1 Decision Number: 10/2018 30 August 2018 PANEL OF THE IAAF

Decision Number: 10/2018 30 August 2018

PANEL OF THE IAAF ETHICS BOARD

Ms Catherine M.E. O’Regan (Chairperson)

Mr Kevan Gosper

Ms Annabel Pennefather

In the matter of DAVID SIYA OKEYO and JOSEPH I KINYUA and the

IAAF Code of Ethics

DECISION

Record

IAAF Ethics Board Legal Secretaries: Tom Mountford and Jana Sadler-Forster

Appearances

Prosecutor: Ms Kate Gallafent QC

Counsel for Mr Okeyo: Mr James Ochieng’ Oduol and Mr Justus Obuya

Counsel for Mr Kinyua: Mr Ashford Muriuku Mugwuku and Mr Mwenda

Kinyua

Introduction

1. This decision concerns the alleged diversion of Athletics Kenya funds

by two of its senior officials for their direct or indirect personal benefit in breach

of the IAAF Code of Ethics. The funds in question were received by Athletics

Kenya from one of its major sponsors, Nike. The Defendants are Mr David Siya

Okeyo, a former Secretary-General and Vice President of Athletics Kenya as

well as a member of the IAAF Council, and Mr Joseph I Kinyua, a former

Treasurer of Athletics Kenya. Mr Okeyo was also charged before this Panel

with the extortion of money from athletes. The Panel will issue a separate

decision in relation to that charge. The Panel notes that it has had the benefit

of written submissions from the Prosecutor and on behalf of both Defendants

in preparing this decision.

Procedure

2. On 16 March 2015, a member of the IAAF Medical and Anti-Doping

Department wrote to the Legal Secretary of the IAAF Ethics Commission, as it

was then called, stating that he had information about accusations levelled at

two members of a national federation of the IAAF that involve “the subversion

of sponsorship monies”. The two officials concerned were the former President

of Athletics Kenya, Mr Isaiah Kiplagat, who is now deceased and Mr David

Okeyo. The Panel notes that the name of the IAAF Ethics Commission has since

been changed to the IAAF Ethics Board and to avoid confusion it is referred to

as the IAAF Ethics Board for the remainder of this decision.

3. On 29 November 2015, the Chairperson of the IAAF Ethics Board, the

Honourable Michael Beloff QC (“the Chairperson”) informed Mr Kiplagat, Mr

Okeyo and Mr Kinyua that he had concluded that there was a prima facie case

against them, i.e. a matter warranting investigation, concerning a breach of the

IAAF Code of Ethics, that he had appointed Mr Sharad Rao (a former Director

of Public Prosecutions in Kenya) to investigate the matter further and that they

were provisionally suspended from any office they held in the IAAF or

Athletics Kenya. The initial period of their provisional suspension was 180 days

as provided for in Ethics Board Procedural Rule 13 (29). The provisional

suspension has been renewed on five occasions since and the current period of

provisional suspension expires at the end of August 2018. The chairperson of

this Panel ordered the last period of suspension on the basis that the charges

against the Defendants were serious charges, and that were the Defendants to

have been reinstated in their senior positions in Athletics Kenya before the

charges were determined, the integrity of the sport of athletics could have been

seriously undermined. She ordered a period of less than 180 days on the basis

that the Panel would determine the substantive charges by then and that it was

not necessary to extend the provisional suspension beyond the date when the

matter would be determined. The prima facie case against Mr Kiplagat, Mr

Okeyo and Mr Kinyua concerned, amongst other things, the allegations that

are at issue in this matter, namely that they had been involved in the diversion

of sums paid to Athletics Kenya by Nike for their direct or indirect personal

benefit. Mr Kiplagat died in August 2016, and all disciplinary proceedings

against him were accordingly terminated. The Panel has not therefore been

called upon to adjudicate or reach conclusions in any case against Mr Kiplagat.

4. During the course of 2016, Mr Sharad Rao investigated the allegations in

terms of the Rules of the IAAF Ethics Board. Following the completion of his

investigation, he presented the Chairperson of the Ethics Board with his report.

In it, he stated that, for the purposes of the question whether disciplinary

charges should be brought, the allegations that Mr Okeyo and Mr Kinyua had

diverted funds paid to Athletics Kenya by Nike for their own benefit had been

established to his satisfaction and that both should be charged with breaches of

the IAAF Ethics Code (as in force from time to time).

5. Following receipt of the report, the Chairperson reviewed the investigation

files and the report in terms of Procedural Rule 13(10).

The Chairperson then

directed that adjudicatory proceedings be commenced against Mr Okeyo and

Mr Kinyua.

Procedural Rule 13(10) provides “The Chairperson of the Ethics Board shall

appoint a member of the Ethics Board to review an Investigator’s final report and

the investigation files.” The question whether it was appropriate for the

Chairperson to review the files in terms of Rule 13(10) was raised on behalf of the

Defendants and the matter is dealt with at para 25 et seq. below.

6. Accordingly, on 28 February 2017, Mr Okeyo and Mr Kinyua were informed

that they were being charged in terms of Rule 13(4) of the IAAF Ethics Board’s

Procedural Rules

with breaches of the IAAF Ethics Code. A copy of the

Investigator’s report was provided to both Mr Okeyo and Mr Kinyua at the

time they were notified of the charges. The notification of charges also

contained a list of acts and/or omissions relevant to the charges.

7. The notification specified that the charge against the Defendants was that

they had “diverted sums paid to Athletics Kenya by Nike to your direct or

indirect personal benefit”. The specific provisions of the various iterations of

Ethics Code that the Defendants were alleged to have breached were the

following:

November 2003 Code

(i) Article C (Fair Play) (7) “All persons subject to this Code shall use due

care and diligence in fulfilling their roles for, or on behalf of the IAAF.

Such persons must not act in a manner likely to tarnish the reputation of

the IAAF, or Athletics generally, nor act in a manner likely to bring the

sport into disrepute.

(ii) Article H (Implementation) (17) “It is the duty of all persons under this

Code to see to it that IAAF Rules and the present Code are applied.”

May 2012 Code

(i) Article C (Fair Play) (6) “Betting on Athletics and other corrupt

practices relating to the sport of Athletics by IAAF officials or

Participants, including improperly influencing the outcomes and results

Procedural Rule 13(4) provides, “If the evidence submitted with or subsequent to

any complaint is found by the Chairperson of the Ethics Board to establish a prima

facie case, the Chairperson shall cause an investigation to be commenced and shall

appoint an investigator in each case, unless in the view of the Chairperson in

consultation with the Board there is some good reason not to cause an investigation

to be commenced or an investigator to be appointed immediately or at all.”

of an event or competition are prohibited. In particular, betting and other

corrupt practices by Participants under Rule 9 of the IAAF Competition

Rules are prohibited.”

(ii) Article H (Implementation) (18) “It is the duty of all persons under this

Code to see to it that IAAF Rules and this Code of Ethics are applied.”

January 2014, January 2015 and Current Code

(i) Article C1 (Integrity) (11) “Persons subject to the Code shall not act in

a manner likely to affect adversely the reputation of the IAAF, or the sport

of Athletics generally, nor shall they act in a manner likely to bring the

sport into disrepute.”

(ii) Article C1 (Integrity) (12) “Persons subject to the Code shall act with

the utmost integrity, honesty and responsibility in fulfilling their

respective roles in the sport of Athletics.”

(iii) Article C1 (Integrity) (15) “Persons subject to the Code shall not offer,

promise, give, solicit or accept any personal or undue pecuniary or other

benefit (or the legitimate expectation of a benefit irrespective of whether

such benefit is in in fact given or received) in connection with their

activities or duties in Athletics.

8. Both Mr Okeyo and Mr Kinyua denied the charges and lodged statements

of defence.

9. Although there were several attempts to allocate dates for a hearing of the

matter during 2017, these came to naught. The IAAF Ethics Board originally

proposed that the hearing would take place in Cape Town, but at the request

of the parties it was decided that the hearing would take place in Nairobi.

10. On 14 December 2017, the Chairperson wrote separately to Mr Okeyo and

Mr Kinyua informing them that the matter had been enrolled for hearing in

Nairobi for the week of 29 January 2018. The Chairperson also notified the

Defendants that, on the recommendation of the Prosecutor,

the alleged acts

and/or omissions relied upon in relation to the charges against the Defendants

had been amended and he provided a copy of the amended acts and/or

omissions. Finally, the Chairperson informed the Defendants that they would

shortly be furnished with an Expert Report produced by a forensic accountant,

Mr Barry Dean, who had been instructed by the Ethics Board, as well as a

witness statement by Mr Kyle Barber of the Athletics Integrity Unit (AIU),

formerly of the IAAF’s Medical and Anti-Doping Department prior to the

creation of the independent AIU. Mr Dean’s Expert Report and Mr Barber’s

statement were sent to the Defendants by email on the same date.

11. On 9 January 2018, both Mr Okeyo and Mr Kinyua lodged responses to

Mr Dean’s Expert Report. Mr Okeyo responded to the substance of the report

but also reserved his right to object to the admission of the report by the Panel

while Mr Kinyua submitted that the Expert Report should be “expunged from

the record”. On 18 January 2018, Mr Dean prepared a brief addendum to his

report describing the responses received from Nike to his original report. The

addendum to his report was served on the Defendants on 23 January 2018.

Hearing Monday 29 January 2018 – Friday 2 February 2018

12. On Monday 29 January 2018, the hearing in the matter commenced in

Nairobi. Both Mr Okeyo and Mr Kinyua were present and they were both

legally represented. Mr Okeyo was represented by Mr James Ochieng’ Oduol

and Mr Justus Obuya and Mr Kinyua was represented by Mr Ashford Muriuku

Mugwuku and Mr Mwenda Kinyua.

Preliminary Objections

13. At the commencement of the hearing, the Defendants raised a series of

preliminary objections. All the preliminary objections that related to procedure

The Ethics Board’s Procedural Rules allow for the appointment of a Prosecutor

to prosecute and present the case against defendants. Alternatively, the Ethics

Board may conduct a hearing in an inquisitorial manner.

were dismissed before the hearing commenced, and most of the objections to

the admission of evidence were dismissed. A copy of that ruling is annexed to

this decision. When the ruling dismissing the procedural objections was made,

it was stated that reasons for the dismissal would be provided with this

decision and those reasons now follow. Some of the preliminary objections

related to both the charges determined in this decision and to the charges

relating to the extortion of money from athletes dealt with in a separate

decision, and some related to only one of the charges. The Panel notes that the

preliminary objections were raised again, in particular on behalf of Mr Kinyua,

in the written submissions that were filed after the hearing. In this decision, we

provide the reasons for the dismissal of objections that related to the charges

dealt with in this decision (that is the reasons for the dismissal of Preliminary

Objections 1 – 9 as set out in the annexed ruling).

14. The preliminary objections can be divided into three categories: the first is

the largest group and these objections all relate to the procedures by which

these disciplinary proceedings were brought, the second category relates to an

objection to the charge; and the third to objections to the admission of evidence

tendered by the Prosecutor. Each category of objections will be discussed

separately.

Objections to the procedure

15. The first group of objections related to the procedures whereby these

proceedings have been brought. They included an objection that the original

complaint was not brought in terms of the Procedural Rules that govern the

Ethics Board, objections to the manner in which the Investigation was

conducted by Mr Sharad Rao, objections to the procedure that followed the

finalisation of the Investigation Report by Mr Rao, and, in particular, the

appointment of a forensic auditor, Mr Barry Dean, as an expert witness, to

investigate further the financial records of Athletics Kenya insofar as they relate

to the charges and to prepare a report concerning his investigation, objections

to the conduct of the Chairperson of the IAAF Ethics Board in reviewing the

Investigator’s Report in terms of Procedural Rule 13(10) and to his decision to

amend the statement of facts upon which the charges were based and finally

an argument that the time that it has taken to bring these proceedings to finality

has rendered the process unfair.

16. Before considering the individual objections, the Panel commences by

observing that the relevant rules of procedure are the Rules of Procedure

adopted in 2015 and annexed to the IAAF Code of Ethics 2015, which is now in

force. All references to Procedural Rules in the following paragraphs are

therefore references to the Procedural Rules of the IAAF Ethics Board that are

annexed, as Appendix 7, to the IAAF Ethics Code 2015 that came into force on

16 November 2015. The Panel notes that the rules governing the procedure of

the Ethics Board are the current rules, as they have been revised from time to

time. The fact that Mr Kinyua left the service of Athletics Kenya in 2013 does

not affect this principle.

17. The first objection relates to the manner in which the complaint was

brought to the attention of the Ethics Board. It was argued on behalf of Mr

Kinyua that Procedural Rule 13(1) had not been observed in regard to the

original complaint to the Ethics Board. The objection was based on two

grounds: the first was that the identity of the person who had made the original

complaint was not disclosed, and the second was that, assuming the identity of

the person to be Mr Mathews Kiptum, that as Mr Kiptum was no longer in the

employ of Athletics Kenya, at the time he made the complaint, he was not

subject to the Code, which is required by Rule 13(1).

18. Rule 13(1) provides that “any person subject to the Code may file a

complaint regarding potential violations of the Code with a Legal Secretary of

the Ethics Commission”. Attached to the report of Mr Sharad Rao is a letter

dated 17 March 2015, in which an IAAF official, Mr Kyle Barber, wrote to the

IAAF Ethics Board to notify it of information he had received concerning the

conduct of Mr Kiplagat and Mr Okeyo. In particular, he told the Board that he

had heard that the Kenyan authorities and Nike were investigating the conduct

of Mr Kiplagat and Mr Okeyo in relation to payments from Nike. It may well

be that Mr Kiptum was the person who provided this information to Mr Barber,

although as Mr Barber did not testify before the Panel, the Panel does not know.

19. In the view of the Panel, the letter from Mr Barber itself complies with

Procedural Rule 13(1). As an official of the IAAF, Mr Barber is a person who is

subject to the Code and he was the person who wrote to the Board to inform it

of the information that he had received. In the view of the Board, that Mr

Barber may have received the information from a person who is not subject to

the Code does not prevent his being able to lodge a valid complaint. There is

no reason for requiring the original information to have been obtained from a

person subject to the Code, as long as the complaint itself is received from a

person who is subject to the Code.

20. Secondly, a range of objections were made on behalf of the Defendants

concerning the manner in which Mr Sharad Rao had conducted his

investigation. It was argued that the Investigation was tainted, and

accordingly that the proceedings before this Panel would ineluctably be

tainted. It was argued that one of the people who had assisted Mr Rao, Mr

Julius Ndegwa, was a person who was not independent of Athletics Kenya and

that his involvement in the investigation process had tainted the investigation.

The Panel notes that investigators appointed in terms of the Procedural Rules

to investigate complaints of breaches of the Ethics Code are under a duty to act

in a procedurally fair and independent manner. The Panel also notes that a

panel of the Ethics Board, in determining disciplinary charges brought against

a defendant, is not bound by any factual findings in an Investigator’s Report.

The Panel must be satisfied on evidence that it has heard and considered that

a breach of the Ethics Code has been established and a panel of the Ethics Board

has the duty to act fairly. In this case, the Panel observes that the Prosecutor,

in formulating her case against the Defendants, did not rely on any statement

made by Mr Ndegwa and did not propose to call him as a witness. In these

circumstances, even if it could properly be said that the Investigator had erred

in employing the assistance of Mr Ndegwa with the consequence that the

report prepared by the Investigator was tainted, something this Panel does not

decide, the Panel notes that it was not bound to accept the facts contained in

that report, but is bound instead to determine whether the disciplinary charges

have been established on the evidence before it. The objections to the conduct

of the Investigation by Mr Sharad Rao were therefore dismissed as having not

inevitably tainted the proceedings before this panel.

21. The next preliminary objection relating to the procedures for the bringing

of these disciplinary procedures related to the appointment of Mr Barry Dean,

a forensic auditor, as an expert witness. As noted above, Mr Dean was

appointed as an expert witness after the Investigator’s Report had been

furnished to the Chairperson of the Ethics Board, and after the Prosecutor had

been appointed. It was argued on behalf of both Defendants that the

appointment of Mr Dean was not consistent with the Procedural Rules of the

Ethics Board. Their argument was that the procedural rules contemplate that

only the Investigator shall conduct an investigation and that it is not open to

the Ethics Board, or a Prosecutor appointed by the Ethics Board, to appoint any

other person to act as an expert witness or investigator.

22. In assessing this argument, it will be helpful to set out the content of the

relevant procedural rules. Procedural Rule 13(4) provides that if the

Chairperson of the Ethics Board considers a complaint that has been submitted

to the Board to “establish a prima facie case” the Chairperson shall “cause an

investigation to be commenced and shall appoint an investigator”. Procedural

Rule 13(7) provides that the Ethics Board must notify any person in respect of

whom an investigation has been commenced. Procedural Rule 13(9) provides

that once the investigation has been concluded, the investigator must provide

a final report to the Chairperson together with the investigation files in terms

of Procedural Rule 13(9) and make a recommendation as to whether the matter

should proceed to disciplinary charges being laid. Procedural Rule 13(8)

provides that where new evidence comes to light or it is otherwise appropriate,

the Chairperson of the Ethics Board may ask the Investigator to reopen the

investigation. Procedural Rule 13(10) provides that the Chairperson shall

appoint a member of the Ethics Board to review an Investigator’s final report

and investigation files. If the panel member considers there is insufficient

evidence to proceed, she or he will notify the Chairperson who may then close

the case or reconsider the matter and reach a fresh decision. If necessary, the

reviewing member may in consultation with the Chairperson return the final

report of the investigator for amendment or completion. If the member

considers there is sufficient evidence to proceed, she or he will send her or his

recommendation to the Chairperson who shall direct that adjudicatory

proceedings be commenced. Once proceedings have commenced, Procedural

Rule 13(16) provides that a Panel may appoint a Prosecutor to present the case

against the parties.

23. The argument raised by the Defendants was that the Procedural Rules

contemplate that only the investigator may investigate the disciplinary charges

and that once the investigator’s report has been completed, no new evidence

may be sought or introduced. In the view of the Panel, this reading of the

Procedural Rules is incorrect. In the view of the Panel, the Investigator’s report

is crucial in assisting the Chairperson (and the reviewing member) to decide

whether sufficient evidence has been procured to warrant initiating

disciplinary charges. It does not follow, in the view of the Panel, that once that

decision has been taken, that no further evidence relevant to the charges may

be gathered or presented. Defendants must of course be given a full

opportunity to hear and challenge any evidence tendered against them in the

disciplinary hearings, but there is nothing in the Rules, nor any reason of

fairness, which would suggest that the gathering of evidence must stop once

the decision to institute disciplinary proceedings has been taken.

24. Moreover, the Rules explicitly contemplate the appointment of a Prosecutor

to present the case. In the view of the Panel, the rules do not contemplate that

the Prosecutor will be prevented from identifying additional witnesses or

appointing expert witnesses to testify in relation to the charges. Again, the

Prosecutor’s right to identify witnesses, including the appointment of expert

witnesses, is subject to the fundamental principle of fairness, which requires

defendants to be given an opportunity to hear and challenge any evidence

brought by the Prosecutor. The preliminary objections made on behalf of the

defendants, however, were that the rules prohibited the appointment of an

expert witness by the Prosecutor, and also forbade any expert witness from

investigating the charges further. In the view of the Panel this argument could

not succeed.

25. A further preliminary objection raised by the Defendants concerned the

fact that the Chairperson of the Ethics Board appointed himself to review the

Investigator’s report and files, which, it was argued, is not permitted by

Procedural Rule 13(10). The provisions of Procedural Rules 13(10) – 13(13) are

as follows:

“10. The Chairperson of the Ethics [Board] shall appoint a member of the

Ethics [Board] to review an Investigator’s final report and the

investigation files.

11. If the member of the Ethics [Board] deems that there is insufficient

evidence to proceed, he may make a recommendation to the Chairperson

of the Ethics [Board], who may close the case or reconsider the matter

and reach a fresh decision. If necessary, the member of the Ethics [Board]

may in consultation with the Chairperson of the Ethics Board return the

final report to the Investigator for amendment or completion. If the

Chairperson of the [Board] considers it appropriate, a notice of the

closure of the investigation and the case may be published by the [Board].

12. If the member of the Ethics [Board] deems that there is sufficient

evidence to proceed, he shall send his recommendation, together with the

Investigator’s final report and the investigation files, to the Chairperson

of the Ethics [Board], who shall direct that adjudicatory proceedings be

commenced.

13. The member of the Ethics [Board] who reviewed the Investigator’s

final report and the investigation files shall not take part in any further

aspect of the proceedings.”

26. The Panel notes that the Chairperson of the Ethics Board is a member of the

Board and that Procedural Rule 13(10) could therefore be read to permit the

Chairperson to appoint himself as the Reviewer of the Investigator’s final

report and the investigation files. However, the Panel also notes that this

interpretation fits uneasily with the provision of Procedural Rule 13(11), which

contemplates that even if the reviewing member deems there to be insufficient

evidence, the Chairperson may nevertheless “reconsider the matter and make

a fresh decision”. This provision suggests that the Chairperson may not be the

reviewing member, because it contemplates the Chairperson exercising a

power to reconsider the matter even where the reviewing member

recommends that no disciplinary proceedings are warranted. In the view of

the Panel, the provisions of Procedural 13(11) imply that the Chairperson of the

Ethics Board may not appoint himself as the reviewing member in terms of

Rule 13(10) because then the power to reconsider the matter that is reserved to

the Chairperson in Procedural Rule 13(11) may not be meaningfully exercised.

27. The Panel therefore concludes that the Chairperson erred in this matter in

appointing himself to be the reviewing member of the Investigator’s final

report. However, this error does not necessarily constitute a bar to these

proceedings, for the next question that arises is whether the Defendants were

materially prejudiced by the Chairperson’s mistake. In the view of the Panel

they were not. The Chairperson is a member of the Ethics Board and is

therefore competent to undertake a review of the Investigation report. The one

clear procedural consequence of the Chairperson undertaking the review of the

report is that the power in terms of Rule 13(11) may not sensibly be exercised.

In this case, the Chairperson did not think there was insufficient evidence to

institute proceedings, and so the power in Rule 13(11) had no application and

the defendants were therefore not prejudiced by the Chairperson’s decision to

review the report himself. We add, for the sake of completeness, that even if

the Chairperson had found there was insufficient evidence, the effect of the

error in appointing himself the reviewing member would have been to prevent

him reconsidering the matter and deciding afresh. The exercise of that power

could never serve as a benefit to defendants, because it makes possible the

holding of a disciplinary enquiry, even where the reviewing member has

concluded that the investigation report discloses insufficient evidence to

proceed. The error made by the Chairperson therefore did not materially

prejudice the defendants in the presentation of their defence in these

proceedings and this objection accordingly failed.

28. The Panel also notes that it was submitted on behalf of Mr Kinyua that once

the Chairperson had served as a reviewing member, Procedural Rule 13(13)

provides that he “shall not take part in any further aspect of the proceedings”.

It was argued that this implied that the Chairperson was not able to consider

whether the Provisional Suspension of the Defendants should be extended, nor

was he able to determine to amend the facts upon which the charge is based,

nor correspond with the Defendants on the question of trial dates. In the view

of the Panel, the Defendants read the words “shall not take part in any further

aspect of the proceedings” too broadly. When Procedural Rule 13(13) stipulates

that a reviewing member may not take part in any further aspect of the

proceedings, in the Panel’s view it prohibits the reviewing member from

serving as a member of the panel to hear the matter. As made clear above,

properly construed the rules do not contemplate the Chairperson performing

the review function. Properly construed therefore, Rule 13(13) did not seek to

address the powers conferred upon the Chairperson in the Procedural Rules,

which include the power to extend periods of provisional suspension in terms

of Procedural Rules 27 - 30, and to determine the notification of charge in terms

of Procedural Rule 14. Even if it should be concluded that because the

Chairperson had erred in reviewing the investigation report, he therefore

should not have taken any steps in relation to the proceedings thereafter, which

the Panel does not finally decide, the Panel is of the view that the Defendants

have in any event not suffered any material prejudice as a result of the conduct

of the Chairperson in this matter. The Defendants have been given a full

opportunity to answer the disciplinary charges preferred against them in a

hearing before this Panel, and any assumed technical non-compliance with the

rules has not impaired their ability so to do. Accordingly, these objections too

were dismissed.

29. The next objection relating to the procedures followed in bringing these

proceedings related to the decision by the Chairperson of the Ethics Board to

amend the facts upon which the charges were based on 14 December 2017. It

was argued on behalf of the defendants that this was unfair. The original

notification of charge stated that the facts upon which the charges were based

were as follows:

“11. The Board refers you, in particular, to Section B of the Investigation

Report (from page 12), and to the witness statement of a forensic expert

Mr Collins Ojambo Were. In summary, the Investigator has found that in

the years 2010 – 2015 you withdrew over US$ 650,000 from the Athletics

Kenya dollar accounts.

12. He has found, further, that there is no adequate explanation as to why

those sums were withdrawn in your name, following monies being paid

into the Athletics Kenya dollar account by Nike.

13. He has therefore concluded that it is reasonable to draw the inference

that those funds were withdrawn by you for your personal benefit.”

30. The amended alleged acts relating to the charge as notified on 14 December

2017 were the following:

“The Board refers you to the Expert Report of forensic accountant, Mr

Barry Dean, dated 12 December 2017. Mr Dean has concluded that the

evidence suggests that you personally received a proportion of the

following amounts paid by Nike, which were subsequently split between

yourself, Mr Kiplagat and Mr Kinyua/Okeyo:

Amount

withdrawn US$

Honorariums paid directly to beneficiaries 198,000

Honorariums paid through Athletics Kenya 351,140

Service fees 300,000

Nike’s commitment bonus 499,930

1,349,079”

31. The Panel notes that the charges themselves were not amended. All that

was amended were the facts upon which the charges were based. The details

of the facts were set out in Mr Dean’s Report of 12 December 2017, which was

provided to both defendants. In the view of the Panel, there is nothing in the

Rules that prevents the Chairperson from amending the facts upon which the

charges are based, as long as that amendment is effected in a fair manner. In

this case, the Panel notes that the amendment was made contemporaneously

with the furnishing of Mr Dean’s report, which set out the basis for the factual

claims. That report was furnished to the Defendants six weeks prior to the

commencement of the hearing, albeit over the Christmas and New Year period.

In the view of the Panel, this was sufficient time to enable the Defendants to

prepare their defence. The objection to the amendment of the facts on which

the charges were based was therefore also dismissed.

32. The next procedural objection raised by the Defendants was to object to the

role of the Chairperson of the Ethics Board in determining the date and venue

of the hearing. The Panel notes although the dates and venue for the hearing

were communicated to the Defendants in the formal name of the Chairperson

by the Secretariat of the Ethics Board, the dates and venue of the hearing were

agreed by the members of the Panel in consultation with the Ethics Board

Secretariat and not by the Chairperson. In the view of the Panel, there was no

merit in this objection.

33. The final procedural objection was raised on behalf of Mr Okeyo and related

to the time these proceedings have taken, which it is submitted has rendered

the process unfair. In written argument, the decision of the United Nations

Human Rights Committee in Perterer v Austria was cited. In that case, Mr

Perterer was the former head of administration in the Austrian town of

Saalfelden. On 31 January 1996 he was charged with disciplinary offences and

suspended from his duties the following month. Thereafter, it took 57 months

(just under five years) for his case to be finalised in the Austrian courts and he

complained about the delay, amongst other things, to the UN Human Rights

Committee. The Committee found that the time taken to adjudicate what it

described as “a matter of minor complexity” constituted a breach of the right

to equality before the courts, as provided in Article 14(1) of the International

Covenant on Civil and Political Rights.

Although the Panel confirms that it is

important that disciplinary matters under the IAAF Code of Ethics be

conducted without undue delay, it is of the view that the issues in these

proceedings are complex and traverse events that took place over more than a

See Perterer v Austria CCPR/C/81/D/1015/2001 (20 July 2004), para 11.7,

accessible here http://juris.ohchr.org/Search/Details/1124

decade. Moreover, the proceedings will have been concluded in approximately

half the time that it took the proceedings under consideration in the Austrian

case. In the circumstances, the Panel is not of the view that these proceedings

have been characterised by undue delay and this objection is rejected.

Objection to the charges

34. The next preliminary objection made on behalf of Mr Kinyua was that the

charges were general and lacked sufficient clarity. In the view of the Panel, the

charges with the amended facts, coupled with Mr Dean’s report, provided a

clear case for the Defendants to meet. It therefore dismissed this objection.

Objection to the admission of evidence tendered by the Prosecutor

35. A range of objections were raised on behalf of the Defendants arguing that

documents sought to be admitted in the proceedings had been tendered to the

Defendants at a time that did not afford them adequate time to prepare. This

objection was taken in relation to the following documents relevant to the

charges in these proceedings:

(a) Mr Dean’s expert report that was provided to the Defendants on 14

December 2017;

(b) the addendum to Mr Dean’s expert report that was provided to the

Defendants on 23 January 2018;

2009 and 13 August 2010 respectively that were tendered for admission

by the Prosecutor on the morning of 29 January 2018;

(d) the minutes of the Athletics Kenya Executive Committee meeting of

23 June 2010 that were also tendered for admission by the Prosecutor on

the morning of 29 January 2018; and

(e) certain cheque stubs relating to the Addendum Report of Mr Dean that

were tendered for admission by the Prosecutor on the morning of 29

January 2018.

Each will be dealt with separately.

36. The objection in relation to the admission of Mr Dean’s report on the basis

that it was furnished too late to afford the defendants adequate time to prepare

was dismissed after hearing submissions on the morning of 29 January 2018.

The objection was dismissed for the following reasons. The report was

furnished six weeks before the hearing commenced and Mr Okeyo lodged a

written response dealing with the substance of the report, which included an

objection to the admission of the report before the hearing commenced. The

Panel acknowledges that the six weeks included the Christmas and New Year

holiday period but nevertheless thought that the time afforded was an

adequate time for the Defendants to prepare their defence. The report was very

detailed as will appear from what follows, and related to matters that fell

within the knowledge of both Defendants, and, in particular Mr Kinyua. In the

view of the Panel the Defendants were afforded sufficient time to prepare their

defence.

37. The Panel did not rule on the objection in relation to the addendum to Mr

Dean’s report on the morning of 29 January 2018 but reserved its decision on

the matter, and permitted the parties to lodge written argument on the issue of

its admissibility. Both the defendants and the Prosecutor did so. The

addendum report was compiled in the light of correspondence between the

Prosecutor and Nike following the Prosecutor’s disclosure to Nike of Mr

Dean’s expert report. The addendum contains copies of the correspondence

with Nike and some amendments to the conclusions of the main report in the

light of the information provided by Nike. The report was a brief report

running to only sixteen double-spaced pages, with several annexures, being the

correspondence with Nike, but it was of clear relevance to the proceedings. The

two key letters from Nike are dated 8 January 2018 and 16 January 2018 and

the report was signed by Mr Dean on 17 January 2018 and provided to the

Defendants on 23 January 2018. The Panel is of the view that the addendum

report could not have been prepared any earlier given the dates on which the

Nike correspondence was received and the Prosecutor, and Mr Dean, cannot

therefore be criticised for the timing of the filing of the addendum report.

Given that the report could not have been provided earlier, that although it

traversed issues of importance to the proceedings, it was nevertheless

relatively brief, and that the defendants were given nearly a week to consider

it before the commencement of the proceedings, the Panel determines that the

addendum report may be admitted.

38. On the morning of the hearing, the Prosecutor sought to have admitted two

emails between Mr Kiplagat and Nike dated 10 September 2009 and 13 August

2009 that had not previously formed part of the record. The emails had been

provided to the Defendants the previous evening. On the morning of 29

January 2018, the Panel determined that the Defendants had not been given

adequate notice of the emails to enable them to prepare their defence and the

Panel refused admission of the two emails.

39. On the same morning, the Prosecutor sought to have admitted in evidence

the minutes of the Athletics Kenya Executive Committee meeting of 23 June

2010. The minutes had been provided to the Defendants the previous evening.

Once again because of the lateness of the disclosure of the documents to the

Defendants, the Panel refused their admission on the morning of 29 January

2018.

40. Also on 29 January 2018, the Prosecutor sought to tender copies of cheque

stubs from Athletics Kenya’s financial records which related to payments

discussed in the addendum to Mr Dean’s report. As with the addendum to the

report, the Panel withheld its decision as to whether the stubs should be

admitted. For the reasons provided above in relation to the addendum to the

report, the Panel now admits the cheque stubs. The Panel notes however that

the cheque stubs were not of material assistance to it in reaching its conclusion.

41. Following the dismissal of the majority of the preliminary objections, the

hearing commenced. The Prosecutor led the expert witness, Mr Barry Dean, as

well as Mr Mathews Kiptum and Mr David Miano. Three witnesses, Mr

Kinthinji Maragara, Ms Brenda Oyugi and Ms Susan Kamau, then testified on

the basis that they addressed questions from the Panel followed by questions

from the Prosecutor and the Defendants’ legal representatives. The two

Defendants, Mr Kinyua and Mr Okeyo also testified.

Standard of Proof

42. Rule 11(7) of the Ethics Board’s Procedural Rules provides that:

“The standard of proof in all cases shall be determined on a sliding

scale from, at minimum, a mere balance of probability (for the least

serious violation) up to proof beyond a reasonable doubt (for the most

serious violation). The Panel shall determine the applicable standard of

proof in each case.”

43. Accordingly, the first issue that arises for the Panel to determine is the

applicable standard of proof. It is clear from the language of the rule that the

key consideration in determining the standard of proof in any matter will be

the seriousness of the disciplinary charges in issue. The least serious violation

may be established, Rule 11(7) states, on a mere balance of probability, whereas

the most serious violations must be established on the criminal standard, proof

beyond a reasonable doubt. The Prosecutor has submitted in argument that the

charge in this matter falls neither within the category of “most serious

violations” nor within the category of the “least serious”, but that the charge is

sufficiently serious to warrant proof to the level of comfortable satisfaction.

44. It is argued on behalf of both Defendants on the other hand that the

applicable standard of proof in this matter is the criminal standard, that is,

proof beyond a reasonable doubt. Mr Kinyua’s counsel submitted that the

charges were of such a serious nature as to warrant the highest standard of

proof. Mr Okeyo’s counsel submitted that in determining the appropriate

standard of proof the Panel should consider the nature of Athletics Kenya as

an organisation, the complexity of the offences concerned and the impact of the

long period of suspension on Mr Okeyo.

45. The Panel notes that the Ethics Board has previously decided that a charge

that related to a form of blackmail fell within the category of most serious

violations, and thus warranted proof beyond a reasonable doubt.

In reaching

that decision, the Board noted that “the conventional standard for sports

disciplinary proceedings is that of “comfortable satisfaction” which in the

context of sports law, has its origins in Andrei Korneev v International Olympic

Committee’.”

46. In the view of the Panel, the key consideration in determining the

appropriate standard of proof is the seriousness of the charge, as rule 11(7)

stipulates. The Panel notes that in this matter the Defendants have not been

expressly charged with conduct that constitutes a criminal offence but rather

with the “diversion of funds for their direct or indirect personal benefit”. There

can be no doubt that this is a serious charge, but in the view of the Panel it is

not a charge that falls within the category of “most serious violations”, which

in the view of the Panel should be reserved for charges relating to serious

criminal conduct. Establishing that the Defendants have diverted funds for

their direct or indirect personal benefit will not establish without more that the

Defendants have committed a serious criminal offence. In the circumstances,

See Ethics Commission Decision 02/2016 VB, AM, GD & PMD at para 14(i). The

decision is available here https://www.iaafethicsboard.org/decisions

Id. And see the decision of the Council of Arbitration for Sport in Andrei Korneev

v IOC 6 CAS 0G 003 -4, 1996, and discussion in Beloff et all On Sports Law, 2

ed.,

para 8.9 – 9.6.

the Panel considers that the appropriate standard of proof is proof to its

comfortable satisfaction.

Applicability of the IAAF Codes of Conduct to Defendants

47. The 2003 Code provides that it binds those “acting in positions of trust

within the IAAF and by any other person who is otherwise entitled to act for,

or on behalf of, the IAAF.”

The Code elaborates further: “There are two

groups of persons subject to this Code: those who are in a position of trust

within the IAAF, such as the members of the Council, Committees and

Commissions, and those who are otherwise entitled to act for, or on behalf of

the IAAF, such as IAAF officials, as well as the IAAF consultants, agents etc.

when acting for or on behalf of the IAAF.”

48. The 2012 Code provides that two classes of person are subject to the Code:

IAAF Officials and what the Code terms “Participants”. IAAF Officials are

defined in the Code as “those who are in a position of trust within the IAAF,

such as the members of the IAAF Council, Committees and Commissions, and

those who are otherwise entitled to act for, or on behalf of the IAAF, such as

IAAF officials and staff, as well as the IAAF consultants, agents etc. when

acting for, or on behalf of, the IAAF.”

Participants are defined in the Code as

“those Athletes, Athlete Support Personnel, competition officials, officials,

managers or other members of any delegation, referees, jury members and any

other person accredited to attend or participate in an International

Competition”.

The 2012 Code then provides that all articles of the Code save

Article I.24 apply to IAAF Officials,

whereas only Article C(6), H and I apply

to Participants.

See the Preamble to the 2003 IAAF Code of Ethics.

Id.

See the Clause entitled “Application” in the 2012 IAAF Code of Ethics.

Id.

Article I.24 refers to breaches of paragraph C.6 of the Code by participants, not

officials.

49. It is common cause that Mr Okeyo was a member of the IAAF cross country

and road running committees from 1991 to 2011 and a member of the cross

country committee from 2011 to 2015 and that he is accordingly bound by the

terms of the Code. Nevertheless it was submitted on his behalf that the

allegations in these proceedings do not relate to his roles in the respective

committees and therefore fall outside the jurisdiction of the Ethics Board.

50. In the view of the Panel, the Ethics Code is clear that members of IAAF

committees are bound by all the provisions of the Code. Article C(7) of the 2003

Code provides, for example, that persons bound by the Code “must not act in

a manner likely to tarnish the reputation of the IAAF, or Athletics generally,

nor act in a manner likely to bring the sport into disrepute”. In the view of the

Panel, this provision seeks to protect the reputation of the IAAF and the sport

of athletics generally by imposing obligations of good conduct upon officials to

ensure that they do not act in a manner that will harm the IAAF or the sport of

athletics. There is no doubt that prohibited conduct by an official while carrying

out duties as a committee member will constitute a breach of the Code, but in

the view of the Committee the obligation imposed by Code C(7) has a wider

reach. The Panel will consider later the question whether the diversion of funds

from an IAAF Federation by an Official bound by the Code for his or her own

direct or indirect personal benefit would constitute a breach of this provision

of the Code.

51. The situation of Mr Kinyua is different. The Prosecutor quite properly

points out in her submissions that Mr Kinyua was never a member of an IAAF

Committee or otherwise in a position of trust within the IAAF as contemplated

by the 2003 IAAF Code and she therefore concedes that Mr Kinyua was not

bound by the provisions of the 2003 IAAF Code. She asserts however that Mr

Kinyua was bound by the terms of the 2012 Code as “an official, as well as a

member of a delegation and person accredited to attend an International

Competition” under the second clause of the Application Provision of the 2012

Code, the clause with the sub-title “Participants”. She further asserts that this

Panel has jurisdiction to consider the conduct of Mr Kinyua that is the subject

of the disciplinary charges in the period before the 2012 Code came into effect

on the basis that Mr Kinyua “was engaged in a corrupt scheme to divert

payments from Nike” from 2004 to 2012. She also asserts that the Panel has

jurisdiction to consider a payment made in December 2012 while the 2012 Code

was in force.

52. It is submitted on behalf of Mr Kinyua, on the other hand, that he was only

subject to the provisions of the 2012 Code while attending or having been

accredited to attend an international competition, and that he was also only

subject to the provisions of the Code which relate to international competition,

and that his obligations under the Code did not extend to his role as an

administrative official of a federation affiliated to the IAAF.

53. The Panel accepts that unlike Mr Okeyo, Mr Kinyua never was an IAAF

Official and was therefore never bound as an Official by the provisions of either

the 2003 or 2012 Code. It accepts that he was bound by the provisions of the

2012 Code under the sub-title “Participant” as “an official, as well as a member

of a delegation and person accredited to attend an International Competition”

as the Prosecutor argues. However, the Panel notes that the Application clause

of the 2012 Code provides that the Code applies to “participants” only to a

limited extent. Only Articles C6, H and I of the Code apply to them. Article C6

is set out at para 7 above. It prohibits “[b]etting on athletics or other corrupt

practices relating to the sport of athletics by … Participants, including

improperly influencing the outcomes and results of an event or

competition…”. Article H1 is also set out at para 7 above. It imposes a duty

on all bound by the Code “to see to it that IAAF Rules and this Code of Ethics

is applied”. And Article I provides for the establishment and powers of the

IAAF Ethical Commission. The question then arises whether the conduct that

is the subject of these disciplinary proceedings is conduct prohibited by either

Article C6 or H of the 2012 Code. The Panel also notes that the notification of

disciplinary proceedings against both Defendants cited only these two

provisions of the 2012 Code.

54. In the view of the Panel, it will be convenient to discuss the question

whether the conduct in issue in these proceedings falls within the prohibitions

in clause C6 and H once the Panel has considered the facts in issue.

Sponsorship agreement between Athletics Kenya and Nike

55. It is common cause between the parties that Nike has been the official

footwear and apparel sponsor of Athletics Kenya since the 1990s. It is also

common cause that on 27 August 2003, Nike and Athletics Kenya entered into

a written sponsorship and license agreement in terms of which Athletics Kenya

agreed that Nike would be its exclusive supplier of athletics footwear, apparel

and necessary products. In return, Nike agreed to pay AK annual

compensation in four equal instalments each contract year. For the first four

years following signature of the contract (2005 – 2008), the annual payment was

agreed to be US$ 642,000, for the next two years (2009 – 2010) US$ 706,200 and

for the final two years (2011 and 2012) US$ 738,300. In addition, Nike supplied

Nike products up to an agreed value for use by athletes, provided an annual

travel allowance for AK representatives to meet with Nike executives, as well

as an annual transport allowance for transportation of athletes and agreed to

pay performance bonuses for achievements by Kenyan athletes in certain

international competitions. Mr Kiplagat and Mr Okeyo signed the agreement

on behalf of Athletics Kenya.

56. On 3 November 2010, Nike and Athletics Kenya agreed to an amendment

to the 2003 written agreement that extended the terms of the agreement to 2020

and altered Nike’s financial obligations under the contract. The annual

instalments were increased to US$ 1,300,000 for the years 2011 to 2016 and to

US$ 1,500,000 for the years from 2017 – 2020. In addition, Nike continued to

agree to provide Nike products to Athletics Kenya and to provide travel and

transport allowances. However, the system of performance bonuses was

terminated and replaced by a one-off commitment fee of US$ 500,000. Nike

also agreed to pay Athletics Kenya an annual service fee of US$ 100,000 for

“paying the costs and expenses of performing the following services necessary

for Nike to receive the full value of the rights and benefits granted to Nike

under this agreement”. The relevant services that were listed included

scouting for and selecting athletes, organizing local, regional and international

athletics meetings, distributing Nike products to athletes and co-ordinating

with the National Olympic Committee on track and field administration

matters. The 2010 agreement was signed by Mr Kiplagat, Mr Okeyo and Mr

Kinyua on behalf of Athletics Kenya.

The Nike Honorariums

57. It is the case for the prosecution that in each year between 2004 and 2010

Nike paid sums of money that it referred to as “honorariums” to Athletics

Kenya and that these sums were paid out in cash to Mr Kiplagat, Mr Kinyua

and Mr Okeyo. The prosecution further alleges that these funds belonged to

Athletics Kenya and were diverted by Mr Kiplagat, Mr Kinyua and Mr Okeyo

for their own direct or indirect personal benefit.

58. Nike admits in several places on the record that it paid honorariums to

Athletics Kenya. For example, a senior Nike executive sent an email both to Mr

Kiplagat, then President of Athletics Kenya, and to another senior sporting

official on 25 September 2003, a month after the 2003 Agreement was signed.

The email read:

“I wanted to give you a heads up that I will be faxing this letter to

Athletics Kenya … by tomorrow. … We need to do this to protect Nike in

case something happens in the future. It will by no means affect our

agreement with you. We just need to have the document for our file to

protect Nike.”

59. The draft letter annexed to this email was addressed to Mr Kiplagat at

Athletics Kenya and read:

“Being that Nike recently extended our agreement with Athletics Kenya

through December 31, 2012, I wanted to send you a letter outlining our

understanding regarding the Honorariums that we pay to Athletics

Kenya. I feel that clarification is necessary in order to expedite future

payments and in case people who currently understand the Honorarium

leave their position.

The Honorarium is an annual payment that Nike makes directly to the

Federation in order to ensure that certain Federation members will

provide, and will have adequate funding for, certain services that Nike

considers critical to maximizing our value from the agreement and our

investment. These activities include travelling with the National Team to

events, travelling to meet with Nike at our request, ensuring that top

athletes attend and compete at events, and maintaining regular contact

with Nike by being available to receive calls twenty-four hours per day,

etc.

Furthermore it is Nike’s understanding that these payments are made

with the full knowledge of the Federation, and how the Federation

chooses to distribute these monies amongst Federation members is at

their sole discretion.”

60. There are five points to be noted from this correspondence. First, it suggests

that Nike had already established a practice of paying honorariums to officials

(the letter states that its purpose is to outline “our understanding regarding the

Honorariums that we pay to Athletics Kenya”). That the payment of

honorariums predated the 2003 Agreement was confirmed in these

proceedings by the fact that both Mr Kinyua and Mr Okeyo admitted that they

received an honorarium directly into their own bank accounts from Nike in

2003.

The Nike letter does not however identify to whom honorariums are

For ease of reference, those admissions are at Transcript Vol 3/121 (Mr Kinyua)

and transcript Volume 5/202 (Mr Okeyo).

paid, or in what amount.

61. Secondly, the email makes plain that the established practice of the

payment of honorariums was based on an agreement between Nike and

existing officials, including at least Mr Kiplagat, who received the

honorariums. The email does not disclose the terms of that agreement but does

state that the terms of that agreement will not be varied by the contents of the

letter attached to the email. The email thus implies that the actual agreement

is different to the agreement stipulated in the draft letter.

62. Thirdly, the email states that the letter has been written “to protect Nike in

case something happens in the future”. The email thus suggests that Nike is

anxious as to how its payment of honorariums might be construed in the future

and that the letter is being written to “protect” Nike. The email therefore

suggests that Nike is of the view that should the payment of honorariums to

officials of Athletics Kenya become public knowledge it might be harmful to

Nike. Yet the email also makes clear that the actual arrangement between it and

the officials will not be varied by the contents of the letter.

62. Fourthly, the letter states that it is Nike’s “understanding” that the

honorariums are paid with the full knowledge of Athletics Kenya and that it is

for Athletics Kenya to determine how to distribute the honorariums “amongst

its members”. And the fifth and final point to note is that the Panel was not

provided with any evidence that the draft letter was in fact sent, but notes that

the purposes for the payment of the honorarium asserted in the draft letter

match the purposes identified by Nike in its correspondence with the

Prosecutor in November 2017 (discussed in para 65 below) and again in

January 2018. The similarity in terms between the draft letter and the recent

Nike correspondence suggests that the draft letter was indeed sent.

63. A second example of Nike’s admission that it paid honorariums, as well as

an acknowledgement of its discomfort with them appears from an email sent

by one of its senior executives to Mr Kiplagat on 19 June 2008. The email was

included as an annexure to the Sharad Rao report. The email is a response to

an email from Mr Kiplagat in which he expressed his disappointment that the

honorarium amount had not been increased to US$ 85,000 from US$ 72,000

despite an alleged agreement with Nike to increase the honorarium payment.

The Nike executive states in his email:

“It is very hard to change the honorarium amount. Very sensitive issue

here at Nike. It has been from the very first day we paid the first payment

in regards to the honorarium. Please understand the only honorarium we

pay is to Athletics Kenya [and one other organisation]. A few people at

Nike got in a lot of trouble several yrs [sic] ago when we first agreed to

the honorarium and made our first payment.”

64. In a letter to the Prosecutor dated 17 November 2017, Nike admitted that it

made honorarium payments from 2002 to 2010 to Athletics Kenya officials. It

identified the purpose of the honorariums to be the same as that set out in the

draft letter discussed above at para 56. In the same letter, Nike admitted that

the honorarium payments in 2003 were made to the individual bank accounts

of Mr Kiplagat, Mr Okeyo and Mr Kinyua.

The Clearance Account

65. As mentioned above, Mr Barry Dean, a forensic accountant, prepared an

expert report at the request of the Prosecutor in which he analysed the books

of account kept by Athletics Kenya in the period between 2003 and 2015. Mr

Dean was the main witness for the prosecution at the hearing.

66. In his report, and again in his evidence before the Panel, Mr Dean explained

that between 2003 and 2012 Athletics Kenya had made use of an accounting

device called a Clearance Account. According to Mr Dean, his analysis of

Athletics Kenya books disclosed that in almost all circumstances, receipts into

the Clearance Account were mirrored by withdrawals from the Clearance

For ease of reference, see Bundle D, Tab 6, email dated 19 June 2008.

Account. Receipts to and withdrawals from the Clearance Account were

reflected in the ordinary cashbook but – and this is of particular importance –

twinned payments to and from the Clearance Account were not then reflected

in the annual audited financial accounts of Athletics Kenya. The only time that

receipts into the Clearance Account were reflected in the audited statements

were when a receipt had been received that had not yet been twinned with a

withdrawal.

67. Mr Kinyua, who as Treasurer was responsible for the management of the

financial accounts of Athletics Kenya, admitted the use of the Clearance

Account. He also admitted that moneys received into the Clearance Account

were ordinarily followed by withdrawals and that in such circumstances

neither the receipt nor the withdrawal would have been included in the annual

financial statements of Athletics Kenya.

Mr Kinyua defended this system as

a legitimate accounting mechanism and pointed to the fact that Athletics

Kenya’s auditors had not qualified their approval of the accounts in this respect

nor had they advised against the use of the Clearance Account. Mr Kinyua,

however, did acknowledge during his testimony that the Clearance Account

system had been abandoned by Athletics Kenya since his departure, because,

he thought, they had been advised to do so by its new auditors.

68. Mr Dean admitted that the use of a clearance account is a legitimate

accounting device in certain limited circumstances. He described those

circumstances as arising when money is received on behalf of a third party and

paid out to that third party.

In his view, it would have been acceptable for

Athletics Kenya to use the Clearance Account in such circumstances, but he

submitted that the Athletics Kenya Clearance Account had been employed in

a different, and not acceptable, manner. In particular, he pointed to the fact

that the Clearance Account had been used on a series of occasions to record

See, for example, Transcript vol 3 at 280.

For ease of reference, Transcript, vol 3 at 286.

See for ease of reference, Dean’s report Bundle E/1 para 4.21 p. 19.

amounts of money paid by Nike pursuant to the contract between it and

Athletics Kenya, amounts of money that were accordingly due and payable to

Athletics Kenya, and not to third parties. The effect of using the Clearance

Account in this manner, it was common cause between the parties, was that

receipts and withdrawals posted to the Clearance Account would not appear

in Athletics Kenya’s annual audited financial statements.

The Sixteen Payments

69. Mr Dean identified sixteen payments

made by Nike to Athletics Kenya

between December 2004 and December 2012 that were posted to the Clearance

Account. In total, these sixteen payments amounted to US$ 1,225,806 between

2004 and 2012, a substantial sum of money received by Athletics Kenya, which,

it is common cause, was never disclosed in its audited financial statements. In

most cases, Mr Dean testified, the receipt of funds into Athletics Kenya’s bank

account and posted to the Clearance Account can be linked to a corresponding

cash withdrawal from that bank account shortly either before or after the

deposit in an identical or near-identical amount. Again, these withdrawals, it

is common cause, were never reflected in Athletics Kenya’s annual audited

financial statements.

70. Further light is shed on these receipts and withdrawals by two letters sent

to the Prosecutor by Nike dated 8 January and 16 January 2018. These letters

were in response to a letter to Nike from the Prosecutor in which she furnished

Nike with a copy of Mr Dean’s Report and asked them to address certain

questions arising from the report. Both the letters from Nike were placed

before the Panel in an addendum to his report by Mr Dean, the admissibility of

which was dealt with at paras 21-24 above. In the following section, we analyse

the evidence placed before the Panel in relation to each payment.

Mr Dean states that he found 15 payments, but he combined two payments, that

is payments 11 and 12 in the list above, made respectively on 8 November and 25

November 2010 as one payment, and there are accordingly 16 payments.

Payment A

71. The first payment identified by Mr Dean in his report was a payment on 16

November 2004 in an amount of US$ 64,666, which was reflected in the Cash

Book as posted to the Clearance Account in an amount of Kenyan Shillings

(KES) 5,200,000.

72. On 18 November 2004, US$ 65,000 was withdrawn from the bank account

by cheque payable to an unknown recipient (possibly a cash cheque). The

withdrawal was also posted to the Clearance Account. In the payment voucher,

the payee was described as “Various Payments” and an additional note stated

“To officials and athletes bonuses earned during various championships $65

000”. The payment voucher was signed by Mr Kinyua. Despite this description

on the payment voucher, Mr Dean could find no further records that identified

the recipients of the withdrawn funds or the championships that may have

been involved.

73. On the other hand, in its letter of 8 January 2018, Nike states that Payment

A was the advance on the 2005 honorarium payment. This description of the

payment does not match with the description given on the payment voucher,

which states that the payment was “To officials and athletes bonuses earned

during various championships $65,000”.

74. Mr Dean also could not find the record of any other withdrawal, which

might have been the honorarium payment for 2005.

75. Even though the payment voucher relating to Payment A suggests that the

withdrawal was to pay bonuses, the Panel is of the view that given the other

evidence before it this description was not accurate. In reaching this conclusion,

the Panel observes that Nike firmly asserts that Payment A did constitute an

advance on the 2005 honorarium payment, that the amount paid was the same

as the honorariums paid by Nike in the previous

and following years (until

See discussion of the 2004, 2006 and 2007 payments below.

2007) and the absence of any further documentation to support the description

in the payment voucher. In the light of these considerations, the Panel is

comfortably satisfied that Payment A constituted an advance on the 2005

Honorarium payment as stated by Nike and Mr Dean.

Payment B

76. The second payment referred to by Mr Dean was paid into Athletics

Kenya’s bank account on 1 February 2006 in an amount of US$ 18,000. It was

reflected in the Cash Book and posted to the Clearance Account in an amount

of KES 1,296,000.

77. On 19 January 2006, some two weeks previous to the deposit, an amount

of US$ 18,000 was withdrawn from Athletics Kenya’s bank account, and the

withdrawal was posted to the Clearance Account. The payment voucher in

relation to the withdrawal states “money received and paid out for onward

payment to specific beneficiaries $18 000, authority of Nike Chairman”. The

payment voucher was signed by Mr Kinyua. There is no further

documentation to suggest who the “specific beneficiaries” may have been.

78. Nike asserts Payment B was for the sponsorship of the Kenyan National

Cross Country Championships, a different but not necessarily inconsistent

purpose to that identified in the payment voucher.

79. The Panel is unable to reach any clear conclusion in relation to Payment B.

The Panel notes that this is one of the two circumstances in which the

withdrawal that the Prosecutor alleges corresponds to the payment was made

before the receipt of the funds. The Panel is not satisfied on the record before

us that the withdrawal does correspond to the later receipt. Even if the Panel

were to accept that the withdrawal did relate to the receipt, it is of the view that

it is not established that the divergent purposes for the alleged payment as

provided by Nike on the one hand and the payment voucher on the other are

sufficient without more to conclude that there was an improper diversion of

funds by the Defendants in relation to this payment.

Payment C

80. The third deposit identified by Mr Dean was made into Athletics Kenya’s

bank account on 23 July 2007 in an amount of US$ 89,000. The deposit was

reflected in the Cash Book as an amount of KES 5,874,000 and the payment was

split so that KES 5,247,000 (US$ 79,500) was posted to the Clearance Account

and KES 627,000 (US$ 9,500) to the account that Athletics Kenya kept to record

payments from Nike and that it called the Nike account.

81. Two withdrawals followed this receipt. The first was a cash withdrawal on

6 June 2007 in an amount of US$ 70,000 posted to the Clearance Account. The

payment voucher stated that the payment was for various persons and was the

“release of dollars paid out by Nike for onward transmission to specified

persons as per negotiated contract”. The payment voucher was signed by Mr

Kinyua.

82. The second withdrawal was on 24 July 2007 in an amount of US$ 9,500,

which was also posted to the Clearance Account. The payment voucher stated

that the payment was for “various payments”, and adds amongst other things,

“travel allowance for internat. champs”. The voucher was signed by Mr

Kinyua. There is also a payment schedule attached which shows that Mr

Kiplagat signed for US$ 4,500 and Mr Kinyua and Mr Okeyo each signed for

US$ 2,500.

83. Nike states that Payment C included an advance on the 2008 honorarium,

its contractual payments towards Athletics Kenya’s travel expenses and a

contractual performance bonus authority of Nike Chairman.” This explanation

conforms to the manner in which the received funds were handled by Athletics

Kenya. Of the total payment of US$ 89,000, US$ 79,500 was paid into the

Clearance Account, which would have covered both the honorariums, which

Nike states were then US$ 72,000 annually, and a travel allowance. The

payment vouchers, taken together, are consistent with the payment of the

honorariums and travel allowances. The balance of the US$ 89,000 received was

paid into the Nike account, which may well have been used for the contractual

performance bonuses as stipulated by Nike. The Panel is therefore comfortably

satisfied that this payment did relate to the 2008 honorarium payments, at least

in part.

Payment D

84. The fourth payment identified by Mr Dean was made into Athletics

Kenya’s bank account on 9 June 2008 in an amount of US$ 72,000, and was

reflected in the Cash Book as posted to the Clearance Account in an amount of

KES 4,464,000.

85. The corresponding withdrawal was made on 19 June 2008 in the same

amount, in cash by Mr Okeyo, and was posted to the Clearance Account. The

corresponding payment voucher states “Honorarium paid by Nike to AK as

per agreement” and was signed by Mr Kinyua.

86. Nike states that Payment D was an advance on the 2009 honorariums,

which is consistent with the payment voucher. Again, the Panel is comfortably

satisfied that this payment constituted an advance payment of the 2009

honorariums.

Payment E

87. The fifth deposit identified by Mr Dean was made into the Athletics Kenya

bank account on 30 July 2008 in an amount of US$ 13,000 and was reflected in

the Cash Book as having been posted to the Clearance Account in an amount

of KES 871,000.

88. A corresponding withdrawal was made on 4 August 2008 in the same

amount in cash and was posted to the Clearance Account. The payment

voucher states “paid from Nike funds meant specifically for three Federation

officers who work daily without a salary” and was signed by Mr Kinyua.

89. Nike states that the payment was intended for the purpose of sponsoring

the Kenyan National Cross Country Championships. This purpose does not

match the payment voucher, which states that the withdrawal was “paid from

Nike funds meant specifically for three Federation officers who work daily

without a salary”.

90. The Panel is troubled by the lack of fit between Nike’s identified purpose

for the payment and the description given in the payment voucher, which

suggests that the withdrawal was paid to three “Federation officers”. In the

view of the Panel, this payment appears to have been a payment diverted by at

least Mr Kinyua, who signed the payment voucher, to three officials of

Athletics Kenya. Given the lack of fit between Nike’s identified purpose and

the payment voucher description we shall return to discuss this payment after

considering the remaining payments.

Payment F

91. This is the sixth payment identified by Mr Dean and it was made into

Athletics Kenya’s bank account on 23 July 2009 in an amount of US$ 72,000,

which was reflected in the Cash Book as having been posted to the Clearance

Account in an amount of KES 5,472,000.

92. There were two withdrawals that corresponded with this payment. The first

was a cash withdrawal by Mr Okeyo on 4 July 2009 in the amount of US$ 70,000

that was posted to the Clearance Account. The corresponding payment

voucher stated that the payees were “chief officers” and the payment

constituted “allowances preferred by Nike in lieu of their voluntary service in

the promotion of Nike contract and custody of their assets”. The voucher was

signed by Mr Kinyua.

93. The second withdrawal was made on 27 July 2009 in the amount of KES

152,000 and was posted to the Clearance Account. The payment voucher

described the payment as for “Chief Officers Honorarium” and “Balance from

amount sent $2,000… $70 000 paid earlier…”. The voucher was signed by Mr

Kinyua.

94. Nike states that payment F is an advance on the 2010 honorarium payment.

The Panel notes that this explanation is consistent with the payment vouchers

and the Panel is therefore comfortably satisfied that Payment F constituted the

payment of the 2010 honorarium.

Payment G

95. The seventh payment identified by Mr Dean was made into Athletics

Kenya’s bank account on 27 July 2009 in an amount of US$ 11,640. It was

reflected in the Cash Book and was posted to the Clearance Account in an

amount of KES 960,000.

96. Mr Dean identified various possible withdrawals that might relate to

Payment G, but none of them were in the same amount as the deposit, and none

were closely contemporaneous with the deposit.

97. Nike states that Payment G is the annual payment for travel and

transportation but the Panel is not satisfied that a matching withdrawal was

identified for this deposit and concludes that Payment G provides no basis for

any breach of the Ethics Code.

Payment H

98. The eighth payment identified by Mr Dean was made into Athletics Kenya’s

bank account on 12 April 2010 in an amount of US$ 35,000. It was reflected in

the Cash Book as posted to the Clearance Account in an amount of KES

2,660,000.

99. The matching withdrawal for Payment H was made in cash on 14 April 2010

in the same amount (US$ 35,000) and was posted to the Clearance Account. The

payment voucher states that the payee is Mr Kiplagat and records the

following: “Nike’s payment to him in appreciation of effective liaison” and was

signed by Mr Kinyua.

100. Nike states that Payment H was for training for the 2010 World Cross

Country Championships. This description does not fit with the payment

voucher description which states that the payee is Mr Kiplagat and records the

payment as “Nike’s payment to him in appreciation of effective liaison”. The

Panel is troubled by this contradiction but given that Mr Kiplagat is no longer

a defendant in these proceedings, given his untimely death, will make no

further comment about this payment.

Payments I and J

101. The ninth and tenth payments identified by Mr Dean were two payments

of the same amount, US$ 25,000, made on 31 May 2010 and 3 June 2010

respectively. Both payments were recorded in the Cash Book and posted to the

Clearance Account in an amount of KES 1,900,000 each.

102. The Prosecutor submits that one withdrawal was made in relation to these

two payments in an amount of US$ 50,000 on 19 April 2010, approximately six

weeks before the two payments were received. The withdrawal was a cash

withdrawal by Mr Okeyo, and was posted to the Clearance Account. The

corresponding payment voucher stated that the payee is “various payments”

and adds a note that the payment was for the “release of funds to beneficiaries

from Nike $50,000”. It was signed by Mr Kinyua.

103. Nike states that payments I and J were for travel and expenses relating to

the 2010 World Cross Country Championships. It is not clear that this purpose

is contradicted by the payment voucher for the identified withdrawal which,

as stated above, suggests the payments related to “various payments” and for

the “release of funds to beneficiaries from Nike $50,000”.

104. However, the Panel notes that the withdrawal which the Prosecutor argues

related to Payments I and J took place six weeks before the payments were

made. The Panel is concerned by the lack of contemporaneity between the

payment and the withdrawal and the absence of any other evidence suggesting

that Payments I and J are related to the identified withdrawal. The Panel also

notes that there is not a clear contradiction between the purpose identified by

Nike and the brief explanatory note on the payment voucher, for the identified

withdrawal. In all these circumstances, the Panel is not satisfied that the

Prosecutor has established that Payments I and J were improperly diverted in

breach of the Ethics Code.

Payments K and L

105. The eleventh payment, Payment K, identified by Mr Dean as having been

paid into Athletics Kenya’s bank account and posted to the Clearance Account

was made on 8 November 2010 in an amount of US$ 485,000. The payment was

reflected in the Cash Book as posted to the Clearance Account in an amount of

KES 38,800,000. The twelfth payment, Payment L, was closely related to

Payment K and they will be dealt with together. Payment L was made on 25

November 2010 in an amount of US$15,000 and was recorded in the Cash Book

and was posted to the Clearance Account in an amount of KES 1,200,000.

106. The sum of these payments was US$ 500,000. This amount accords with

the commitment fee agreed in the 2010 Sponsorship Agreement (see para 56

above). Mr Kinyua in his evidence accepted that the payment was the

commitment fee owing to Athletics Kenya in terms of the contract,

and the

Panel is satisfied that these payments constituted Nike’s payment on that

contractual commitment fee.

107. According to Mr Dean, Athletics Kenya’s bank statements show four

separate withdrawals of funds relating to Payments K and L, three of which

were made on 12 November 2010 after Payment K was received and the fourth

on 23 November 2010 just before Payment L was received.

For ease of reference see Transcript, vol 3, p 251 - 4.

108. The first withdrawal was a bank transfer outwards in the amount of US$

200,000 with the following description (Outwards SWIFT AT-MOLAV 283 SW

– SCBLHKHH OCEANS). It is common cause between the parties that this

payment was to refund Pamodzi Sports Marketing in relation to funds received

from it in September.

This transaction is described more fully below.

109. The second withdrawal was for US$ 200,000 and was a cash withdrawal

recorded in the cashbook in an amount of KES 16,000,000 with the payee listed

as “AK Members” and with a note stating “As per new Nike contract $

200,000”.

110. The third withdrawal was again a cash withdrawal of US$ 100,000,

according to the bank statement, and it was recorded in the cashbook (but

without a stipulated amount) on 15 November 2010, although the bank

statement shows that it took place on 12 November. The payment is described

as “cash from dollar account”. The relevant payment voucher stated that the

amount withdrawn was KES 7,800,000 “To defray a variety of expenses as

detailed later. $100,000”.

111. Mr Dean suggests that there was also a fourth withdrawal (although the

sum of the first three equalled the deposit amount of US$ 500,000). The fourth

withdrawal according to the bank statement was made on 23 November 2010

in an amount of US$ 31,451. The payment was only recorded in the cashbook

on 28 November 2010, without an amount being disclosed. The relevant

payment voucher disclosed the amount withdrawn as KES 2,453,178 “to defray

several cash expenses as analysed later”. Mr Dean pointed out that both the

third and fourth withdrawals were shown as receipts in the cash column and

therefore were retained in cash.

112. It is necessary to explain the background to the first withdrawal in relation

to Payments K and L, which was in the form of a bank transfer for US$ 200,000.

For ease of reference see Okeyo’s response to Dean’s Report: Bundle A, Tab 25,

p 5, para 23. For Kinyua’s response, see Transcript, Vol 3 at p 257.

Mr Dean attached to his report a copy of a letter dated 8 January 2010 sent by

Mr Kiplagat to Mr Papa Massata Diack of Pamodzi Sports Consulting

(Pamodzi), in which he confirmed that Pamodzi would be Athletics Kenya’s

“exclusive marketing agent to look for opportunities in Asia”. The letter

continued by saying that Pamodzi “has been duly mandated to secure a (sic)

Official clothing supplier/sponsor in Sporting Goods category in the territories

of People’s Republic of China, Japan, South Korea, Singapore and Malaysia for

the period of 2011 to 2016”. This letter thus suggests that Athletics Kenya was

looking for a new apparel sponsor in Asia, and had appointed Pamodzi to be

its agent.

113. Mr Dean also provided a second letter from Mr Kiplagat to Mr Papa

Massata Diack dated 2 August 2010 in which it is stated that Athletics Kenya

confirms its acceptance of a proposed agreement with Li-Ning (China) Sports

Goods Ltd. An invoice for US$ 200,000 is attached to the letter, in which this

amount is described as a “signing fee”. Following this letter, a payment of US$

199,930 was deposited in Athletics Kenya’s bank account on 3 September 2010

with the note “Pamodzi Consult Dakar P”. The amount was recorded in the

cashbook as a sum of KES 15,994,400 and posted to the Clearance Account.

114. On 9 September 2010, an amount of US$ 199,930 was withdrawn from the

account in cash by Mr Okeyo. On 16 September (a week later), the cashbook

records a payment of KES 15,994,400 to “AK Officers/Exec Mbs”, a payment

that was also posted to the Clearance Account. The relevant payment voucher

describes the payment as “Payment of money from some negotiated source –

potential for athletics development”. There are no further documents to

explain the employment of the withdrawn funds.

115. During his testimony, Mr Kinyua accepted that the withdrawal against the

signing fee was treated as “a kind of honorarium” that was paid out to several

Athletics Kenya officials and that he was one of the recipients,

although he

For ease of reference, see Transcript Vol 3, 245-247.

testified that he could not remember how much he had received.

116. On the other hand, Mr Okeyo in his written response to Mr Dean’s report

stated that the funds had been used by Athletics Kenya to promote its

programmes, a course of action he stated that had been approved by the

executive board.

However, Mr Okeyo could not produce any evidence to

show that the executive board had approved this course of action, nor did he

provide any details as to what programmes had been supported, nor did he

furnish any evidence by way of payment vouchers or supporting invoices to

corroborate his account, nor did he provide any explanation as to why the

substantial amount of US$ 200,000 should be withdrawn at one time for the

purposes of athletics programmes. Under cross-examination, when asked to

explain the purpose for the withdrawal of US$ 200,000, Mr Okeyo could

provide no explanation, other than that he had been instructed to withdraw the

money.

In his testimony, he did not mention programs or competitions that

had been supported with the funds.

117. In the written submissions made on behalf of Mr Okeyo, a new

explanation for the use of funds was provided. It was submitted that at the

point of deciding to withdraw the funds on 9

September 2010 “the Federation

was in a financial crisis and needed urgent cash noting that the agreement with

Nike had been terminated at the time”.

, No reference to the documentary

record or to the transcript of the hearings was provided in the submissions. The

Panel notes that it is not appropriate for written submissions to introduce new

factual allegations that are not already on the record before the Panel and the

Panel therefore disregards this new factual allegation.

118. After considering the evidence on the record before it, the Panel notes that

For ease of reference, see Transcript Vol 3, 248.

See his response at Bundle A,,Tab 25, p 4, para 16.

For ease of reference, see Transcript Vol 5, at 285.

For ease of reference, see written submissions on behalf of Mr Okeyo in

relation to the First Charge dated at para 5.2.

it finds it improbable that a senior Athletics Kenya official would draw US$

200,000, a very considerable sum, and not be able to provide any cogent

explanation as to how the funds were applied. In the view of the Panel Mr

Kinyua’s admission that the funds were shared amongst Athletics Kenya

officials and not used for development is the far more credible account. It

explains why the money was withdrawn in cash in a lump sum and also why

no financial records have been located to explain the use of the funds. In the

view of the Panel, it may also explain why Mr Okeyo gave an unpersuasive

account of the use of the funds in his testimony, in that he was unwilling to

explain the real purpose to which the funds had been put. Accordingly, the

Panel does not accept Mr Okeyo’s testimony on this score. After its

consideration of all the evidence on the record before it, the Panel is

comfortably satisfied that the “signing fee” received from Pamodzi, acting on

behalf of Li-Ning, was divided between Athletics Kenya officials as Mr Kinyua

admitted in his testimony, and that it was not used for developmental purposes

as asserted by Mr Okeyo. The Panel is also comfortably satisfied given his

untruthful testimony in this regard and the fact that he was the person who

drew the funds in cash, that Mr Okeyo also received a share of the “signing

fee”.

119. The sponsorship agreement with Li-Ning came to naught. It appears from

an email included in Mr Dean’s report that Mr Kiplagat purported to give

notice to terminate the Nike sponsorship agreement in August 2010.

Nike

responded by email asserting that there was no legal basis for terminating the

contract.

Just under two months after the signing fee for the contract with Li-

Ning was paid by Pamodzi, Athletics Kenya and Nike signed an amendment

to the 2003 sponsorship agreement as described at para 29 above, in terms of

which the sponsorship agreement was extended to 2020.

For ease of reference, see Dean’s Report, Bundle E, Tab 1, para 7.11, p 45

(email from Nike to Mr Kiplagat dated 20 August 2010).

Id. para 7.12, p. 45, email from Nike to Mr Kiplagat dated 10 September 2010.

120. As mentioned above, it is common cause that the first withdrawal relating

to Payments K and L was to refund Pamodzi for the signing-fee payment that

had been received by Athletics Kenya on 3 September 2010. The refund

payment therefore reimbursed the funds that this Panel has concluded were

withdrawn in cash and shared amongst Athletics Kenya officials, including Mr

Kinyua and Mr Okeyo. It seems likely that in its negotiations with Nike,

Athletics Kenya required Nike to put it in funds to enable it to reimburse

Pamodzi for the “signing fee”. As the Panel has concluded that the “signing

fee” paid by Pamodzi was divided between Athletics Kenya officials including

Mr Kinyua and Mr Okeyo, the Panel is comfortably satisfied that the

reimbursement of Pamodzi with the Nike commitment fee constituted an

indirect benefit to Mr Kinyua and Mr Okeyo.

121. As noted above the second withdrawal relating to the Nike commitment

fee of US$ 500,000 was made by Mr Okeyo on 12 November 2010 in an amount

of US$ 200,000 that, according to the relevant payment voucher, was paid to

“AK Members” with a note stating “As per new Nike contract $ 200,000”.

During his testimony, Mr Kinyua could not identify who the money was paid

to be but he said that it was paid to “members or officials”.

A little later he

said he had “no recollection at all” of how many people shared in the money

but that the names would have been contained in a payment schedule.

The

Panel found Mr Kinyua’s evidence in this regard evasive. It notes that the

amount of the withdrawal, US$ 200,000 was a substantial sum and that the

payment voucher stipulates that it was to be paid to “AK members”. The Panel

finds it deeply improbable that a Treasurer who had authorised the withdrawal

of such a large sum in cash which he has noted is to be paid to members would

have no “recollection at all” as to who was paid.

122. Mr Okeyo was also unable to explain how the US$ 200,000 cash that he

For ease of reference, see Transcript Vol 3 at 263 (and surrounding pages).

For ease of reference, see Transcript Vol 3 at 270.

For ease of reference, see Transcript Vol 3 at 271.

withdrew on 12 November 2010 was spent. In his written response to the Dean

Report, he stated that the balance of the Nike 2010 commitment fee, being US$

300,000 was used “to pay Athletics Kenya members outstanding dues”.

But

under cross-examination, he said that the funds were not used to pay dues

either owed to or by Athletics Kenya but rather to make payments to Athletics

Kenya’s own members, the regional athletics associations in Kenya, “for

running their offices in their respective regions”.

The Panel found Mr Okeyo’s

evidence in this respect to be confusing, contradictory and unclear. Just as with

Mr Kinyua, it finds it deeply improbable that Mr Kinyua could not recall how

the US$ 200,000 was spent.

123. The Panel notes that in the written submissions tendered on behalf of Mr

Okeyo, a new explanation as to the use of the US$ 300,000 balance on the Nike

commitment fee is again provided. Reference was again made to the cash flow

difficulties experienced by Athletics Kenya as a result of the “short-lived

agreement with Li-Ning” and it is stated that the money was sent to clear

“outstanding obligations to both suppliers and members”.

This explanation

is different to that provided by Mr Okeyo in his testimony, as set out in the

previous paragraph above. Again, the written submissions provided no

reference to the transcript or to the documentary record. The Panel once again

notes that new factual allegations may not be introduced in closing

submissions and once again will give no weight to them.

124. After considering the evidence that is before it, the Panel is of the view

that it is quite probable that this second withdrawal in an amount of US$

200,000 was also divided up between officials and members of Athletics Kenya,

and that it is likely too that Mr Okeyo and Mr Kinyua received at least some of

the funds. Although the Panel finds this to be more likely than not, it is not

See Bundle A, Tab 25, para 24, p 5.

For ease of reference, see Transcript Vol 5 at 290 – 291.

For ease of reference, see written submissions lodged on behalf of Mr Okeyo at

para 5.5.

comfortably satisfied on the record before it that this is the case, and therefore

the Panel does not conclude that the Defendants diverted the second

withdrawal for their own direct or indirect personal benefit. In reaching this

conclusion, the Panel has taken into consideration the facts that unlike in the

case of the honorarium payments, neither Defendant admitted receipt of any

of these funds, nor did the payment voucher state that the payments were made

to the executive officials, or to the Defendants. In concluding on this issue, the

Panel records its concern at its inability to conclude with certainty on the record

before it who the recipients of this substantial sum were. Its inability to do so

is all the more perturbing given that both the Treasurer and Secretary General

of Athletics Kenya at the time testified before it, neither of whom could shed

any certain light on the matter.

125. According to Mr Dean, the third and fourth withdrawals that relate to

Payments K and L were held in cash in the offices at Athletics Kenya. In the

circumstances, the Panel concludes that the Prosecution has not produced

sufficient evidence to suggest that these payments were diverted by the

Defendants for their own direct or indirect personal benefit.

Payment M

126. The thirteenth payment identified by Mr Dean, Payment M, was made on

13 January 2011 in an amount of US$ 412,250. It was reflected in the Cash Book

in an amount of KES 33,292,250 of which KES 25,292,250 (US$ 312,250) was

posted to the Nike account and KES 8,000,000 (US$ 100 000) was posted to the

Clearance Account.

127. On 14 January 2011 an amount of US$100,000 was withdrawn in cash by

Mr Kinyua, and this withdrawal was posted to the Clearance Account. Mr

Dean could not locate the payment voucher.

128. The Panel notes that Nike provided no explanation for Payment N, but

also notes that the amounts of US$ 312,250 and US$ 100,000 equate to the

amounts owing under the 2010 sponsorship agreement between Nike and

Athletics Kenya (see the discussion above at para 29). The amount of

US$100,000 was, according to the agreement, for paying the costs associated

with the performance of certain services including scouting for and selecting

athletes, organizing local, regional and international athletics meetings,

distributing Nike products to athletes and co-ordinating with the National

Olympic Committee on track and field administration matters.

129. Even in the absence of a payment voucher, the Panel is comfortably

satisfied that Payment M constituted the payment by Nike of the contractually

agreed services reimbursement of US$ 100,000 for the year 2011, given the exact

amount involved (US$ 100,000), the date (13 January 2011) and the fact that it

formed part of a larger payment equivalent to the Nike contractual payment.

Payment N

130. The fourteenth payment identified by Mr Dean was made into the bank

account of Athletics Kenya on 13 January 2012 in an amount of US$ 412,250. It

was reflected in the Cash Book in an amount of KES 35,041,20

of which KES

26,541,250 (US$ 312,250) was posted to the Nike income account and KES

8,500,000 (US$100,000) to the Clearance Account.

131. On 18 January 2012, an amount of US$ 100,000 was withdrawn in cash

from the Athletics Kenya bank account by Mr Okeyo. The withdrawal was

posted to the Clearance Account. The corresponding payment voucher stated

that the payees were “C.Officers” and a note adds that the amount was “paid

out to Kiplagat, Okeyo and Kinyua as provided for by Nike – part of $412,500.

$100,000” and was signed by Mr Kinyua.

132. The Panel notes that Nike provided no explanation of the reason for

Payment N, but it also notes that the amounts of US$ 312,250 and US$ 100,000

Note there appears to be a typographical error in Mr Dean’s expert report in

this respect where he states that the amount was reflected in the Cash Book as

USD 35,041,250, which cannot be correct.

as in the case of Payment M, equate to the amounts owing under the 2010

sponsorship agreement between Nike and Athletics Kenya.

133. The panel therefore concludes that Payment N constituted the payment

by Nike of the contractually agreed services reimbursement of US$ 100,000 for

the year 2012.

Payment O

134. The fifteenth payment identified by Mr Dean was made into the Athletics

Kenya bank account on 18 September 2012 in an amount of US$ 10,000. It was

recorded in the cashbook in an amount of KES 850,000 and was posted to the

Clearance Account.

135. On 28 September 2012, a cash withdrawal of US$ 10,000 was made from

the bank account and the withdrawal was posted to the Clearance Account.

The payment voucher states that the payee is the “Ndalat GAA Cross Country”

and “release of cash donated by Nike $10,000”.

136. Nike provided no explanation for Payment O. The Panel notes that the

explanation provided for the payment voucher was that the funds would be

used for an athletics competition. In the absence of any other information, the

Panel concludes that the record does not establish that this payment was

improperly diverted.

Payment P

137. The last payment identified by Mr Dean was made into the Athletics

Kenya bank account on 17 December 2012 in an amount of US$ 412,250. It was

reflected in the Cash Book in an amount of KES 35,269,600

of which KES

26,769,600 (US$ 312,250) was posted to the Nike income account and KES

Note there appears to be a similar typographical error in relation to this

payment as there was to payment N, in that the amount recorded in the Cash Book

is stated to be in USD not Kenyan Shillings (KES).

8,500,000 (US$100,000) to the Clearance Account.

138. On 18 December 2012, US$ 100,000 was withdrawn from the Athletics

Kenya bank account by Mr Okeyo. The withdrawal was posted to the Clearance

Account. The payment voucher stated that the payees are

“Kiplagat/Okeyo/Kinyua” and noted that the payment was “operational

expenses for running AK office – appreciation by Nike”. The payment voucher

is signed by Mr Kinyua.

139. The Panel notes that Nike provided no explanation of the reason for

Payment P, but it also notes that the amounts of US$ 312,250 and US$ 100,000

as in the case of Payments M and N, equate to the amounts owing under the

2010 sponsorship agreement between Nike and Athletics Kenya.

140. The panel therefore concludes that Payment P constituted the payment by

Nike of the contractually agreed services reimbursement of US$ 100,000 for the

year 2013.

Summary: conclusion on payments A, C, D, F, M, N and P

141. Accordingly, from its analysis of the evidence, the Panel is comfortably

satisfied that Payment A constituted the honorarium paid by Nike in 2005, that

Payment C constituted the honorarium paid by Nike in 2008, that Payment D

constituted the honorarium paid by Nike in 2009, that Payment F constituted

the honorarium paid by Nike in 2010, and Payments M, N and P constituted

the contractual service payments for 2011, 2012 and 2013 respectively. We shall

turn in a moment to consider whether it is possible to determine on the record

whether the Defendants received some or all of these honorariums, and, if so,

whether receipt of the honorariums, and the manner of that receipt, constituted

a “diversion of the funds of Athletics Kenya for their direct or indirect personal

benefit” and a breach of the relevant IAAF Ethics Code.

Summary: conclusion on payments B, E, G, H, I and J, and O

142. From its analysis of the evidence, the Panel is unable to conclude that the

Defendants improperly diverted Payment B, which Nike asserts was made for

the sponsorship of the Kenyan National Cross Country Championships. The

Panel is also not persuaded that Payment G was improperly diverted, as the

Panel is not persuaded that the correlative withdrawal has been correctly

identified. The Panel has also concluded that the Prosecutor has not established

that Payments I and J and Payment O were diverted for the direct or indirect

personal benefit of the Defendants.

143. The Panel is disturbed by the evidence concerning Payment H given the

contradiction between the purpose identified by Nike for Payment H (that it is

for training for the 2010 World Cross Country Championships) and the

payment voucher description which states that the payee is Mr Kiplagat and

records the payment as “Nike’s payment to him in appreciation of effective

liaison”. However, given that Mr Kiplagat is no longer a defendant in these

proceedings, the Panel makes no further comment about this payment.

144. The only one of these payments that the Prosecutor has established

constitutes a diversion of funds is Payment E. In reaching its conclusion the

Panel notes the lack of fit between the purpose Nike attached to the payment,

and the purpose reflected on the payment voucher. Nike stated the payment

was its sponsorship of the Kenyan National Cross Country Championships

while the payment voucher stated that it was “paid from Nike funds meant

specifically for three Federation officers who work daily without a salary”. In

the view of the panel, this payment appears to have been a payment diverted

by Mr Kinyua, who signed the payment voucher, to three officials of Athletics

Kenya. We shall return to discuss the beneficiaries of this this payment below.

Summary: conclusion on Payments K and L

145. The Panel has concluded that one of the withdrawals that relates to

Payments K and L, the withdrawal that reimbursed Pamodzi for the signing

fee with Li-Ning was diverted for the indirect benefit of the Defendants. The

Panel will revert to this issue later in the decision when it considers whether

the diversion constituted a breach of the Code of Ethics.

Honorarium payments in 2004, 2006 and 2007

146. Nike in its letter of 16 January 2018 asserted that it had paid honorariums

to Athletics Kenya in 2004 (in an amount of US$ 64,666 on 23 January 2004),

2006 (in two separate payments of US$ 32,000 dated 6 September and 30

November 2005) and 2007 (US$ 64,666 dated 10 July 2006). Mr Dean did not

initially uncover these payments in his investigation but upon receipt of Nike’s

letter, he found the payments reflected in Athletics Kenya’s bank account,

although there were no corresponding entries in Athletics Kenya’s cashbooks

for the payments.

He also found corresponding cash withdrawals for each of

the payments reflected in Athletics Kenya’s bank statements (for US$ 64,666 on

26 January 2004, US$ 32,000 on 9 September 2004, US$ 32,000 on 2 December

2004, US$ 37,000 on 17 July 2006 and US$ 27,000 on 31 July 2006). There are no

payment vouchers for any of these payments. The Panel is comfortably

satisfied on this evidence that these payments constituted the honorarium

payments for 2004, 2006 and 2007.

147. We now turn to consider separately the following four questions:

(a) has it been established on this record that the Defendants received the

honorarium payments;

(b if they did receive the honorarium payments, were they received for their

own direct or indirect benefit;

Athletics Kenya funds”; and

(d) did such conduct constitute a breach of the IAAF Ethics Code binding upon

For ease of reference, see Dean Addendum report at para 2.5ff.

the Defendants and within the jurisdiction of this Panel.

Did the Defendants receive the honorarium payments made between 2004 –

2010 and the Service Fee Payments from 2011 – 2013?

148. The Panel has concluded that Payments A, C, D, and F, all posted to the

Clearance Account, constituted honorarium payments paid by Nike to

Athletics Kenya for the years 2005, 2008, 2009 and 2010. These payments were

not contractually due in terms of the 2003 Sponsorship contract between Nike

and Athletics Kenya, but Nike admits to paying the honorariums. The Panel

has also concluded that Payments M, N and P constituted the annual service

payments stipulated in the 2010 sponsorship agreement between Nike and

Athletics Kenya. The question that arises is whether the Prosecution has

established that the Defendants received the honorarium or service payments.

In this regard, there are three issues which will be considered: first, did the

Defendants receive a share of the honorarium and service payments in the

period 2004 - 2013; secondly, were the Defendants and Mr Kiplagat the only

three officials at Athletics Kenya to receive honorariums; and thirdly, was the

annual honorarium amount divided equally between the three of them.

149. In his expert report, Mr Dean concluded that Nike paid honorariums,

directly or through Athletics Kenya to Mr Kiplagat, Mr Okeyo and Mr Kinyua

from 2004 to 2010.

In his response to Mr Dean’s report, Mr Okeyo stated

firmly that “[i]t was the mutual understanding of both parties that the

Honorarium was to be divided between the Chairman, the Secretary General

and the Treasurer” [Mr Kiplagat, Mr Okeyo and Mr Kinyua].

This admission,

on its face, confirms that Mr Kiplagat, Mr Okeyo and Mr Kinyua were the only

three officials to receive the honorarium and that Nike understood and agreed.

In addition, the statement could perhaps be read to mean that the honorarium

was divided equally between them, but in the view of the Panel, the word

For ease of reference, see Dean Expert Report Bundle E/1 para 11.1, p 59.

For ease of reference, see Bundle A, Tab 25, at para 7.

“divided” does not necessarily mean that something is equally divided and so

the statement cannot be construed to mean that honorarium was equally

divided between the three officials.

150. During his testimony, Mr Okeyo continued to admit that he had received

the Nike honorariums throughout the period, but he contradicted his written

statement by testifying that not only he, Mr Kiplagat and Mr Kinyua had

received the honorariums but that other officers of Athletics Kenya had also

received them from time to time, at the direction of Mr Kiplagat.

determining which of the two versions presented by Mr Okeyo is true, the

Panel notes that Mr Okeyo did not identify any of the other officials who he

said had received honorariums.

151. Under cross-examination, Mr Okeyo sought to explain his change of

stance by stating that his written response had been referring only to the 2003

honorarium payment. The Panel finds this attempt to narrow the scope of his

written response unsatisfactory because his own statement in the previous

paragraph in the written response expressly states that the honorariums were

paid directly to the accounts of Mr Okeyo, Mr Kiplagat and Mr Kinyua between

the years 2004 to 2010.”

The Panel notes that Mr Okeyo appears to be

mistaken in this statement in saying that the Honorariums were paid directly

into the bank accounts of the three officials, as it is common cause that Nike

paid the honorariums to Athletics Kenya’s account. Nevertheless, the Panel is

of the view that the written statement is clear to the extent that it states that the

honorariums were received by Mr Okeyo, Mr Kiplagat and Mr Kinyua.

152. Mr Kinyua also admitted that he had received honorarium payments

throughout the period but he disputed that only he, Mr Kiplagat and Mr Okeyo

had received the honorarium payments. He asserted that Mr Kiplagat made

the decision each year as to who would be beneficiaries of the Nike honorarium

For ease of reference, see Transcript, Vol 5, pp 94 – 95.

For ease of reference, see Bundle A, Tab 25 at para 6.

payment and in what amount and that he, Mr Kinyua, as Treasurer, had merely

implemented Mr Kiplagat’s instructions. However the Panel notes that Mr

Kinyua too did not identify any other official of Athletics Kenya that had

received an honorarium.

In explaining his inability to do so, Mr Okeyo

suggested that he was anxious about answering the question in case he might

err.

153. The Panel finds Mr Okeyo’s attempts to resile from the admission he had

made in his written response to Mr Dean’s report unconvincing. It also finds

improbable the inability of both Mr Okeyo and Mr Kinyua to identify any other

official who had received an honorarium payment given that Athletics Kenya

is a small organisation and both Mr Kinyua and Mr Okeyo would have known

all the other officials. The Panel finds Mr Kinyua’s inability to identify any such

official is particularly surprising given that as Treasurer, he would have been

responsible for any payments made.

154. In determining whether other officials were paid honorarium payments,

the Panel notes that it is common cause between the parties that the 2003

honorarium payments were made to Mr Kiplagat, Mr Okeyo and Mr Kinyua

only. Moreover, the email written by the senior Nike executive to Mr Kiplagat

on 25 September 2003, cited above in para 26, asserted that there would be no

changes to the agreement between Nike and the officials following the letter to

be sent to Athletics Kenya which acknowledged the payment of the

honorariums, and the conditions of the payment of those honorariums. This

email suggests that the pattern established in 2003, in which Mr Kiplagat, Mr

Okeyo and Mr Kinyua were paid honorariums would be continued in future

years.

155. There are also other documentary indications that the honorariums were

paid only to Mr Kiplagat, Mr Okeyo and Mr Kinyua. For example, the payment

For ease of reference, see Transcript Vol 3, p 211.

For ease of reference, see Transcript Vol 3, pp 211 – 212.

vouchers relating to the service fees distribution in 2012 and 2013 (Payments N

and P, above) made clear that the payments were made to Mr Kiplagat, Mr

Okeyo and Mr Kinyua. The payment voucher relating to Payment E also

stipulated that the payment was to be made to the “three Federation officers

who work daily without a salary”, again which appears to indicate Mr

Kiplagat, Mr Okeyo and Mr Kinyua.

156. The Panel is comfortably satisfied that Mr Okeyo and Mr Kinyua received

honorarium payments throughout the period 2004 – 2010 and service fee

payments for 2011 – 2013. They both admitted on the record that they did so,

although they disputed the fact that the only recipients of honorarium

payments were them together with Mr Kiplagat. The Panel is also comfortably

satisfied that they were the most regular recipients of the honorariums and

service payments, and that they received the lion’s share of such payments. The

evidence on whether anyone else received any portion of the honorariums or

service payments is contradictory and confusing, and the Panel is not

convinced that anyone else did receive the payments, yet it is also not

comfortably satisfied that such payments did not happen from time to time at

the direction of Mr Kiplagat.

157. In the view of the Panel, once it is satisfied that the Defendants did receive

these payments throughout the period, whether other officials might also have

received a small share of one or more of the honorarium payments or service

fee payments is not material. The Panel also concludes that it is unable to

determine on this record whether the honorarium and service payments were

equally divided between Mr Kiplagat, Mr Okeyo and Mr Kinyua.

Were the honorarium and service fee payments received for the direct or

indirect personal benefit of the Defendants?

158. In the letter attached to the email of 25 September 2003 (discussed above

at para 29), Nike stated that the honorariums were paid “to ensure that certain

Federation members will provide, and will have adequate funding for, certain

services that Nike considers critical to maximizing our value from the

agreement and our investment”. The activities identified were “travelling with

the National Team to events, travelling to meet with Nike at our request,

ensuring that top athletes attend and compete at events, and maintaining

regular contact with Nike by being available to receive calls twenty fours per

day”.

159. However, the email to which this letter was attached which was addressed

to Mr Kiplagat made clear that the contents of the letter would “by no means

affect our agreement with you. We just need to have the document for our file

to protect Nike.” The email suggests therefore that the letter does not contain

an accurate description of the existing agreement with Mr Kiplagat but it is not

clear in what respect the letter differed from the agreement with Mr Kiplagat.

The Panel notes that Nike appears never to have required any accounting for

how the honorariums were spent. Indeed, in the same letter Nike states that

“how the Federation chooses to distribute these monies amongst Federation

members is at their sole discretion”, although it notes that it is its

understanding that the payments “are made with the full knowledge of the

Federation”.

160. Nike’s letter suggests that a key purpose for the honorariums is to cover

travel costs. However, Mr Dean’s expert report, which was not disputed in this

respect by the Defendants, made plain that Athletics Kenya covered the travel

costs of the Defendants when they travelled for Athletics Kenya, including the

costs associated with business class travel

and so it would not have been

necessary to use the honorariums for travel expenses. It is not surprising then

that neither Mr Okeyo nor Mr Kinyua mentioned that they had used their

honorarium to defray any specific travel expenses Mr Dean also confirmed

that Athletics Kenya appeared to cover hotel accommodation and expenses

For ease of reference, see the report at Bundle E, tab 1, para 6.8 and Appendix

8 relating to the years 201, 2011 and 2012.

associated with mobile phones for Mr Kiplagat, Mr Okeyo and Mr Kinyua.

161. The 2010 sponsorship stipulated the purposes for the service fee payments

as including expenses relating to scouting for and selecting athletes, organizing

local, regional and international athletics meetings, distributing Nike products

to athletes and co-ordinating with the National Olympic Committee on track

and field administration matters. Again, Nike did not require any accounting

for the expenditure of the service fees.

162. Both Mr Okeyo and Mr Kinyua asserted that they used the honorariums

and service fees they received to cover costs related to athletics, but their

statements were vague and lacked detail. For example, in his written response

to Mr Dean’s report, Mr Okeyo stated that the amounts he received as

honorariums “were duly channelled to the execution of my duties in ensuring

that the contract with Nike was successfully implemented”.

Mr Kinyua gave

only one example in his testimony of what he had used the payments for,

mentioning that on at least one occasion he had used the money to purchase

shoes for an athlete.

Mr Kinyua also stated that he had kept a separate bank

account for the payments

but he did not produce any statements from this

bank account to indicate how he had spent the payments he had received.

Neither Mr Okeyo nor Mr Kinyua suggested that they provided any accounting

to Athletics Kenya for their expenditure of the honorariums or service fees and

the Panel notes that Athletics Kenya did not appear to have required any

accounting for the manner in which the monies were spent.

162. Both Defendants testified that Kenya is a country that is a “cash economy”

in the sense that many payments made relating to the running of events and

competitions are paid in cash, and that accordingly Athletics Kenya often needs

to withdraw money in cash in advance of events. The Panel accepts their

testimony in this regard. However, as was put to the Defendants by the

For ease of reference, see Bundle A, Tab 25, para 5.

For ease of reference see Transcript Vol 3 p 131-2.

For ease of reference, see Transcript Vol 3 p 129 - 131

Prosecutor in cross-examination the cost of running events was considerably

less than the amounts drawn in relation to the honorarium and service fees.

163. Generally in relation to questions concerning the payment of the

honorariums and service fees and the purpose to which they were they put, the

answers given by both Mr Okeyo and Mr Kinyua were unsatisfactory and

appeared evasive. At one point, for example, the Prosecutor asked Mr Kinyua

“Are you suggesting you didn’t yourself receive the honorarium?” and he did

not say anything for twelve seconds (according to the transcript), but then

responded with a question “from when to when”?

When asked by the

Prosecutor whether he knew what the honorarium would be used for when he

paid it out, he responded, “No, I don’t know. I think I’ve explained that one. I

believe I’ve explained that one. Nike knew what the honorarium was for.”

164. Mr Okeyo’s testimony was that the honorariums and service fees were

used according to Mr Kiplagat’s instructions.

But although he admitted

receiving the honorariums and service fees, he gave few details as to how he

spent them, save for one example when he mentioned an occasion on which

Mr Kiplagat had instructed him and Mr Kinyua to contribute to a party for staff

in, he thought, 2005 or 2006.

He implied that the funds for the party came

from the honorarium because, as he noted, he was not a salaried person.

165. In considering whether the Defendants used at least some of the money

received as honorariums for their own personal benefit, the Panel takes into

account the meaning of the word “honorarium”, which ordinarily denotes a

sum paid for a service provided where no fee has been set in terms of a contract.

Importantly, an honorarium is often a nominal sum that does not equate to the

value of the service provided and is intended for the personal benefit of the

recipient. The use of the word “honorarium” thus suggests a payment made to

For ease of reference, see Transcript Vol 3 p 129.

For ease of reference, see Transcript Vol 5, p 276.

Id.

a person for that person’s private benefit.

166. The Panel further notes that it is common cause that the three officials, Mr

Kiplagat, Mr Okeyo and Mr Kinyua, were not paid a salary during this

period,

although they did receive daily allowances, as well as travel and

mobile phone expenses. Mr Dean calculated that in the years 2010, 2011 and

2012, the total amount of the payments made by Athletics Kenya to Mr

Kiplagat, Mr Okeyo and Mr Kinyua (excluding Payments A to M discussed

above) amounted to KES 20,569,925. At an exchange rate of KES80 to US$ 1,

this represents US$ 257,124 in total for the three officials over the three years.

167. The Panel also takes into account that Nike was manifestly uncomfortable

about the payment of honorariums to the officials as appears from their

correspondence referred to at para 63 above. In the view of the Panel one of

the reasons for that discomfort may have been the fact that the honorariums

amounted to significant sums of money paid on an annual basis (between US$

65,000 and US$ 72,000 between 2004 and 2010) and US$ 100,000 as a contractual

service fee after 2010 and not nominal amounts at all. The Panel notes too that

Mr Kinyua admitted during his testimony that from 2013 onwards the service

fee was used to provide salaries to Athletics Kenya officials.

168. The Panel also notes that although both Mr Okeyo and Mr Kinyua

admitted to receiving honorariums and service fees throughout the period,

they both failed to provide any detail as to how they spent the funds. The Panel

also notes that Athletics Kenya covered the travel and other expenses incurred

by Mr Okeyo and Mr Kinyua in carrying out their duties to Nike, and that

neither suggested otherwise in their testimony. In the view of the Panel, neither

of the Defendants felt able to admit that they had used the funds for their own

personal benefit, but were unable to provide any cogent explanation as to how

the funds were otherwise used. In the light of all the aforegoing considerations,

For ease of reference see Mr Dean’s Expert Report, Bundle E, Tab 1 at para 6.1.

For ease of reference, see Mr Dean’s Expert Report, Bundle E, Tab 1, para 6.5

and 6.6

the Panel is comfortably satisfied that at least some of the money received by

Mr Okeyo and Mr Kinyua as honorariums and service fees were used by them

for their own personal benefit.

Did receipt of the honorarium payments and service payments constitute

diversion of funds of Athletics Kenya by the Defendants?

169. The Panel notes that it is clear that Nike understood and accepted that the

honorarium payments were made to Mr Kiplagat, Mr Okeyo and Mr Kinyua

and did not require any accounting for their expenditure. Nike’s email to Mr

Kiplagat in September 2002 (see para 58 above) suggests that Nike considered

that were the fact of the honorarium payments to become public it might be

harmful to Nike, and so the draft letter annexed to that email, was written to

“protect” Nike. And Nike acknowledged that the conditions set out in the draft

letter, which identified in a broad manner how the funds should be spent, and

stipulated that it was Nike’s understanding that the payments were made

“with the full knowledge of the Federation”. The letter written by Nike makes

clear that in Nike’s view the honorarium payments for the period 2003 – 2010

were paid to Athletics Kenya and it was for Athletics Kenya to determine how

the funds should be spent. It is also clear from the 2010 sponsorship contract

that the service fee was a payment made annually to Athletics Kenya for its

benefit.

170. Yet it is common cause on this record that the Nike honorarium payments

and service fee payments were not disclosed to the Annual General Meeting of

the Federation, nor were any of them included in the annual financial

statements between 2004 and 2013. As explained above, in three instances

(2004, 2006 and 2007), the payments were not included in the cashbook of

Athletics Kenya at all, and in the remaining years (2005, 2008 – 2013), the

payments were included in the cashbook but posted to the Clearance Account

with the consequence that they did not appear in the income and expenditure

statement for the year.

171. In the view of the Panel, this failure by the three senior officials to disclose

to the membership of Athletics Kenya the fact that Nike was paying

honorariums and service fees to Athletics Kenya, as well as the quantum of

those payments, and the beneficiaries who received them, was a material

dereliction of their duty of good faith towards the membership of the

organisation. It was also directly in conflict with the express intentions of the

donor, Nike, as set out in its letter of September 2003.

172. The Panel has concluded above that both Defendants received at least

some of the honorarium and service fee payments for their own personal

benefit throughout the period 2004 – 2013. In doing so, and in failing to disclose

the honorarium and service fee payments to the membership of Athletics

Kenya, the Panel is comfortably satisfied that the Defendants diverted funds of

Athletics Kenya for their own direct or indirect personal benefit, as charged.

Did Defendants’ conduct constitute a breach of the IAAF Ethics Code binding

upon the Defendants and within the jurisdiction of this Panel?

173. The next question that arises is whether in diverting funds of Athletics

Kenya for their own direct or indirect personal benefit, the Defendants acted in

breach of provisions of the Ethics Code that were binding upon them.

174. As mentioned above, the Defendants were each charged with breaches of

Article C(7) and Article H(17) of the 2003 Code, Article C(6) and H(18) of the

2012 Code and Article C1(11), C1(12) and C1(15) of the 2014, 2015 and current

codes. As discussed above, the events at issue in this matter all took place

before the 2014, 2015 and current Codes came into operation, so the charges

relating to those Codes cannot be sustained.

175. As set out at para 49 above, the Panel is comfortably satisfied that Mr

Okeyo was an official bound by both the terms of the 2003 Code and the 2012

Code. The 2012 Code came into force on 1 May 2012. The honorariums and

service fees paid from 2003 – 2012

were therefore all covered by the 2003

Code, while the service fee paid in 2013 was covered by the 2012 Code.

176. Turning first to the provisions of the 2003 Code. Article C(7) stipulates, in

part, that “all persons subject to this Code … must not act in a manner likely

to tarnish the reputation of the IAAF, or Athletics generally, nor act in a manner

likely to bring the sport into disrepute.”

177. In the view of the Panel, Mr Okeyo’s conduct in failing as Secretary General

of Athletics Kenya to disclose to the membership of Athletics Kenya the fact of

the substantial honorarium and service fee payments made by Nike to Athletics

Kenya in the period 2004 – 2012 and to account for these payments, constituted

conduct likely to bring the sport of athletics into disrepute. The Panel is also of

the view that his conduct in receiving honorariums and service fee payments

throughout the period without disclosing the fact of the receipt of such

payments was similarly conduct that was likely to bring the sport into

disrepute. In particular, the Panel notes that the diversion of funds of Athletics

Kenya by Mr Okeyo is closely linked to the sport of athletics, and would be

perceived to reflect negatively on the sport, and the administration of the sport,

if the fact of the diversion of the funds became known.

178. In reaching this conclusion, the Panel emphasises that senior

administrators in athletics federations must act with scrupulous care to avoid

any suggestion of financial impropriety in the administration of their

federations because the sport of athletics will be harmed by any suggestion that

administrators in the sport are receiving clandestine payments from sponsors

that are not disclosed and approved by their federations. The Panel notes that

Nike itself expressed concern as early as 2003 that if the payments were to

become public Nike would be harmed, and in its contemporaneous letter

written to “protect” itself, it asserted that it was its understanding that the

As set out at para 130 above, the 2012 payment, Payment N was received into

Athletics Kenya’s bank account on 13 January 2012 and withdrawn on 18 January

2012, before the 2012 Code came into force.

payments were being made with the “full knowledge of the Federation”. This

statement suggests that Nike considered that if the payments were made

without the full knowledge of the Federation, the reputation of Nike (and

Athletics Kenya, by necessary implication) would be harmed.

179. The Panel is not persuaded that Article H(17) which provides that “it is

the duty of all persons under this Code to see to it that IAAF Rules and the

present Code are applied” adds anything further to its analysis. In particular,

the Panel is of the view that any person charged with a breach of a particular

provision of the Code must be notified of that provision so as they can prepare

a meaningful defence to the charge. In this case, in the view of the Panel, it has

been established that Mr Okeyo breached Article C(6) of the Code and Article

H(17) does not establish a second breach, simply because it imposes an

obligation upon persons by the Code to see to it that the Code is applied.

180. We turn now to the 2012 Code. The Defendants were charged with a

breach of Article C(6) which prohibits “Betting on Athletics and other corrupt

practices relating to the sport of Athletics by IAAF officials or Participants,

including improperly influencing the outcomes and results of an event or

competition are prohibited. In particular, betting and other corrupt practices

by Participants under Rule 9 of the IAAF Competition Rules are prohibited.”

181. As mentioned at para 48 above, this provision is one of the few provisions

in the 2012 Code that imposes obligations both upon IAAF Officials and

Participants. The terms of Article C(6) prohibit corrupt practices in relation to

the sport of athletics, including improperly affecting the results of events and

competitions. In the view of the Panel, the terms of this provision suggest that

it is primarily concerned with prohibiting corrupt practices that relate to

competitions and events and that the term “corrupt practices” in the provision

does not have a more general import. Can it be said that the conduct of the

Defendants established in these proceedings constituted a breach of Article

C(6) of the 2012 Code? Although we did not hear oral argument from counsel

on this point, the Panel is not persuaded of this. As stated above, in the view

of the Panel, Article C(6) properly construed, prohibits corrupt practices in

relation to the sport of athletics in relation to events and competitions. The

conduct at issue in this matter concerns conduct relating to the administration

of an athletics federation, rather than to competitions or events.

182. The Panel notes that there are other provisions of the 2012 Code that could

be said to govern the conduct at issue in this case. Article C(8) states, in part,

and in similar terms to Article C(6) of the 2003 Code that “All IAAF Officials …

must not act in a manner likely to tarnish the reputation of the IAAF or

Athletics generally, nor act in a manner likely to bring the sport into disrepute.”

And Article D(11) states that “Except as may otherwise be permitted under this

Section D, no IAAF Officials shall, directly or indirectly, solicit, accept or offer

any concealed remuneration, commission, benefit or service of any nature

connected with their function as an IAAF official”. These provisions were not

relied upon in the notification of charge, however, and therefore cannot be

further considered.

183. The Defendants were also charged with a breach of Article H(18) of the

2012 Code. It is in similar terms to Article H(17) of the 2003 Code and provides

that it is “the duty of all persons under this Code to see to it that IAAF Rules

and this Code of Ethics are applied.” It might be argued that the effect of

Article H(18) is, that if it is established that a person is found to have breached

a provision of the Code, despite not have been charged with a breach of that

provision, that the person will nevertheless have been shown to be in breach of

Article H(18) because he or she has not observed the duty to “see to it” that the

Code is applied. In the view of the Panel, such an argument should not

succeed. Those charged with a breach of the Code are entitled to know which

substantive provision they are alleged to have breached so that they can mount

a meaningful defence to the charge.

184. The Panel accordingly concludes that Mr Okeyo is in breach of his

obligation under Article C(7) of the 2003 Code in that he engaged in conduct

that was likely to bring the sport into disrepute. The breach was occasioned by

his diversion of funds of Athletics Kenya for his own direct or indirect personal

benefit in the years 2004 – 2012.

185. Although Mr Kinyua has been found to have engaged in similar conduct,

because he was not bound by the 2003 Code of Ethics he cannot be found to

have been in breach of that Code. Similarly, neither Mr Kinyua nor Mr Okeyo

are found to have been in breach of the two provisions of the 2012 Code of

Conduct with which they are charged, that is, Article C(6) and Article H(18).

Payment E and Payments K and L

186. At para 144 above, the Panel observed that it was troubled by the lack of

fit between Nike’s identified purpose for Payment E, which suggested that the

payment was to sponsor the Kenyan National Cross Country Championships

and the description given in the payment voucher, which suggests that the

withdrawal was paid to three “Federation officers who work daily without

remuneration”. Having considered this divergence in the light of the other

evidence, the panel is comfortably satisfied that when the payment voucher

states that the payment was directed to the three Federation officers who work

daily without payment, it was speaking of Mr Kiplagat, Mr Okeyo and Mr

Kinyua. The Panel is also comfortably satisfied that Payment E was a payment

that was diverted by the Defendants for their own direct or indirect personal

benefits. The diversion of this payment too constitutes a breach by Mr Okeyo

of Article C(7) of the 2003 Code.

187. At para 120 above, the Panel concluded that one of the withdrawals that

related to Payments K and L, the withdrawal that reimbursed Pamdozi for the

signing fee with Li-Ning, constituted the diversion of Athletics Kenya funds

diverted for the indirect benefit of the Defendants. The diversion of this

payment too constitutes a breach by Mr Okeyo of Article C(7) of the 2003 Code.

188. For the reasons given at para 51 above, because Mr Kinyua was not bound

by the provisions of the 2003 Code, his conduct in relation to payments E, K

and L does not constitute a breach of his obligations under that Code.

Summary of conclusions on charges

189. The Panel has found that Mr Okeyo’s conduct in diverting some of the

payments he received relating to Payments A, C, D, E, F, K and L, M and N, as

well as the honorarium payments for the years 2004, 2006 and 2007, for his own

direct or indirect personal benefit constituted breaches of his obligations in

terms of Article C(7) of the 2003 Code. Mr Kinyua was found not to have been

bound by the provisions of the 2003 Code so accordingly not be in breach of

any obligations imposed by that Code.

Appropriate Sanction

190. Article D(17) of the Statutes of the IAAF Ethics Commission (as mentioned

above the name of the IAAF Ethics Commission has been changed to Board

and to avoid confusion the word “Board” is substituted in the following quote

to avoid confusion) provides as follows:

“The Ethics [Board] shall have the following powers to be exercised in

accordance with the Procedural Rules where applicable:

(i) to caution or censure;

(ii) to issue fines;

(iii) to suspend a person (with or without conditions) or expel the person

from office;

(iv) to suspend or ban the person from taking part in any Athletics-related

activity, including Events and Competitions;

(v) to remove any award or other honour bestowed on the person by the

IAAF:

(vi) to impose any sanctions as may be set out in official Rules;

(vii) to impose any other reasonable sanction that it may deem to be

appropriate, including community service within athletics and/or

restitution; and

(vii) for any appeals under C16(v) above, to uphold, dismiss or refer back

to the Member Federation for further consideration and to do so without

procedural costs.”

192. The Panel notes that Mr Okeyo has been found to have committed

breaches of the Code on ten occasions over a long period of time. Moreover,

the effect of his conduct was to deprive Athletics Kenya of income from its

sponsor that could have been better directed to support the development of the

sport of athletics in Kenya. In the view of the Panel the pattern of conduct

warrants serious sanction to establish the firm principle that federation officials

must act scrupulously and transparently in managing the finances of their

federations in order to protect the name and reputation of the sport of athletics.

In all the circumstances, the Panel decides that Mr Okeyo should be expelled

from his office as a member of the IAAF Council and banned for life from

taking or holding any office in the sport or taking part in any Athletics-related

activity. The Panel imposes this ban with effect from the date of this decision.

193. The Panel notes that these disciplinary proceedings concern the diversion

of funds from Athletics Kenya and it considers that it would in the

circumstances be appropriate to levy a fine on Mr Okeyo, and for the fine to be

paid to the account of Athletics Kenya. It notes that the levying of this fine

should be without prejudice to the right of Athletics Kenya to pursue any civil

remedies it may have. Accordingly, Mr Okeyo is ordered to pay an amount of

US $50,000 to Athletics Kenya. The fine shall be paid within 90 days of the date

of this decision.

Costs

194. The total procedural costs incurred by the Ethics Board in connection with

this matter exceed US$ 350,000. The Panel notes that this amount reflects an

appropriate apportionment between the costs of this matter and the separate

disciplinary matter against Mr Okeyo and Mr Mwangi relating to charges of

extortion (in respect of which the Panel has yet to issue its decision at the date

of publication of this decision).

195. Of the total procedural costs, in principle half (i.e. US$175,000) ought to be

borne by Mr Okeyo. However, the Panel has decided to reduce the amount it

will require him to bear. In so doing it took account of the fact that the

procedural costs were considerable, that not every factual allegation and legal

argument against Mr Okeyo as charged has been proved (albeit that the

prosecution cannot in any sense be said other than to have succeeded on the

case against Mr Okeyo), as well as of the fact that the logistics involved in

holding a hearing in Kenya meant that there were certain additional costs

which the Panel has concluded in its discretion not to award against Mr Okeyo.

The Panel nevertheless observes that the decision to hold the hearings in Kenya

was at the request of the Defendants and was taken for their benefit. That

decision had the effect of saving the Defendants and their legal representatives

from the cost and inconvenience of travelling to a hearing in another

country. In all the circumstances the Panel will therefore make a costs award

in the IAAF's favour against Mr Okeyo in the sum of US$100,000.

196. The Panel determines that the fines and costs set out above should be paid

within 90 days of the date of this decision.

Final remarks

197. The Panel concludes with the following observation. The misconduct in

this matter resulted in the diversion of substantial funds that could have been

used to develop athletics in Kenya. Kenya, as members of the Panel well know

and many of the witnesses mentioned, is a country that excels at athletics,

something of which many Kenyans are justly proud. This decision affirms the

fundamental principle that the IAAF Ethics Code requires that the funds of

Athletics Kenya should be used to promote Kenya’s continued excellence in the

sport and not diverted for private gain.

Right of Appeal

198. The parties have a right of appeal against this decision to the Court of

Arbitration for Sport, within 21 days of the date of this decision, in accordance

the procedure set out in rule R47 et. seq. of the CAS Code of Sports-related

Arbitration (http://www.tas-cas.org/en/arbitration/code-procedural-

rules.html).

Signed:

Catherine O’Regan

Kevan Gosper

Annabel Pennefather

Date: 30 August 2018

ANNEXURE: Ruling on Preliminary Objections 29 January 2018

Preliminary Objection 1

1. Objection to the manner in which the Investigator conducted the investigation.

1.1. On the basis that he obtained assistance from an individual called Mr

Ndegwa;

1.2. In relation to a range of issues raised by Mr Mwangi in his Amended

Statement of Defence.

Objection dismissed.

Preliminary Objection 2

2. Objection in relation to the procedure adopted following finalisation of the

Investigation Report and in particular that new evidence and an expert report

were introduced, on the basis that no further evidence can be gathered and no

further witnesses identified after the finalisation of the Investigation Report.

Objection dismissed.

Preliminary Objection 3

3. Objection to admission of Expert Report of Mr Barry Dean on three grounds:

3.1. That he was not competent to gather evidence after the final Investigation

Report. Objection dismissed.

3.2. That the Expert Report of Mr Barry Dean and its Addendum were lodged

too late to enable the parties to prepare an adequate defence:

3.2.1. In relation to Expert Report lodged on 14 December 2017: Objection

Dismissed.

3.2.2. In relation to the Addendum Report lodged on 23 January. Not

determined. Parties are entitled to re-launch objection to

admissibility of the Addendum Report once the evidence of Mr

Dean has been heard.

3.3. That in preparing the Expert Report, Mr Dean or the Prosecutor usurped

the proper functions of the Investigator. Objection Dismissed.

Preliminary Objection 4

4. Objection in relation to the role of the Chairman of the Ethics Board in reviewing

the Investigator’s Report in this matter. Objection Dismissed.

Preliminary Objection 5

5. Objection in relation to amendment of charges by Chairperson of the Ethics

Board subsequent to the finalisation of the Investigator’s Report and following

on from the preparation of the Expert Report by Mr Dean. Objection Dismissed.

Preliminary Objection 6

6. Objection that the complaint in relation to the diversion of funds of Athletics

Kenya for personal gain had been originally brought by a person who was not

eligible to bring a complaint and that therefore the complaint was invalid and

incompetent. The two grounds were that:

6.1. The identity of the complainant was not disclosed. Objection Dismissed.

6.2. At the time that the complaint was brought the person was a former

employee of Athletics Kenya. Objection Dismissed.

Preliminary Objection 7

7. Objection that charge relating to diversion of funds lacked clarity and that it was

not clear what its relationship was to the facts in the Investigation Report.

Objection Dismissed.

Preliminary Objection 8

8. Objection in relation to the role of the Chairperson of the Board in subsequent

proceedings and particularly allegation that Chairperson was involved in

determining hearing dates and in listing this matter for hearing and in the

amendment of charges subsequent to the original Notification of Charge.

Objection Dismissed.

Preliminary Objection 9

9. Objection relating to the fact that documents were presented to the parties

without affording them an adequate time to prepare. This was in relation to the

following:

9.1. Statements that had not been included in the record beforehand, that

were circulated yesterday in relation to two witnesses: Ms Agatha Jeruto

and Mr Matthew Kisorio. The party who is affected by the statements

objected to their inclusion. Decision reserved until Thursday morning (1

February 2018). I am minded to admit the statements on the basis that

any party who considered that they would need further time or would

need to lead further evidence as a result of those statements would be

entitled to do so.

9.2. Timesheet relating to charge against Mr Mwangi. Decision reserved until

Thursday morning (1 February 2018).

9.3. Three witness statements from witnesses who had previously provided

statements. Mr Kipchumba, Ms Sakari and Ms Manunga. Statements

Admitted.

9.4. Two emails between Mr Kiplagat and Mr Lotwis dated 10 September

2009 and 13 August 2010. Admission Refused.

9.5. Minutes of Athletics Kenya Executive Committee meeting 23 June 2010.

Admission Refused.

Cheque Stubs relating to the Addendum Report of Mr Dean. Decision deferred until

Panel has had opportunity to hear Mr Dean’s evidence.

Preliminary Objection 10

10. Objection that the complaint made in relation to the second charge about the

extortion of athletes was made in the Press and therefore not by a competent

person. Objection Dismissed.

Preliminary Objection 11

Objection relating to issue raised on behalf of Mr Mwangi, who asserted the right to

cross examine witnesses who had not been called. Objection Dismissed.