Kasparov vs Ilyumzhinov: the FIDE Presidency battle begins

[Angus French]

Without knowing much about company accounts, presumably:

(a) there might be all sorts of good reasons why a company might have capital of only two dollars at any given time?
(b) it would be surprising if this were a permanent state of affiars if that company organised events of any kind?
(c) if (b) is true, there ought to be accounts of some kind somewhere, whether publicly-available or otherwise?

My understanding - and I'm not an accountant:
(a) It's only the nominal value of the shares. It's not the worth or net assets of the company;
(b) I guess this isn't application given my interpretation of (a);
(c) Good question. Why would an organisation do business with a company which keeps its finances private? This seems especially relevant if the organisation is a global governing body such as FIDE.

[Roger de Coverly]

(c) if (b) is true, there ought to be accounts of some kind somewhere, whether publicly-available or otherwise?

There were any number of people providing services to both the Grand Prix event and the London Candidates, some of whom post on here. Presuming they got some form of remuneration for their services, who or what was paying?

If the issued share capital is just $ 2, then for the Company to function, it would have to borrow money. It's far from unusual for the principal shareholder to provide this, but it wouldn't preclude other lenders who could be private individuals or even banks.

As well as the question of who owns Agon, which Chris Rice has confirmed to be AP, there's also the question of who finances Agon.

[Angus French]

Isn't all this stuff about Agon a smokescreen?

The real issue - for me anyway - is what Kasparov and his team are doing to secure votes - an issue on which Nigel Short, the ECF Delegate to FIDE, has yet to comment.

I did a bit of checking with the Jersey company registry and find that Agon Ltd submitted an Annual Return for February 2013 (which they are required to do under Companies (Jersey) Law 1991) which revealed that the Number of Ordinary shares to be issued was 10,000. Of those 10,000 the number issued to date was two (both were issued to Andrew Paulson who was registered at a London address) and the total amount received for these was $2. It cost me £2 to get this information which means I effectively paid more than the stated capital value of the company. It does, if nothing else though, confirm though that Andrew Paulson is the sole owner of Agon Ltd.

All companies are required to keep accounts under Jersey Law but presumably as its a private company it doesn't have to make those accounts public. I don't know but certainly I can't trace any accounts for Agon Ltd on the company registry or anywhere else. If they don't exist its going to lead to further speculation that Agon Ltd is just a shell company and the agreement with FIDE is and was worthless from the start.

Thank you Chris, that's very interesting. I don't suppose the search result was in the form of a document which could be made public (I guess not but thought I'd ask)?

[Chris Rice]

It's a pdf document Angus on a Jersey Companies House C20 Annual return form. The only reason I haven't shared it is because the only additional information is Andrew Paulson's address, which may be his residential address for all I know and as it doesn't add anything to the argument I didn't feel it warranted to disclose it on the EC Forum.

[JustinHorton]

If the issued share capital is just $ 2, then for the Company to function, it would have to borrow money.

Although presumably it could "borrow" money from its owner, i.e. it would operate as a vehicle to receive or make payments when an event was running, and at the conclusion of the event the surplus would be transferred elsewhere? (Again, I'm out of my depth here - please tell me if I'm writing in ignorance.) There'd be nothing improper about this, but it'd be interesting nonetheless.

[Chris Rice]

If the issued share capital is just $ 2, then for the Company to function, it would have to borrow money.

Although presumably it could "borrow" money from its owner, i.e. it would operate as a vehicle to receive or make payments when an event was running, and at the conclusion of the event the surplus would be transferred elsewhere? (Again, I'm out of my depth here - please tell me if I'm writing in ignorance.) There'd be nothing improper about this, but it'd be interesting nonetheless.

There is nothing improper so far in the way Agon Ltd is set up its just that the lack of accounts information gives us nothing to go on. However, it occurred to me when reading the Agon-FIDE agreement (in Angus's post of 27 Jan 1.50pm) that the agreement states "5. Assurance of funding - Agon will pay a cash deposit to FIDE of $500,000 within 60 days of the signing of this agreement..." Now the agreement was signed on 20 February 2012 and therefore whether this cash had been paid or whether it was still owed it should still feature in FIDE's 2013 published audited accounts which ran up to year ending 31 December 2012. I can't find it (perhaps someone else can take a look to see whether I have missed it somewhere?) and it seems scarcely credible that if Ernst & Young the auditors had seen this agreement it wouldn't at least be in the notes to the accounts. In which case why isn't it?

http://www.fide.com/images/stories/NEWS ... nnex_1.pdf

[Roger de Coverly]

Although presumably it could "borrow" money from its owner, i.e. it would operate as a vehicle to receive or make payments when an event was running, and at the conclusion of the event the surplus would be transferred elsewhere?

You could operate that way, but if the event made a profit, you might need some documentation before money was transferred permanently out of the Company. You could repay the owner perhaps with interest, but if there were to be profit or revenue sharing with a third party, an accountant verifying the accounts might expect there to be a prior agreement to that effect. Agon has such an agreement with FIDE for future sharing of revenue as made public at one of the Congresses or Presidential Board meetings.

Nigel, above, was suggesting that the Sunday Times had got hold of some signed agreement between Agon/Paulson and Kirsan. Their article as published doesn't seem that specific, perhaps they have more revelations planned for the coming weekend.

The loan approach can have benefits. If as owner you put in $10,000 as share capital, you cannot so easily take it out again. If you put in $2 as share capital and $9,998 as loan, the money can be retrieved by repaying the loan.

[Roger de Coverly]

[Agon will pay a cash deposit to FIDE of $500,000 within 60 days of the signing of this agreement..." Now the agreement was signed on 20 February 2012 and therefore whether this cash had been paid or whether it was still owed it should still feature in FIDE's 2013 published audited accounts which ran up to year ending 31 December 2012. I can't find it.

An amount of that size should be visible somewhere. Are they allowed to leave it out if it is regarded as having no value or hasn't yet been received? A clearer treatment would have been to show it as Income and then as an expense as a bad debt. Amounts owed by Federations appear to have that treatment.

[John McKenna]

Apologies for interrupting normal service.

There follows excerpts from ChessBase's Contractgate? The Kasparov-Leong Agreement -
http://en.chessbase.com/post/contractga ... -agreement

1/25/2014 – The story began last weekend, when a draft contract between Garry Kasparov, who is running for FIDE President, and his running mate Ignatius Leong were leaked.

[Yes, the story began then but the actual events of the story began last July - see below. JM]

The first we heard of the matter was on January 18, in a message sent to us (and some German newspapers) from someone calling himself Bill Warth...
On Jan. 19 Sand issued a statement confirming that his law firm had a regular retainer contract as an advisor helping Garry Kasparov to become the next FIDE President, and that the draft contract being circulated was indeed by him.
"I sent it to Ignatius in July, using his FIDE email account. The only way to get possession of this draft is through the administrator of the mail account in FIDE. There can only be political reasons for why this is now made public in such a way...
The final version of the Agreement was later signed on September 5th..
On October 31st the Kasparov Chess Foundation (KCF) made an Agreement with the Kasparov Chess Foundation Asia Pacific (KCFAP), listing how and for what purpose any transferred money could distributed and spent.(") [NB There is no closing quotation mark in the article but I assume from the format it should be here. JM]
Later FIDE released a statement saying the claim by Morten Sand that the contract must have been leaked through the administrator of the mail account in FIDE was entirely false. "It is obvious that there is an attempt to drive the discussion away from the substance of this issue, i.e. whether such contracts are ethical or not. For the leaking of confidential documents, Garry Kasparov's team should perhaps look amongst themselves."
In the days following the initial Bill Warth message [to ChessBase, not NYT, presumably - JM] we received multiple copies of the draft contract, with demands that we publish it....
Then, on January 21, the chess blog of the New York Times broke the story, and the next day a version of it appeared in print, on page B13 of the New York edition...
On January 22 we at last received a call from the man himself. Garry Kasparov was in New York and spoke to us on Skype...
Then, on January 24 Garry Kasparov for the first time replied publically to the allegations that were now starting to appear on many different sites. And he kept his promise by actually publishing the final version of hie contract with Leong – asking his opponents to do the same with their contracts and agreements...

So there you have a version of events in which it seems that someone(s?) sat on an email for perhaps roughly 6 months before 'leaking' it (via the NYT first?) into the public domain in time for the first great chess event of the election year 2014. Make of that what you will.
What I make of it is that it was the end of skirmishing and the opening salvo of the battle (of 2014) alluded to in the header of this subject on the forum. I even think it bears some comparison to the Fischer-Spassky (USA-USSR) World Championship match of 1972.
This time round the World Champion and challenger will play little or no part in the political struggle. Today's Bobby & Boris are Garry & Kirsan - obviously a chess match between them would be totally one-sided but Kirsan is the current FIDE political champ like it or not and has defeated all challengers thus far. An interesting question is - will the USA and this time Russia line up behind their respective natural representatives? I doubt they will do so directly but it will be interesting to see where and how international political clout (including the use of 'private' money) is exercised and on whose behalf.
On a final facet of that it is also very interesting that the English Chess Federation is now being led by two (normally fairly quiet) Americans - Andrew & Phil. One might say that they form a kind of natural pair - Andrew being what I would term the daylight ops man and Phil the night ops man. (Nothing sinister implied in the latter case - just an observation that he works mainly behind the scenes in his ECF role compared to the former, as far as I see.) Again, there is nothing immediately particularly suspicious about their sudden appearance at the top of a chess federation of a foreign client state of their country - it may be mainly just a coincidence but it is a somewhat strange one from my perspective. Anyway the year is still young and the summer is the traditional time for Western campaigning - e.g. Battle of France, Barbarossa, Overlord - and the winter a time for Eastern - e.g. the siege of Leningrad, the defense of Moscow & of Stalingrad. If Garry and his forces have not stormed Kirsan's FIDE defenses by the autumn some will be in for quite a few more winters of discontent.

(NB: I am even beginning to think of this forum as being something akin to Bletchley Park cipher school!?!)

Edit: Oh yes, it is always right to try to follow (both sides) money but that may prove to be harder than trying to follow the email trail. It's like a game of hare & hounds.

[Nigel Short]

The forum readers may be interested to see this http://kevinspraggettonchess.wordpress.com/

[Jonathan Bryant]

There is nothing improper so far in the way Agon Ltd is set up its just that the lack of accounts information gives us nothing to go on.

This is the issue, of course. Obviously Agon *could* have been set up in such a way that it was required to make accounts public. That it was not was a choice of those (or he) who set it up.

A Nigel Short tweet in the last hour includes the following:-

"Agon clearly failed and has vanished without a trace, as you all know." claims Paulson.

Not sure where this comes from, but it's interesting wouldn't you say?


Streatham Common can think what it likes. Streatham Hill remains firmly in the 'unwise to put too much trust in Mr P' camp until there's a clear reason to believe otherwise.




{Edit: I see I cross posted with Nigel Short himself. Unwilling to click the Kevin Spraggett link on a work computer. Perhaps it has something to do with the tweet cited?}

[JustinHorton]

Unwilling to click the Kevin Spraggett link on a work computer.}

Try this, which is the specific item rather than the site itself. It shouldn't be a problem.

I'm not sure what it tells us that we didn't already know, but perhaps Nigel could talk us through it.

All this commitment to transparency is very healthy and exciting. If only people applied it to themselves as well as to their enemies!

[Roger de Coverly]

I'm not sure what it tells us that we didn't already know.

Given Chris Rice's research into the disclosed material filed by Agon, it does appear to be a draft proposal and not the final structure of the FIDE-Agon deal. Nevertheless it shows FIDE senior management treating the deal as a type of Executive Incentive scheme designed to deliver personal rewards, rather than to the benefit of the international sporting or cultural organisation that they had been elected or appointed to run. Hardly a surprise, as you say.

[Angus French]

All this commitment to transparency is very healthy and exciting. If only people applied it to themselves as well as to their enemies!

A little context wouldn't go amiss either. What Kevin Spraggett with his blog post and Nigel Short and Malcolm Pein* in their tweets don't say is something along the lines of what the Sunday Times said.

The company was founded a few weeks later but by this time the terms of the deal appear to have changed.

Paulson said the agreement had been an early proposal and that he was the firm’s sole shareholder.

Ilyumzhinov did not respond to questions. Georgios Makropoulos, Ilyumzhinov’s deputy at FIDE, said on his behalf: “Kirsan finally decided not to be involved in the ownership of Agon, although he loves to support chess and has spent millions of dollars to encourage similar projects without receiving anything back.”

If anyone read the Spraggett post and the Short and Pein tweets and didn't know otherwise... well, I imagine they may well end up thinking the alleged agreement between Kirsan Ilyumzhinov and Andrew Paulson had taken effect and that Ilyumzhinov owned 51% of Agon.

* Malcolm Pein tweet: https://twitter.com/TelegraphChess/stat ... 9254661120

[Angus French]

Given Chris Rice's research into the disclosed material filed by Agon, it does appear to be a draft proposal and not the final structure of the FIDE-Agon deal. Nevertheless it shows FIDE senior management treating the deal as a type of Executive Incentive scheme designed to deliver personal rewards, rather than to the benefit of the international sporting or cultural organisation that they had been elected or appointed to run.

Quite - assuming the memorandum, as reported by Kevin Spraggett, is genuine.