Iran accuses WSG of overpricing in breach of international rules

By James M. Dorsey

Iranian state television has accused Singapore-based marketer World Sport Group (WSG) of trying to overcharge it for the broadcasting of Iranian national team 2014 World Cup qualifiers qualifiers in what it said was a breach of international rules.

The television’s legal counsel, Gholamreza Rafiee, said in a live interview quoted by Iranian news agency Kabir News that “four years ago at the same time we paid $4 million to broadcast Team Melli matches in World Cup qualification. But now World Sport Group wants to charge us over $40 for the same service. We paid $7.5 to broadcast World Cup 2010 and we bought the London 2012 broadcasting right for only $1 million. World Sport Group is trying to swindle Asian countries for broadcasting World Cup qualification matches.”

Mr. Rafiee said that Lebanese television had earlier this month for the same reason refused to pay WSG for the broadcasting of a World Cup qualifier in which Lebanon surprisingly defeated Iran. He said that WSG was encountering similar problems in South Korea. Mr. Rafiee’s assertions could not be immediately independently verified.

Kabir News said WSG’s hiking of broadcast rights for 2014 World Cup qualifiers had angered fans in Asia.

Apparent tension between WSG and national broadcasters comes as questions have arisen about the nature, terms and value of the company’s $1 billion marketing rights agreement with the Asian Football Confederation (AFC).

Questions have also been asked about payments at the time that the WSG contract was being negotiated by a WSG shareholder to Mohammed Bin Hammam, the disgraced AFC president and world soccer body FIFA vice president. Mr. Bin Hammam has been suspended since more than a year initially on suspicion of bribery and more recently on the basis of an audit that accuses him of financial mismanagement and raises multiple concerns about AFC’s contractual relationship with WSG. The Qatari national has repeatedly denied any wrongdoing.

Malaysian police last week arrested a man believed to be an associate of Mr. Bin Hammam on suspicion of theft of documents from AFC’s offices in Kuala Lumpur related to one of the WSG shareholder’s payments. 

AFC lawyer Mohamad Bustaman Abdullah said Tony Kang, the husband of Amelia Gan, the soccer body’s finance director under Mr. Bin Hammam, who was let go earlier this year, had surrendered himself to Malaysian police and was expected to be charged in court for his role in the theft.

AFC reported the theft in late July after an audit by PricewaterhouseCoopers (PwC) raised questions about a payment of $2 million payment in 2008 by Saudi Arabia-based International Sports Events (ISE), one of three WSG shareholders, according to the company’s website. The audit said that the money had been paid into an AFC sundry account for Mr. Bin Hammam’s personal use. It said the payment by ISE, which is believed to have a ten per cent stake in WSG, as well as a second payment of $12 million by a related company, Al Baraka Investment and Development Co., were “of interest. Transactions of significant value between these parties (of both a business and purportedly personal nature) occurred around the time of the ($1 billion master rights) MRA contract negotiations with WSG,” PwC said in its report.

PwC said further that “it is highly unusual for funds (especially in the amounts detailed here) that appear to be for the benefit of Mr Hammam personally, to be deposited to an organization’s bank account. In view of the recent allegations that have surrounded Mr Hammam, it is our view that there is significant risk that…the AFC may have been used as a vehicle to launder funds and that the funds have been credited to the former President for an improper purpose (Money Laundering risk)” or that “the AFC may have been used as a vehicle to launder the receipt and payment of bribes.”

WSG has refused to comment on the PwC report and has failed to respond to various requests for comment by this reporter in the past 15 month. However, WSG Group legal counsel Stephanie McManus in an August 28 letter in advance of initiating legal proceedings against this reporter in a bid to squash reporting and intimidate sources said that “PWC are incorrect and misconceived in suggesting that the MRA was undervalued. They have neither considered the terms of the contract correctly, the market, nor the circumstances in which it was negotiated.” Ms. McManus did not elaborate.

Nonetheless, obviously stung by broad media reporting on the PwC report, WSG in a reversal of its no comment and failed intimidation policy was quick to deny the Iranian television assertions. WSG spokeswoman Shyamala Velappan in a statement sent to Kabir News denied Mr. Rafiee’s claims.

“The information Mr. Rafiee has presented is incorrect and misleading. Firstly, the previous agreement to broadcast various AFC events for the period 2009 – 2012 was valued at US$4.5 million.  The broadcast rights fee which we are negotiating with IRIB for the new cycle is US$11 million for all AFC national team and club competitions, which consist of approximately 1,300 matches over a four year period, not just the FIFA World Cup 2014 AFC qualifying matches.  To put this figure into context, it represents only a tiny fraction of the rights fees being paid by other countries in the Middle-East for the same number of matches,” Kabir News quoted Ms. Velappan as saying.

James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore and author of the blog, The Turbulent World of Middle East Soccer