On Sunday August 21st the executive committee of Olympic Council of Ireland (OCI) met in the offices of Arthur Cox solicitors in Dublin. The meeting ran into the early hours of the morning and a statement was released shortly after 2.30am.
Among the three recommendations agreed was the appointment of a three-person crisis management subcommittee to lead the council's response to the recent events in Rio involving Pat Hickey.
The crisis group comprised Sarah Keane (Swim Ireland), Professor Ciarán Ó Cátháin (Athletics Ireland) and Robert Norwood (Snowsports Association of Ireland).
On Thursday, a letter, signed by OCI general secretary Dermot Henihan and circulated to all of the Irish sports federations, updated them on a meeting of the OCI executive committee the previous day.
The letter was six paragraphs long. The fifth paragraph began: “Under the direction of the crisis management committee, the Olympic council expenditure is likely to exceed €750k.”
It went on to list Grant Thornton, Deloitte, Espion, Blacknight, Communications Clinic, Wilson Hartnell and Arthur Cox legal fees as the reason costs have spiralled.
The executive committee that just over two months ago had appointed Keane, Norwood and Ó Cátháin, who resigned this week, was now hanging them out to dry for €750,000.
It’s not hard to believe that the OCI, divided broadly along the lines of loyalists to Mr Hickey and those who want change, is now in melt down.
For an organisation to point the finger at its own members, who they appointed in the first place, has certainly achieved one thing. It has successfully moved focus from events in Rio, tickets and Pat Hickey on to a handful of people on the frontline in an ever confusing mess.
But there are a number of things the letter did not contain that are germane to the issue of the growing costs. If there is anxiety over money why not list all exposures.
Injunction
One other unlisted cost is that of Mr Hickey in Rio. The OCI was contacted this week in an effort to nail down who was paying for what, as it occurred to a number of people that the OCI may actually be paying for Mr Hickey’s lawyers when they threatened the OCI with a High Court injunction. On that specific issue
, The Irish Times
was unable to get a clear answer.
“The OCI has not been billed for any such costs,” was the reply.
But one thing that was made crystal clear was that, in the long run, Mr Hickey may prove very expensive.
“According to the OCI articles of association, Mr Hickey’s legal fees will only be paid if he is not convicted of the offences for which he is being held but his fees will not be paid if he is convicted of those offences,” said the OCI in a statement.
“In order to meet his bail conditions in Rio, Mr Hickey had to have an address in Rio. The OCI rented a one-bedroom apartment for Mr Hickey for this purpose and continue to pay rent on that apartment.”
In other words the OCI pay for everything if Mr Hickey is found not guilty. It is believed that €500,000 has already been set aside for this. The reference to the articles of association refers to article 33, entitled ‘Indemnity’.
It states: “No executive committee member or other officer of the council shall be liable for… any loss or expense… unless the same happens through his own dishonesty.”
In what is now becoming a financial crisis as much as a constitutional and governance implosion, the OCI is subject to an open-ended agreement to pay everything if Mr Hickey walks free.
It’s not surprising that the OCI don’t want to talk about it because in that scenario the total costs are completely unknown.
The €750,000 could be the tip of the iceberg.
There is no escaping what that figure, as well as the unknown costs of Mr Hickey, could do to the OCI. They have called an egm for the end of January.
Under the current terms, three months’ notice is needed for that to happen but it seems quite a distance away given the acute concerns.
But the federations have options. They could hold a meeting themselves and go directly to the International Olympic Committee (IOC) and say the situation in Ireland is not working. The IOC claim to put federations at the heart of their organisation as it is enshrined in their constitution.
One federation head suggested calling in an administrator because of the possibility of bankruptcy.
Heart of the issue
What is clear is that the OCI is not releasing full information about the real cost, nor is it disclosing full information.
For example, the letter to the federations lists as eight the number of people who would not take part in the Grant Thornton inquiry into ticketing arrangements until Brazil and Mr Hickey are dealt with. It does not say how many people agreed to co-operate with Grant Thornton.
It lists €750k but is that the total bill? Is it the bill so far? Will it double over the next 12 weeks until the January egm?
Will it triple if Mr Hickey’s hearing does not take place until next March? Did they not agree costs before as is normal for reviews or limited investigations? Do Arthur Cox, included in the €750,000 package, not also do regular work for the OCI?
The letter also refers to Mr Hickey as “our president” in the second paragraph. He is currently not “our president” because he stepped aside from that position, as he did from his role in the IOC in the wake of Rio.
Of course, that is still at the heart of this issue. To some he is “our president” and he always will be.
Full letter from Dermot Henihan to the National Federations
To All National Federations,
Please find below an update from last night’s Meeting of the Olympic Council of Ireland Executive Committee (2nd November 2016).
The Grant Thornton review will be postponed until further notice due to the current proceedings in Brazil against our President- Pat Hickey, and this decision was taken in order not to prejudice the case in any way.
Furthermore, we received correspondence from Pat Hickey’s Legal Team to advise that should the report proceed they would have no other option than to take out an injunction.
There are at least eight other persons who through separate legal representation cannot take part in the Grant Thornton inquiry until such time as all the outstanding issues in Brazil have been dealt with by the Brazilian Judicial Authorisation.
Under the direction of the Crisis Management Committee the Olympic Council expenditure is likely to exceed €750K directly on the review with Grant Thornton, Deloitte, Espion, Blacknight, Communication Clinic, Wilson Hartnell, and Arthur Cox legal fees.
We will continue to cooperate fully with the Judge Moran non statutory inquiry, and will keep you up to date on same.
Yours sincerely,
Dermot Henihan
Secretary General
Olympic Council of Ireland
Response from Sarah Keane and Robert Norwood
To Hon Secretary,
Olympic Council of Ireland
4th November 2016
Dear Dermot,
We refer to your recent communication to National Federations dated 3 November 2016 which contained a number of key errors which must be corrected without delay.
Your letter specifically sets the responsibility for considerable OCI expenditure at the door of the Crisis Management Committee (CMC) and may be interpreted by many as a public criticism of your fellow directors. It may also be perceived as an attempt by you to distance yourself from Executive Committee unanimous decisions leading again to a question around the governance of the organisation.
As you should be aware your comments are incorrect and the expenditure facts are as follows:
1. The Communications Clinic was hired by OCI, the initial contact coming from a representative of Mr Hickey in Brazil, and the agreement was made with the Acting President. Both events pre-dated the creation of the CMC.
2. Arthur Cox was appointed on 19 August by the Acting President (after considerable communications via board members and copied to the entire Board) and that appointment was ratified by the Executive Committee on 21 August as was the appointment of the Communications Clinic.
3. The Executive Committee agreed to appoint an international accountancy firm to review the OCI handling of ticketing arrangements in Rio and to appoint a firm to review corporate governance arrangements at the OCI. The CMC appointed Grant Thornton, Deloitte, Espion and Blacknight in order to implement unanimous Executive Committee decisions.
In summary, two of the bodies whose appointment you published as attributable to CMC were appointed prior to CMC creation, the rest were appointed with the clear and minuted authority of the unanimous Executive Committee. Due to the lack of engagement with the Federations which the CMC were concerned about we temporarily engaged the services of WHPR to circulate update emails to the Federations. The engagement of WHPR lasted 3 weeks.
Also, as you are aware Mr Hickey has stood aside as President of the OCI and from all other Olympic functions until such time as judicial proceedings in Brazil involving him are completed.
Mr Willie O’Brien is the OCI Acting President and due regard for this should be had in all correspondence.
The CMC has at all times sought to act responsibly during this very difficult time for us all and in the very best interests of the Olympic Council of Ireland to whom we owe our duty as directors of the company.
Yours sincerely,
Sarah Keane, Robert Norwood
Copy: All Executive Committee members, All Member Federations
