No Financial Loss Was Incurred: PT Usha Responds To Allegations Over CAG Audit Report

No financial loss was incurred: PT Usha responds to allegations over CAG audit report (Image Source: IANS)

The Indian Olympic Association: The Indian Olympic Association (IOA) President PT Usha has issued a clarification in response to allegations over the CAG audit report that cited an "alleged loss of Rs 24 crore to the IOA" due to "purported undue favours" extended to sponsor Reliance Industries Limited (RIL). The Comptroller and Auditor General of India (CAG) released an audit report on September 12, suggesting that the "faulty sponsorship agreement" between the IOA and Reliance Industries Limited resulted in undue benefits to RIL. It also alleged that the agreement led to a loss of Rs 24 crore to the IOA.

In response, Usha said she has already formally replied to the CAG's half-margin No. 2, dated September 12, 2024, stating that there has been no financial loss to the IOA.

"The issue stems from a flaw in the Request for Proposal (RFP) document issued in July 2022 by the previous IOA management, under which the naming rights for establishing a National Olympic Committee (NOC) House were awarded to RIL as the highest bidder. A simple caveat stating that the naming rights were "subject to the guidelines of the International Olympic Committee (IOC) and the Host Territory, issued from time to time" should have been included in the RFP to safeguard the interests of all parties. Unfortunately, this clause was overlooked," the IOA chief said in her letter.

"In June 2023, the IOC published new guidelines disallowing sponsors from acquiring naming rights for NOC Houses at the Paris 2024 Olympic Games. Despite the IOA's best efforts to secure exemptions, the IOC maintained its stance, which applied to all participating National Olympic Committees (NOCs). As a result, RIL, having initially secured naming rights under the 2022 agreement, sought to renegotiate the terms with the IOA. RIL proposed a 50% reduction in the previously agreed hosting fee due to the loss of naming rights," the letter further read.

She said, Under the circumstances, the IOA had limited options:

1) Terminate the agreement entirely, resulting in no NOC House at the Paris 2024 Olympic Games and a loss of 21 crore (the balance of the rights fee receivable for the 2024 Olympic Games, 2026 Commonwealth Games, 2026 Asian Games and 2028 Olympic Games).

2) Accept the reduced rights fee of Rs. 17.5 crore for the remaining agreement period.

3) Renegotiate the terms to protect the IOA’s cash flow without compromising the original hosting fee of Rs. 35 crore for six events.

"Under the circumstances, it was the most obvious choice to renegotiate the agreement and concurrently protect the original rights fee of Rs. 35 crores.

"As part of this, additional events granted to RIL in the renegotiated agreement -- namely the 2026 and 2030 Winter Olympics and the 2026 and 2030 Youth Olympic Games-- provide minimal visibility to sponsors compared to high-visibility events like the Summer Olympics, Commonwealth Games, or Asian Games. Sponsorship value is primarily derived from how often a sponsor's branding is visible on TV, live telecasts, print, or social media," it read.

Usha claimed that the CAG's report incorrectly equates the visibility of these events with the level of exposure available at the Summer Olympics, Commonwealth Games and Asian Games which is inaccurate.

Further, she also strongly refuted the claims made by IOA treasurer Sahdev Yadav in the CAG report, alleging that the IOA chief acted without the knowledge of the IOA Executive Council. These claims, according to her, are part of a deliberate attempt to tarnish her reputation and discredit the IOA.

"In reality, the renegotiation proposal was circulated to all Executive Council members on September 9, 2023, and later forwarded by the acting CEO in a letter dated October 5, 2023. Rohit Rajpal, representing the sponsorship committee, was present at the meetings where the renegotiation was discussed.

"The Addendum to the agreement was drafted under the guidance of one of India’s leading sports lawyers, Nandan Kamath of NK Law, Bangalore. The acting CEO was kept in the loop, copied on all relevant emails," she explained.

Usha also expressed her surprise that shortly after the revised agreement, the IOA’s finance committee and treasurer decided to terminate Kamath’s services, despite his appointment as a legal advisor to the IOA by them in May 2023.

"The Addendum to the agreement was drafted under the guidance of one of India’s leading sports lawyers, Nandan Kamath of NK Law, Bangalore. The acting CEO was kept in the loop, copied on all relevant emails," she explained.

Article Source: IANS