voting for Ilyumzhinov?
Let me explain to you and to Karpov what happens. Federations have to pay their annual dues to FIDE (minimum €380) and these fees can be rebated if the Federations take part in sufficient FIDE events. The CACDEC monies are granted on a case by case basis. They are divided 40% for Africa, 25% for Americas and 25% for Asia, with 10% being at the Chairman's discretion. What would normally happen is that the Continental President would request a sum, this would have to be approved by the Commission Chairman and then by myself. We now insist that these funds are paid for useful purposes with the Federation itself providing some input and we need invoices and a report. It is up to Federations to request and make use of these funds, they are not to be used as a gift for failing Federations. Most Federations seem to wish to remain as CACDEC nations, our aim is to remove them from CACDEC so that they can stand on their own feet. The total dues received from CACDEC nations are probably about €40,000 and the CACDEC budget is €200,000, so obviously those who are proactive are receiving much more than they are paying in. The disbursement has nothing to do with voting.

Can you react on the Karpov2010 website's claim that Ilyumzhinov hasn't kept his promise that FIDE would keep only 10% of the world championship prize fund instead of 20%?
Actually we have gone better as it is 0% of prize is taken from players, FIDE's 20% is on top of what the players get.

But the bottom line seems to be that the players get less of the sponsors' money?
The players played in Sofia for a €2,000,000 prize fund which was what the winning bid was for.

Is it true, as Danailov said in a recent interview, that Bulgaria paid 30% to FIDE for the Sofia match?
If you take into account stipends, travel, inspection and WCCC fees and internet rights, the sum is probably correct and all as per the contract that he signed.

What do you think if the success of Global Chess, CNC or Chess Lane. How do those companies relate to FIDE? What have they actually done? How much did it cost?
Global Chess was an agreement between Kirsan, Bessel Kok and Geoffrey Borg and nothing to do with FIDE. Chess Lane is a seperate entity and CNC is as above. Our costs have been minimal so far (phone calls, hotel bills etc.). Global Chess really produced nothing and our Agreement with them no longer exists, but we are hopeful that in CNC, we have a vehicle that is serious in bringing about sponsorship and new projects to chess.

Peter Doggers's picture
Author: Peter Doggers

Founder and editor-in-chief of ChessVibes.com, Peter is responsible for most of the chess news and tournament reports. Often visiting top events, he also provides photos and videos for the site. He's a 1.e4 player himself, likes Thai food and the Stones.

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Comments

rob's picture

I don't understand the answer to the question:

The Ernst and Young audit didn’t include fraud detection of source verification. Why not?
FIDE is not one of Ernst & Young’s larger clients and thus is not a priority for them. You will have to ask the auditors what procedures they took.

Please ask an auditor how he feels about this answer. I think it is doesn't make sense....

Arne Moll's picture

@rob: in fact the E & Y audit isn't an accountants declaration. In this respect, it means little more than that FIDE did their addition and subtraction right. It's strange FIDE decided to include it at all, given its meaningless status. Freeman's answer basically suggests that the reason E & Y didn't do the normal checks - or couldn't perform them - is their problem, not his. Personally, I think it's the other way around. At the least, it suggests FIDE is not as transparant as they'd like us to believe.

Ben's picture

"Global Chess was an agreement between Kirsan, Bessel Kok and Geoffrey Borg and nothing to do with FIDE. Chess Lane is a separate entity and CNC is as above. Our costs have been minimal so far (phone calls, hotel bills etc.). Global Chess really produced nothing and our Agreement with them no longer exists"

Why does he say "our Agreement with them" when he just said in the previous sentence that FIDE has nothing to do with Global Chess? Also looks like Kirsan has some serious conflict-of-interest issues going on there.

Nick's picture

I don't understand this discussion, are you suggesting that FIDE is committing fraud or being defrauded, and against whom or by whom? It's difficult to take the accusations seriously when the accusers seem to have no idea of their form.
It is indisputable that Kirsan has personally injected large sums of money into chess, directly or through FIDE. Where the latter, these transactions are faithfully reported in the accounts, there is no reason for them not to be. There are questions about where his money originated, and how its previous owners feel about this use of it, but I don't think those need be of concern to FIDE's auditors

Nick's picture

@Ben Yes, I spotted that, but I think it's just careless wording. Global Chess was a joint venture ( called here an agreement) betweek Kirsan, Kok and Borg. It had an arms-length business relationship with FIDE ( called here an Agreement ). I agree this appearance of conflict would have been better avoided, but the only result seems to have been that Kirsan funded a completely useless vehicle for far too long.

Bartleby's picture

A truly creative accountant. Can I have 0%, too?

Johan's picture

This sounds completely rotten. If the chess world really re-elect Ilyumzhinov and his bunch of cronies, it deserves what it's getting.

EJ Wagenmakers's picture

@Johan: why does this sound completely rotten, exactly? To me, it actually sounds completely fair and rational. It would be nice to hear what the Karpov team has to say about this interview!

Jim's picture

@EJ: Fairness and rationality have been the touchstones of the Kirsan regime, right?

ChessGirl's picture

"not only did Kasparov not thank me for assistance, nor respond to any correspondence, he also failed to pay any of the expenses."

Reading this, as well as the assertions that Karpov has been receiving large sums of money for things such as redecorating his appartment, makes me quite sick. If this is not true, they are very grave accusations. If it is, this gives an image of the double K´s as plain bloodsuckers who will always be where the money´s at.

Reality check's picture

karpov, kasparov, and short should step out of politics and business. i suggest they start playing in a few strong open chess tournaments; claw their way back into the elite, possibly regain their former over-the-board status as great chess players. aahhh, the glory days!
their business and political endeavours have turned them into losers, bad jokes, laughing stocks in chess circles and the world at large.

Sofie's picture

Being an auditor myself I can tell you that this smells like a finance man trying his utmost to get something representable in the accounts that is wrong from the start. We have seen similar practices on a large scale with e.g. Enron, and just because FIDE is so small (from a material point of view) this situation can continue. But it's clear that Mr Freeman is not acting in line with the code of conduct of any professional organization (Treasures, Insitute of Internal Auditors, Qualified Accountants).

NoClue's picture

Quote: Can you react on the Karpov2010 website’s claim that Ilyumzhinov hasn’t kept his promise that FIDE would keep only 10% of the world championship prize fund instead of 20%?
Answer: Actually we have gone better as it is 0% of prize is taken from players, FIDE’s 20% is on top of what the players get.

Typical bureuacrat politicospeak! Similar to "pay cut" means you get less of a raise than you imagined, in government quarters. Here is an example, the ICGA can't ever find a sponsor to host their Computer Champ in the US because they demand maybe $50K in overhead, that is "on top" in the FIDEspeak, and only Eurocrat funding agencies and their kin will put up with this larceny. These up-front fees make a HUGE difference as to what noncorrupt sponsors will do, and to how they view the organization on the whole.

The same exaggeration is with the word "audit" for bookkeeping arithmetic. It gives you a large shadow to hide in, but is useless at the end.

liverpool's picture

what kind of choice is this?? one Russian national vs another Russian national. They're both sleazy.

Antonius's picture

At least the 2 K would understand chess and make a decent Candidates Cicle.
For the money part... well do not expect gross differences in management.

Antonio 's picture

How are you Nigel? Remember me from Toronto and Hong Kong

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