USOC Could Face 'Radical Surgery'
Government takeover of Olympic organization is possible, key member of Senate committee says.
WASHINGTON -- Amid the disclosure of potential tax-related irregularities involving the U.S. Olympic Committee, a U.S. Senate panel on Thursday made plain its intent to perform "radical surgery," as Sen. Ben Nighthorse Campbell (R-Colo.) put it, on the USOC.
Campbell, warning that a government takeover of the nation's Olympic enterprise was "not out of the realm of possibility," said that a "partial housecleaning is not going to repair the office."
Sen. John McCain (R-Ariz.), chairman of the Senate Commerce Committee, said he intended to appoint a task force to study how to streamline the USOC.
Donald Fehr, executive director of the Major League Baseball Players Assn. and a member of the USOC board of directors, is expected to play a key role in that task force. He was among half a dozen witnesses who testified Thursday before the committee, saying USOC affairs were akin to a "television soap opera."
At issue is the USOC's fundamental purpose: Is it to win medals or inspire society? Or both?
The organization's two-track structure, with a 120-member, all-volunteer board of directors and a paid professional staff at its headquarters in Colorado Springs, Colo., is often at odds. That conflict has produced management turmoil, promoted political infighting, and has erupted recently into a row that has split USOC leadership and may threaten funding -- and medal prospects -- for U.S. athletes in Athens in 2004, and beyond.
McCain said he expected the new task force would be small and would work quickly. With the Athens Games 18 months away and the calendar marching toward the 2005 selection of the 2012 Games -- New York is the U.S. candidate -- McCain said, "Time is important."
In the meantime, David F. D'Alessandro, chairman and chief executive of John Hancock Financial Services, a major Olympic sponsor, testified that he'd been told in a letter dated Wednesday and signed by Lloyd Ward, the USOC's chief executive, that USOC tax returns "are not correct, that they do not reflect accurately all the contributions ... and that clearly the accounting is not anywhere near as transparent as it needs to be."
The issue deals with the source and nature of what is called "value in kind," or VIK. That means the goods or services companies give the USOC for the right to use the five-ringed Olympic symbol.
The issue is whether the sources and value of the VIK, presumed to be worth millions of dollars, have been fully detailed on the USOC's returns.
Legally, the USOC is tax exempt as a nonprofit corporation, but it still must comply with federal tax-reporting regulations.
D'Alessandro also said that VIK-laden deals don't fully serve America's athletes.
"When we sit in a room with the NFL, they basically say, 'Show me the money.' When the USOC shows up in similar suits, they say things like, 'Show me the Jell-O -- we'll take 20,000 cases of Jell-O. Or Kleenex.' ... You cannot train athletes with value in kind."
"Interesting revelation," McCain said after the hearing. "The IRS should certainly be interested."
Early Reese, the USOC's chief financial officer, said after reviewing tax returns for recent years, "All revenue, including VIK, is reported. All expenses are reported. However, it has not been classified in a consistent manner."
A tax-related audit would mean yet more uncertainty for the USOC -- which is now operating with an interim president and with a CEO who was ordered over the weekend to forfeit his 2002 bonus, $184,800, after being tied to two violations of the USOC ethics code.
The hearing Thursday was the second the commerce committee has held in two weeks in the wake of revelations that Ward had directed USOC staff to help a Detroit company with ties to his brother and a childhood friend, which was seeking a contract for the 2003 Pan American Games in the Dominican Republic.
Fred Fielding , a Washington lawyer, conducted the inquiry that formed the basis of a USOC ethics board report into Ward's conduct. In testimony that raised questions about his command of the facts, Fielding mispronounced the last name of Hernando Madronero, the USOC's former international relations director, six times -- calling him either "Madorona" (once) and "Madoreno" (five times).
Under questioning, Fielding also testified that, at his billing rate of $500 an hour, the USOC matter was worth $22,000 in billed time by the end of December.
The U.S. Justice Department, meanwhile, has recently conducted interviews in Santo Domingo, capital of the Dominican Republic, apparently inquiring into allegations that a bribe was offered to win the Detroit company, Energy Management Technologies, a contract. No deal was struck.
In the wake of the ethics board's report, made public Jan. 13, six USOC officials resigned, among them Marty Mankamyer, elected president in August. Bill Martin, athletic director at the University of Michigan, is acting president. The USOC has had four presidents and four CEOs since 2000.
Martin was not asked to testify Thursday, nor were any of the five USOC vice presidents.
Campbell derided a USOC plan to set aside $2.5 million for restructuring and public relations. That, he said, is money that "should have gone to helping the athletes ... no question about it."
Last weekend, senior USOC officials announced they had formed their own internal reform study group. McCain said Congress had "no problem" with an internal review but expressed concern that it would "amount to nothing more than a reshuffling of chairs on the deck of the Titanic."
D'Alessandro, a leading critic of the International Olympic Committee in 1999, also said of the USOC's fixing itself, "It's like asking the group at the 'Star Wars' bar to come together and fix the universe. I don't see how that's going to happen. There's not a Jedi among them."
Ward's membership in Augusta National Golf Club, site each spring of the Masters, also remains a focus of attention. The club does not admit women members. Sen. Barbara Boxer (D-Calif.) said Thursday, "Every indication is, Mr. Ward doesn't live the values I think are necessary to lead the USOC."
Ward has said he would not resign from Augusta or his post at the USOC.
Donald Fehr, executive director of the Major League Baseball Players Assn. and a member of the USOC board of directors, is expected to play a key role in that task force. He was among half a dozen witnesses who testified Thursday before the committee, saying USOC affairs were akin to a "television soap opera."
At issue is the USOC's fundamental purpose: Is it to win medals or inspire society? Or both?
The organization's two-track structure, with a 120-member, all-volunteer board of directors and a paid professional staff at its headquarters in Colorado Springs, Colo., is often at odds. That conflict has produced management turmoil, promoted political infighting, and has erupted recently into a row that has split USOC leadership and may threaten funding -- and medal prospects -- for U.S. athletes in Athens in 2004, and beyond.
McCain said he expected the new task force would be small and would work quickly. With the Athens Games 18 months away and the calendar marching toward the 2005 selection of the 2012 Games -- New York is the U.S. candidate -- McCain said, "Time is important."
In the meantime, David F. D'Alessandro, chairman and chief executive of John Hancock Financial Services, a major Olympic sponsor, testified that he'd been told in a letter dated Wednesday and signed by Lloyd Ward, the USOC's chief executive, that USOC tax returns "are not correct, that they do not reflect accurately all the contributions ... and that clearly the accounting is not anywhere near as transparent as it needs to be."
The issue deals with the source and nature of what is called "value in kind," or VIK. That means the goods or services companies give the USOC for the right to use the five-ringed Olympic symbol.
The issue is whether the sources and value of the VIK, presumed to be worth millions of dollars, have been fully detailed on the USOC's returns.
Legally, the USOC is tax exempt as a nonprofit corporation, but it still must comply with federal tax-reporting regulations.
D'Alessandro also said that VIK-laden deals don't fully serve America's athletes.
"When we sit in a room with the NFL, they basically say, 'Show me the money.' When the USOC shows up in similar suits, they say things like, 'Show me the Jell-O -- we'll take 20,000 cases of Jell-O. Or Kleenex.' ... You cannot train athletes with value in kind."
"Interesting revelation," McCain said after the hearing. "The IRS should certainly be interested."
Early Reese, the USOC's chief financial officer, said after reviewing tax returns for recent years, "All revenue, including VIK, is reported. All expenses are reported. However, it has not been classified in a consistent manner."
A tax-related audit would mean yet more uncertainty for the USOC -- which is now operating with an interim president and with a CEO who was ordered over the weekend to forfeit his 2002 bonus, $184,800, after being tied to two violations of the USOC ethics code.
The hearing Thursday was the second the commerce committee has held in two weeks in the wake of revelations that Ward had directed USOC staff to help a Detroit company with ties to his brother and a childhood friend, which was seeking a contract for the 2003 Pan American Games in the Dominican Republic.
Fred Fielding , a Washington lawyer, conducted the inquiry that formed the basis of a USOC ethics board report into Ward's conduct. In testimony that raised questions about his command of the facts, Fielding mispronounced the last name of Hernando Madronero, the USOC's former international relations director, six times -- calling him either "Madorona" (once) and "Madoreno" (five times).
Under questioning, Fielding also testified that, at his billing rate of $500 an hour, the USOC matter was worth $22,000 in billed time by the end of December.
The U.S. Justice Department, meanwhile, has recently conducted interviews in Santo Domingo, capital of the Dominican Republic, apparently inquiring into allegations that a bribe was offered to win the Detroit company, Energy Management Technologies, a contract. No deal was struck.
In the wake of the ethics board's report, made public Jan. 13, six USOC officials resigned, among them Marty Mankamyer, elected president in August. Bill Martin, athletic director at the University of Michigan, is acting president. The USOC has had four presidents and four CEOs since 2000.
Martin was not asked to testify Thursday, nor were any of the five USOC vice presidents.
Campbell derided a USOC plan to set aside $2.5 million for restructuring and public relations. That, he said, is money that "should have gone to helping the athletes ... no question about it."
Last weekend, senior USOC officials announced they had formed their own internal reform study group. McCain said Congress had "no problem" with an internal review but expressed concern that it would "amount to nothing more than a reshuffling of chairs on the deck of the Titanic."
D'Alessandro, a leading critic of the International Olympic Committee in 1999, also said of the USOC's fixing itself, "It's like asking the group at the 'Star Wars' bar to come together and fix the universe. I don't see how that's going to happen. There's not a Jedi among them."
Ward's membership in Augusta National Golf Club, site each spring of the Masters, also remains a focus of attention. The club does not admit women members. Sen. Barbara Boxer (D-Calif.) said Thursday, "Every indication is, Mr. Ward doesn't live the values I think are necessary to lead the USOC."
Ward has said he would not resign from Augusta or his post at the USOC.
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