Andrew Paulson wrote:You're right about 'deposit'. Both that it is often refundable, and that in the Agreement it is not stated how or why it would be refunded. This is because the 'deposit' was added after the Presidential Board approved the Agreement as a sop to Ilya Levitov, Executive Director of the Russian Chess Federation, who thought that AGON should put some 'skin on the table.' I didn't/couldn't object to this unilateral demand at the last minute. But it was also slipped in without consulting lawyers, who might have addressed such issues. I was reassured verbally that it would be reimbursed as soon as AGON had proven its track record of payment; I'm not sure if I believed that, but I had little choice.
I have to agree with Andy McCulloch, this is quite incredible. The other side to the negotiation adds a material clause, which could potentially have cost you $500,000, and you meekly accept without obtaining a legal opinion. Furthermore, by your own account, the person proposing the change was hostile!
Given the deposit has never been paid, one is entitled to wonder whether, even at this early stage, you intended to cough up. Nor does it occasion astonishment that the entire venture appears to have collapsed within eighteen months.
Whatever the interpretation, no sane member of the ECF Council can possibly support a president who behaves so recklessly. In my estimation you should resign, although I expect you to play on until you are checkmated at the finance meeting on 12th April. Speaking of which, have you got any candidates active in English chess to take over from the directors you wish to replace?
Andrew Paulson wrote:You have been doing your homework on the AGON Agreement; let me help you out. Nigel Short has alleged that Kirsan Ilyumzhinov or some other FIDE official(s) representing a conflict of interest are behind AGON. If, as he claims, they stand to reap huge profits or that they seek to control the World Championship Cycle for some other nefarious reason, youâ€™d assume that youâ€™d see some evidence of this. None has been offered and thereâ€™s only one place to look: cherchez l'argent.
That's why I started with the unpaid deposit! We've got six weeks to cover the rest.
Andrew Paulson wrote:Under the AGON/FIDE Contract (unanimously approved by the Presidential Board; ratified by the General Assembly; publicly available since February 2012), the first four years (two World Championship Cycles, not including the World Cup â€” 2012-2015) cost AGON over â‚¬20m, of which FIDE receives â‚¬1.75m (prize fund commissions, the rest being overhead, product development, event costs and prize funds). The ambitious assumption that sponsorship revenue will grow from zero to â‚¬5m/year by year four, this implies a loss of about â‚¬10m before break-even.
Starting in 2016, AGON starts paying to FIDE 30% royalties on any sponsorship revenues (over agreed-upon base costs) up to $5m, with percentages growing on a sliding scale to 55%. Therefore, in addition to â‚¬436k/year in prize fund commissions, assuming AGON was by then breaking even (now requiring about â‚¬7m/year), AGON would be paying FIDE an additional â‚¬2m/year. As soon as AGON makes a profit, even more goes to FIDE.
The owner(s) of AGON would therefore receive no dividends unless AGON grew sponsorship revenue from zero to â‚¬5m/year by year four and continued to grow it to over â‚¬10m/year by year eight to pay back the â‚¬10m start-up deficit; at which moment, AGON would have only 3 years left to earn money on what would generally be considered a crazy high-risk, capital-intensive investment â€¦ before the Agreement was up for renewal with FIDE in year eleven. By which time, AGON would have paid to FIDE â‚¬35m. (To put this in perspective, currently FIDEâ€™s budget is about â‚¬3m/year.)
Thanks, Andrew, when I previously indicated that I had read dozens and dozens of files on the FIDE website, I should have added that I had perused
the Agreement. I consider this scheme quite lunatic, something you appear to agree with, and I don't want you to talk the ECF into something similar. Furthermore, given the missing deposit, there's no reason to assume you would pass on any sums due.
The whole thing is so utterly bizarre that one naturally is entranced by conspiracy theories. As far as I'm aware, you've never publicly and convincingly explained this
At the very least, your commercial enterprise is a potentially massive conflict of interest for you at the ECF.
Andrew Paulson wrote:Having conclusively established that I own and have always owned 100% of AGON ...
But there's the rub. Ignoring tax and ethical considerations for the moment, there are other ways to reward stakeholders than a mere payment of dividends or a repurchase of shares by the company. One can instruct agents, one can hire employees at inflated salaries, one can buy assets at one price and sell at another, ...
I expect you followed the court proceedings initiated by the late Boris Berezovsky against Roman Abramovich
, according to Berezovsky he was the real owner of substantial stakes in Sibneft and Rusal. According to Abramovich, he had to pay $1.3 billion for krysha
, effectively protection, in relation to Sibneft. What this illustrates is that the concept of payment to 'non-shareholders' for curious services is not exactly unknown in Russia. ECF members may enjoy a feeling of dÃ©ja vu should any reach point 34 of the judge's summary: 'On my analysis of the entirety of the evidence, I found Mr. Berezovsky an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes. At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events ...'