Out to Ruin FIDE?

In yesterday's summary of the recent Executive Board meeting at the 82nd FIDE Congress, 2011 FIDE Executive Board : Whither the World Championship?, I mentioned a 'discussion of two lawsuits that have cost FIDE heavily'. The remarks were made during Ilyumzhinov's Report of the President. Here they are as reported in the minutes of the meeting.

Speaking about problems which FIDE is facing, I would like to draw your attention to a law suit, initiated by English Chess Federation and Georgia. I just want to mention that we have a necessity to amend the FIDE Statutes, regarding the place of settling legal disputes -– CAS of Lausanne. When I was in Tbilisi in summer for the opening of the European Women’s Chess Championship and also festivities to celebrate birthdays of two great chess players, Nona Gaprindashvili and Maya Chiburdanidze, I spoke to the President of the Georgian Chess Federation and I asked them why they sued FIDE and during the negotiations I clearly understood that this process has nothing to do with technical or sporting aspect of FIDE’s activities. I was told that I should make an agreement with Kasparov and President of Georgia. This is a pure politically cooked suit, and this has to be solved in another legal institution, and not in Sports arbitration. Mr. Makropoulos will speak in detail about this.

We had a suit against Karpov and Kasparov, in CAS of Lausanne, last September. Kasparov found sponsors in the US, who paid all expenses for this suit. You know that the meeting was also had political background and aims. And we did win the court case, but we all together lost more than 1 million USD. We all make money for chess and in one month we spend for the lawyers this amount of money. This is cash we are talking about, we could have spent this money for chess in schools or our development programmes. Now if England and Georgia do not revoke this suite, we will spend another million in legal expenses, and the 1 million USD which we would receive for chess in schools, but it would be spent for our lawyers in Lausanne.

The first lawsuit mentioned in that excerpt, the one initiated by the ECF and the country of Georgia, was chronologically the second. Since there is no explanation of what the lawsuit involves, let's turn to the Streatham & Brixton blog for a summary: Independent and accountable.

The case revolves around the appointment of extra FIDE Vice-Presidents, which, it is alleged, is unconstitutional. • It is being paid for by Garry Kasparov - or so it is suggested, and at any rate will not, it is claimed, cost (or risk) the ECF a penny • Kasparov (or whoever it may be) is not able to take the case to the Court of Arbitration for Sport in Lausanne because the complainant needs to be a federation affiliated to FIDE, and hence, presumably via Nigel Short and/or CJ de Mooi, it's been agreed that the ECF should do it.

The second lawsuit mentioned, stemming from Karpov's 2010 bid for the FIDE presidency, was discussed later in the minutes of the Executive Board, during the Financial report.

Mr. Freeman [FIDE Treasurer] said [...] You can see that in the last year accounts that FIDE made a very small loss and that is despite us having legal fees more than was expected. When he did the budget he was not sure regarding the Khanty-Mansiysk Olympiad, and he did not budget for all the income, and legal fees were very high.

You all know what this court case was about – five federations together with Karpov2010 campaign sued FIDE that we illegally accepted nominations for Kirsan’s ticket. The CAS first of all decided that Karpov2010 is not an entity to join so the suit was brought by the five federations and result was that the only ticket that had an illegal nomination was from one of the federations who was suing us. That does not help. We are attempting to try and recoup the costs. 65% of the CAS costs were awarded to us and small extra sum on top of that, but none of our legal costs. This case is in the CAS at present and we are waiting to see the outcome.

You will be glad to hear that the view of the five federations is that they themselves cannot afford to pay but that FIDE is a big organisation which is rich and can raise the amount by putting a levy on all FIDE federations to pay the cost. In this case they seem to be trying to get the Greeks to pay for the Germans! We do not know if we will get some of the money back until the case is finished. The amount of nearly one million USD was spent on lawyers. We hope that expenses in respect of the second case will not reach this level. And you will see in the budget for 2012, which is ready and will be brought in later, that contingency for legal fees is included. We hope that Kasparov will stop continuously to sue us, but we cannot judge this in advance.

The CAS decision is recorded in a September 2010 document on Chessvibes.com, ARBITRAL AWARD delivered by COURT OF ARBITRATION FOR SPORT [PDF], and names the five federations: 'national chess federations of France, Germany, Switzerland, the Ukraine and the United States'. The cost of the lawsuits is recorded in an annex distributed as part of the minutes. Legal Costs of EUR 900,321 in 2010 (vs. EUR 83,711 in 2009) was the largest item in Total Expenses of EUR 2,249,975 in 2010 (EUR 1,462,544 in 2009). A Euro (EUR) is currently worth about USD 1.30. Continuing with the minutes:-

Mr. Yazici [Vice President] thanked Mr. Freeman for efforts to balance the account under the situation. He said that we have applied for recovery of costs, but asked whether there is a plan B against these federations who sued us as this money would have been used for the benefit of chess.

Mr. Freeman said we should wait and see the outcome in the CAS and then it is up to FIDE to decide if we wish to take any further action.

Mr. Hamers [Zone 1.1 President] asked Mr. Freeman about the legal fees and said that in the Verification Commission we talked about this. We see an enormous amount of money without specification. He said former legal cases were much less. We asked for specifications and justification of expenses. Verification Commission will look into this after the Congress. It is difficult to make a judgement as we do not know the details.

Mr. Freeman said that as he had said in Verification Commission the White and Case were acting very aggressively and that the CAS has never seen so much documentation. White and Case were flooding the CAS with documentation and the trouble is that CAS is arbitration court for sports and it is not like a court in any country, they are not used to this type of behaviour. We have professional Swiss lawyers, they are good, they had to take time, and there were also lawyers from other countries. This also damages FIDE professionally as well considering the time spent by FIDE staff on this. This is why we should consider the amount of hours spent on the case. Mr. Boxall knows the figure and he will require the additional info, he will receive it, and the bills were inflated by White and Case’s assertions that had to be responded to and not by FIDE. I understand that Karpov2010 guaranteed the federations concerned that they would not suffer. Now it is said that they cannot afford the guaranteed costs. It is easy for FIDE to claim its money from its federations, this is what they are saying. He advised Mr. Hamers to speak to the suing federations, so the question should be to them, not to FIDE. We presume that they were discussing the subject with White and Case on a regular basis.

[...]

Mr. Makropoulos [Deputy President] proposed to publish this on the website. He said Mr. Hamers is right to raise such concerns as FIDE won the case. He said FIDE should stop asking expenses from these federations, but some of the federations do not learn their lessons, but then we will win again and maybe this is the only solution. he was informed that Mr. Kapustin said that FIDE should reserve more money in the budget as bigger legal cases are coming. He said he had personal discussions with the only person who is really worried, which is Mr. Azmaiparashvili. The others do not worry at all about the amount of money spent.

Mr. Gelfer [Vice President] said he has been talking about this in the last 5 years insisting that we should change the system and predicting that we will win cases and lose money. Not only that this can be left on the air, we mean here 50% of the FIDE budget. He thinks that we have very good and honest lawyers but still that if we think like a businessman, it is an enormous amount. Kasparov is planning some more law cases, what we can do, we are planning to change the Statutes that such cases should go to civil system where we have a prospect of not spending so much. CAS has a different approach, and they do not know that we have no money to spend on court cases. We will never get money back from CAS.

The discussion moved to the newer lawsuit.

Mr. Azmaiparashvili [Vice President] said that thank you Mr. Makropoulos mentioned me and this is true that many people are worrying that FIDE is spending huge amount of money on court cases which can be used in proper way to develop chess. But what I want to say and I am talking about the current court case, right now with FIDE, where English and Georgian Federations are in the court. I am saying that 14 federations approximately sent to FIDE letters asking FIDE to correct the mistake and to defend the statutes and nobody was planning to go to the court and force FIDE to spend money, but unfortunately FIDE did not react and did not correct their mistake and my federation felt insulted, but if FIDE any day is ready to correct the mistake, then we intend not to spend so much money for the lawyer. I was sorry that Mr. President mentioned the discussion with Mr. Giorgadze, I was not present and I have no information about this discussion and the President of my country is mentioned. And we have an independent country, democratic country, and the President is not involved in our federation’s politics.

Mr. Makropoulos said that there was a letter from Silvio [Danailov; Continental President for Europe], but there are no signatures or no stamps from other federations. But we saw that two federations go against us. The main point is that let’s say FIDE wins the case, that what we should correct the mistakes. You were also nominated as one of the Vice Presidents outside of the Statutes, and always General Assembly makes a decision, and it is a respected decision. And this is practice for 30 years. So the question is if we win and we spend the half of million and should we recover the costs from these two federations or not. This is a risk and this is what everyone is worried about.

Mr. Yazici said that in any democracy suing is the right of any member. I cannot understand why one is trying to defend oneself more than necessary. But when we come to the point of Mr. Azmaiparashvili, I did not know that FIDE received such a proposal. If Georgia and England are ready to withdraw the suit case, I am ready to resign on the spot. We do not care for the titles. Maybe there are some who can resign but then the two federations have to cover all

The FIDE President gave a historical recourse to the relations between Kasparov and FIDE, and between Kasparov and himself. He said that unfortunately the main aim of Mr. Kasparov is to ruin FIDE, not help FIDE.

[...]

Mr. Danailov said with all my respect to the speech of K. Ilyumzhinov, he said not only he but many other people share a lot of negative opinion of Mr. Kasparov, but he wants to share his personal experience, but he is not here to defend Mr. Kasparov. He said that Mr. Kasparov joined ECU and helped them a lot, they created a special Chess in Schools project, they invested 100,000 euro to this Commission, we met all together two officials in UNESCO. He thanked Mr. Tornaritis for arranging the meeting. And recently there was an important presentation before MPs in European Parliament. He is grateful for the support of Mr. Kasparov. He said we have to appreciate this. And this was done by Mr. Kasparov for free. I think that for FIDE instead of making war, we should find some ways to use his name as he can be very useful for the world of chess.

This was followed by a discussion on a possible settlement: 'if two Vice Presidents resign, then the case will be dropped'.

Mr. Al Hitmi [Honorary Vice President] said why FIDE is at defensive side. I know at the democratic organisation, General Assembly has a final power to nominate any number of Vice Presidents, this is the choice of the people. I suggest that I will do it by myself. FIDE should sue these people and ask for paying for damaging our reputation. I will do it myself in my capacity as Vice President. We should teach them if they do not honour our General Assembly.

Is Kasparov behind the English / Georgian suit or not? If he is, it makes me wonder if this was his real reason for supporting Karpov's bid for the FIDE Presidency last year. Whether Karpov won or not, there was bound to be material for a potential lawsuit against FIDE. Or two lawsuits.