DANAILOV, SAKOTIC & STOISAVLJEVIC GUILTY OF VIOLATIONS OF THE FIDE CODE OF ETHICS
FIDE News (www.fide.com)
The complainants in the case before the EC were the European Chess Union (ECU) and Montenegro Chess Federation (MCF). The complaints related to events surrounding the organisation of the 2013 European Youth Chess Championship in Budva, Montenegro (2013 EYCC).
In its decision of 9 November 2016, reached in Baku, Azerbaijan, the EC found Silvio Danailov, Vladimir Sakotic and Sava Stoisavljevic (all ECU executives in the period 2011-2014) guilty of violations of the FIDE Code of Ethics and imposed bans of 3 years (Sakotic), 18 months (Danailov) and 6 months (Stoisavljevic) respectively.
Mr Danailov and Ms Stoisavljevic did not appeal the decision of the EC. Mr Sakotic appealed to CAS asking it to annul the EC decision in its entirety and to allow Mr Sakotic to hold office, participate in meetings and represent any organisation within FIDE and its members.
In its Arbitral Award of 2 August 2017, the CAS confirmed that Mr Sakotic violated Article 2.2.2 of the FIDE Code of Ethics (as found by the EC) but reduced Mr Sakotic’s period of suspension to 18 months (from the 3 years imposed by the EC). The period of suspension runs accordingly from 10 October 2016 until 9 April 2018.
During the suspension period Mr Sakotic may not hold any office or position within FIDE, participate in any meeting of FIDE as delegate or in another capacity, or represent any organisation in its relations with FIDE. The suspension applies also to FIDE member federations, continental associations and other affiliated organisations. However, as per the EC decision, the sanction does not preclude Mr Sakotic from performing activities as a chess arbiter, chess organiser or FIDE lecturer during the period of suspension.
The CAS award may be considered benevolent to Mr Sakotic as he did not explicitly request a reduction in the period of suspension, in the event that the CAS holds that he has indeed violated the Code of Ethics, and the issue of the appropriate length of the ban was not canvassed in the parties’ written statements and argument before CAS.
The CAS appeals system allows for a re-hearing of the matter and an independent determination by the CAS Panel of the case without limiting itself to assessing the correctness of the procedure and decision of the disciplinary tribunal. This de novo character of the appeal proceedings allowed the parties to file written submissions, produce new exhibits not introduced in the matter before the EC and to call and examine witnesses even if they did not testify in a hearing before the EC. As a result, the CAS Panel did not have to rely, as did the EC, on adverse inferences which may be drawn against Mr Sakotic for his absence at the EC hearing and his decision not to answer fully all the allegations made and evidence produced by the complainants in the EC proceedings.
The CAS Panel noted that the allegations against Mr Sakotic had to be proved according to the standard of “comfortable satisfaction” (CAS Award: paragraphs 127-129).
The CAS Panel held that the 2013 EYCC was riddled with improprieties and suspicious activity, from a lack of transparency surrounding the transfer of the organising rights, to an inconsistent manner of invoicing for payments to various entities, and a diversion of a deposit fee in the sum of €7 500 payable to the ECU but channelled to an unrelated private entity, incorporated in Delaware, USA with a bank account in Slovenia, and bearing the name European Chess Union LLC (ECU LLC).
The CAS Panel found that Mr Sakotic violated Article 2.2.2 of the FIDE Code of Ethics (acted in a way that no longer inspires the necessary confidence, or has in other ways become unworthy of trust) on the grounds of a lack of transparency and a conflict of interest, and being complicit in the diversion of the ECU deposit fee. However, the CAS Panel did not reach the same conclusion as the EC as to the extent of Mr Sakotic’s responsibility for other irregularities in connection with the 2013 EYCC.
More in particular, the CAS held that Mr Sakotic played a significant role in the lack of transparency surrounding the transfer of the organising rights in respect of the 2013 EYCC to a private entity controlled by an immediate family member of Mr Sakotic and, in this regard, he breached his fiduciary duty not to place himself in a position of a conflict of interest (CAS Award: paragraphs 138-148; 177, 179 and 188).
The CAS Panel further held that Mr Sakotic gave written instruction to MCF officials to pay the ECU deposit fee to the imposter corporation, ECU LLC (CAS Award: paragraphs 159-172, 177 and 188).
The Panel considered that each of the abovementioned behaviours is serious enough to manifest a loss of the “necessary confidence” or the status of being “unworthy of trust” in contravention of Article 2.2.2 of the Code of Ethics (CAS Award: paragraphs 177 – 179).
Regarding Mr Sakotic’s alleged involvement in the ECU LLC and another Delaware corporation, Chess Plus LLC, albeit that the Panel found that Mr Sakotic’s explanations were very vague, unsatisfactory and even suspicious, it held that the available evidence nevertheless fell short in order to be able to conclude that Mr Sakotic was responsible for or instrumental in the creation and operation of these corporations (CAS Award: paragraphs 150-155).
The CAS Panel noted the inconsistent and suspicious manner of invoicing for accommodation, organisation and ECU entry fees and the lack of a clear explanation from Mr Sakotic and his witnesses for such irregularities, but found nevertheless that there was insufficient evidence incriminating Mr Sakotic (CAS Award: paragraphs 156-158).
The CAS Panel further considered that the evidence was insufficient to prove that Mr Sakotic was the “mastermind” in a scheme to make secret profits at the expense of MCF and ECU (CAS Award: paragraphs 176).
In conclusion, the CAS Panel stressed that its decision must not be seen as exonerating Mr Sakotic, for example, of having created and operated the Delaware companies, siphoned-off funds, and/or benefitted directly or indirectly from the payments made to Chess Plus LLC. The Panel merely concluded that on the basis of the evidence made available in the arbitration, it is not comfortably satisfied that Mr Sakotic engaged in such actions. The award should thus in no way be viewed or treated as an exoneration of Mr Sakotic on any level, but it must be regarded for what it is – a finding against Mr Sakotic under Article 2.2.2 for having committed ethical violations, albeit fewer and of lesser magnitude than found by the EC (CAS Award: paragraph 191).
The findings of CAS relating to the use of ECU LLC as a vehicle for a diversion of funds, and Mr Sakotic’s role therein, is highly relevant to a separate investigation currently being carried on by the EC, under case no. 5/2016, in the context of the use of ECU LLC for a diversion of funds in excess of €1 million by individuals in the name of the Bulgarian Chess Federation in the period 2011-2014.
A copy of the CAS Award can be found here.