Rio legal bill cost Olympic Federation over €440,000 in 2017

Legal costs surrounding the arrest and detention in Rio de Janeiro of former Olympic Federation of Ireland (formerly OCI) employees, including president Pat Hickey, amounted to €444,182 in 2017.

The latest financial results for 2017, which were recently posted on the federation website, show that legal bills for that year alone came in two lump sums. The amounts were €174,603 and €349,138.

“We can now report that we have expensed a further €349,138 and this represents the cost this year to the company,” says the financial statement. “During 2017, the company recognised reimbursements of €174, 603 bringing the total reimbursements in this regard to €444,182.”

The 2018 financial results are not yet available and are expected in June. Prior to 2017, OFI President Sarah Keane had disclosed that the legal costs up to that point had exceeded €1 million, taking the legal costs of Rio up to the end of 2017 close to €1.5 million.

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By then the Rio Olympics ticketing controversy had already consumed a vast amount of OFI cash reserves, leaving them with a deficit of €826,000 for 2016.

Speaking ahead of the 2017 AGM at the National Sport Campus, the then recently elected president Keane described the previous year as “chaotic, dramatic, traumatic, and extremely costly”.

The 2017 financial statement adds that the OFI do not know what the final legal cost will be and do not know if the insurance they have in place will cover their current liabilities.

“As detailed in the 2016 financial statements, the controversy surrounding the Olympic Games in Rio resulted in a significant cost to the organisation. This cost was a combination of known costs at the time of issuing of the financial statements as well as estimations of accruals and provisions required to account for costs not yet invoiced at the time,” said the statement.

“The full extent of costs relating to defending legal claims will only be known when these proceedings have been concluded. Likewise, the level of recovery of these costs against our insurance is also uncertain at this point.”

During 2017 the OCI held 15 board meetings in order to cope with the fallout of Hickey’s arrest and the reorganisation of the council. OCI governance and transparency then became the key points following a series of recommendations from Deloitte, who carried out a root and branch report.

Ticket touting

The financial statement also says the OFI held an EGM in January 2018 and decided that the executive committee write to the IOC proposing that Hickey, as an International Olympic Committee (IOC) member, would not have a right to sit on the OFI Board with an automatic voting right.

The IOC pointed out that under Olympic Charter all IOC members must be entitled to sit on the executive committee with a vote. That remains the case although Hickey, following Rio, ‘self suspended’ himself from IOC membership. The OFI say he has not sat in on any of their board meetings.

The trial in Brazil of Hickey on ticket touting charges was suspended in November 2017, ensuring he was not required to return to Rio from Ireland for the trial date of November 29th, as was originally scheduled. The supreme court in Brasília explained that an injunction to suspend the case, granted to THG executive Kevin Mallon, “extends to all of the accused in this process”.

The other accused were Mr Hickey and Barbara Carnieri, who was arrested alongside Mr Mallon in a hotel in Rio on the eve of the 2016 Olympic Games.

Both men faced charges of alleged ticket touting, tax evasion and money laundering. They denied any wrongdoing, with Hickey repeatedly claiming he would be “cleared of all charges”.

Despite the extensive legal bills to date, the 2018 financial statement is expected to show a dramatic decrease in exposure to legal costs.

“Yes, 2017 was a difficult year as was 2016,” said OFI chief executive Peter Sherrard.

“But things have turned for the better and we are finding a lot of goodwill from stakeholders and sponsors. In relation to Rio and legal costs for 2018, I can confirm they have been reduced and will be in the region of €50,000.”

The OFI has not received any indication when or if the suspended trial will resume and have not had any contact with officials in Brazil.