IOC invested $5m in scam

2008-12-20 20:58

London - The International Olympic Committee could lose close to $5 million in investments because of the Madoff hedge fund scandal.

IOC finance commission chairman Richard Carrion said Saturday that the Olympic body had about $4.8 million tied to the multibillion dollar Ponzi scam by New York financier Bernard Madoff.

"That could be the maximum loss," Carrion told The Associated Press in a telephone interview from Puerto Rico, adding that the IOC's money wasn't directly in Madoff funds. "They're in funds invested in Madoff funds."

IOC spokeswoman Emmanuelle Moreau said the Madoff affair would have "limited impact" on the IOC's overall finances.

Madoff, a 70-year-old former Nasdaq stock market chairman, is accused of swindling investors of $50 billion in a massive Ponzi scheme. He was ordered on Friday to remain in his New York home under 24-hour surveillance and to hire security guards for protection.

The IOC's exposure to the affair was first reported in the Wall Street Journal.

A week ago, Carrion said the IOC has financial reserves of more than $400 million - a fund designed to keep the Olympics afloat in the event of the games being cancelled.

"It's a little over 1 percent of the money in the portfolio," Carrion said of the funds tied to Madoff. "It is possible that we could lose a substantial portion of that. That is not something that makes us very happy."

Carrion said the IOC has policies in place to limit major concentrations of money, but the Madoff scam has caught the organization off guard.

"This is obviously something unexpected because this is a fraud," he said. "It's never any fun when you lose money."

At an IOC meeting in Lausanne, Switzerland, last week, Carrion said the amount of money in the IOC reserves had dropped about 14 percent in recent months due to the fall in stock prices and the strengthening of the U.S. dollar against the IOC's non-dollar investments. On Saturday, Carrion reiterated that other monies are hurting the IOC more.

"Probably the improvement of the other currencies vis-à-vis the dollar is bigger," Carrion said. "We'll have to see when all the dust settles how much is lost."

Moreau, the IOC spokeswoman, said the organization's financial foundation was solid "due to a conservative budgeting and investment strategy."

"We have already reached agreements with nine partners through 2012 ... and broadcast rights have been secured for the vast majority of territories for games in 2010 and 2012," she said in an e-mail.

Moreau also said the host cities of the next three Olympics are all financially sound.

"As of today, we have received assurances from all Organizing Committees (Vancouver 2010, London 2012 and Sochi 2014) that they will meet their obligations and are taking appropriate steps to manage any financial risks," Moreau said.