This story originally appeared in the Fightful Boxing Newsletter, which releases each Thursday morning.
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The International Boxing Association (AIBA) is now suffering from potential bankruptcy issues with former members of the governing?s Executive Committee standing firm in alleging the organization is mishandling certain funds and is massive debt.
According to The Guardian, amateur boxing's governing body has yet to pay back millions dollars in loans and investments and could potentially face bankruptcy.
There had been issues at the top of the governing body after the treasurer and finance director resigned following claims that they "were sidelined" by AIBA President Wu Ching-kuo. An executive committee member was also removed by the AIBA president after the executive was worried about possible irregularities within the organizations finances. That executive member was reinstated by Swiss courts, where AIBA headquarters are located, in mid-July.
AIBA has been under scrutiny for some time now, with numerous claims by many in the boxing community that the judging had been subpar. Current pro boxer Michael Conlan, who recently fought on the Manny Pacquiao vs. Jeff Horn undercard, made headlines at the 2016 Summer Olympics after he believed he was robbed by the judges in his quarterfinal fight against Vladimir Nikitin.
Azerbaijani company Benkons also sent out a letter demanding AIBA to pay back an £8 million loan from 2011. A source within the organization said AIBA only has £2 million in its account despite receiving about £14 million in investments from the IOC to help the organization through the 2020 Summer Olympics, which will take place in Tokyo.
The organization published a letter on its official website responding to the media reports and condemning the financial mismanaging of a former executive member, part of which can be read below.
"Regarding the Azeri loan, Benkons MMC had never claimed any payment from AIBA nor called upon the guarantee contained in the Investment Agreement until its letter dated July 19, 2017. Benkons and AIBA in fact had reached an agreement in which AIBA assumes the obligation to reimburse the loan and Benkons MMC agrees to a repayment schedule. Benkons? lawyers reviewed this Settlement Agreement and expressly approved its content on all the essential features. AIBA was surprised at the letter and its leaking to the press, and has initiated arbitration proceedings against Benkons in Switzerland seeking a declaration that the Settlement Agreement is valid and binding."
To add onto the growing debt, a Chinese company called First Contract International Trade sent documents to the AIBA demanding it pay back an 18.99 million Swiss francs investment that the governing body put into its marketing department BMA.
In a letter to AIBA?s executive committee last month, Wu suggested he did not put more money into BMA because it was losing millions and that his requests for more board meetings, a credible business plan, and a ?specific and clear report on this unreasonable huge loss? were not being met.
Rob Garea, AIBA?s financial director, also resigned, but not before suggesting that he was not consulted on key contracts and was worried about accounting irregularities within the governing body. In a letter to Executive Committee members seen by the Guardian, Garea raised concerns about the spending of the organization.
?The president?s office in Taipei is paid for ? at the cost of 200,000 Swiss francs a year with another 120,000 of the president?s representational fees, including travels, per diems and merchandising giveaways paid for by AIBA. That is more than AIBA has given to its five confederations to help fund and promote the sport over the past 12 months. In my opinion, the money spent on legal, communication and travel fees is out of proportion and wasteful. AIBA HQ focuses heavily on presidential PR management. I believe the management culture of the organization is neither inclusive nor transparent and needs reforms,? Garea wrote.
The AIBA held a two-day Executive Committee in Moscow, Russia to address numerous issues regarding the governing body and its mission to bring boxing into the 2020 Summer Olympics, which will be held in Tokyo, Japan. Key decisions were reached on the host cities for AIBA?s flagship international events ahead of the start of an exciting new partnership for world boxing, Alisports, delivered their vision for the global growth of the sport and for unleashing AIBA?s marketing and online potential.
In that meeting, it was finally concluded that the hosting rights for the 2019 and 2021 Men?s World Boxing Championships were awarded to the Russian city of Sochi and India?s capital New Delhi, the Women?s World Championships for 2018 and 2019 to Trabzon in Turkey and New Delhi respectively, and Moscow will host the 2018 AIBA Congress.
The meeting also confirmed that there is a sort of civil war taking place within the organization, as Wu, without naming names, called the group that have left, or tried to leave, the organization ?a negative faction within the Executive Committee that appears to be bent on creating a false narrative in the media.?
KPMG, a global finance firm, presented their financial audit of the organization at those meetings which was approved by the AIBA. This was the first audit for the first time in three years, noting the improved financial transparency and cooperation since Rio 2016. The audit was confirmed by the Executive Committee, which was very pleased with what the financial records and audit had showed. It was agreed that the financial situation and positive forecasts, with significant increases in hosting fees sponsorship and licensing income, will be communicated to all AIBA member federations in the second half of the year.
The city of Hamburg, Germany, will host the 2017 edition of the AIBA World Boxing Championships, which will run from August 25 to September 2.