Soccer's missing World Cup millions

MILLIONS of rands spent on Bafana jerseys by tens of thousands of SA football fans for last year's World Cup have gone missing.

The SA Football Association (Safa) urged South Africans to buy authentic jerseys and not "Fong Kong" replicas, because the profits would be ploughed back into SA football.

Not only has the money from jersey sales not reached its intended destination, but it appears to have vanished .

Safa initially signed a deal with adidas in 2003, with a clause guaranteeing it a minimum of à3-million (R32-million) in royalties from the millions of shirts sold.

But shortly before the games kicked off, former Safa CEO Raymond Hack secretly ceded the adidas money to a shadowy entity called Safa Legal and Management (SLAM) in a sweetheart deal that shortchanged the association and robbed it of cash to develop football in the country.

Safa ultimately ended up with just R2-million from World Cup jersey sales from SLAM, according to Safa officials.

Safa president Kirsten Nematandani and CEO Robin Petersen refused to discuss details of the "confidential" deals this week, but did not dispute the figures. "These questions are not for this structure - they are for SLAM [to answer]," said Petersen.

But Nematandani admitted that "there were things that made us get worried [because] what we were getting was far less than we expected".

However, he said he could not divulge details because there was a "secrecy clause" in the deal with Stanton Woodrush, the company that owns 49% of SLAM. Safa owned the other 51%. "SLAM was supposed to account to us, but this thing had been running and we kept losing money, and we just couldn't afford to continue losing money," he said.

This week, adidas confirmed they had paid royalty fees to Safa, but had never agreed to ceding the Bafana jersey sales component to SLAM.

"At no stage were we told whether that money was used at Safa or paid over to SLAM," said adidas marketing director Gavin Cowley. "It was always a mystery to me who SLAM was."

The Sunday Times first revealed last year that mystery Johannesburg businessman Wayne Smidt stood to make a killing from selling World Cup Bafana clothing.

Smidt's company, Standton Woodrush, registered the Bafana trademark in 1993 and owns 49.9% of SLAM.

Even though Safa owned the other 51.1% stake of SLAM, it failed to exercise any oversight over its investment or check how SLAM spent its money. Though Safa had a right to appoint board members to SLAM, companies office records show no Safa officials were ever appointed directors.

"It's true Safa messed up by not appointing any directors to the SLAM board," said a Safa insider, who did not want to be named.

He said it remained a mystery why the association received almost nothing from SLAM, despite the fact that the shirts flew off the shelves. "We didn't get those royalties. In our eight-year agreement, Safa did not get more than R2-million from SLAM," he said.

SLAM, which pocketed the à3-million from adidas and collected all the cash from selling shirts, is now being quietly shut down.

Safa financial reports obtained by the Sunday Times show that, at a meeting of its national executive committee on June 10 this year, a decision was taken to "hand over the SLAM matter to forensic auditors and investigators" - presumably to find the missing funds.

But, this week, Nematandani told the Sunday Times that the forensic probe had been scrapped on Stanton Woodrush's insistence. Instead, a final settlement was reached in June which saw Safa pay R5-million to Stanton Woodrush "in full and final settlement".

Nematandani said he had no idea why Hack signed the deal. But he was adamant that if the SLAM deal was brought to him today, there is no way he'd sign it. "The less one talks about it, the better. It was a painful situation, and I don't want to violate the settlement agreement."

He added that Safa had "assigned an office to look at every record [because] it may warrant that we go back [on] this".

Speaking to the Sunday Times from Morocco this week, Hack admitted signing the deal, but said Safa "should have got more than R2-million. Safa must provide the figures. SLAM must provide the figures."

However, SLAM has repeatedly refused to supply the Sunday Times with any evidence of how its directors managed to blow the royalties bonanza.

Hack defended himself against claims that he signed a poor deal, saying "we were trying to bring in additional income because we weren't getting anything from the intellectual property we had, from the Bafana name".

But he agreed that Safa should have managed its investment in SLAM better.

SLAM's finances were handled by Richmark Holdings, Stanton Woodrush's administration company. Richmark is owned by colourful Johannesburg businessman Gavin Vareejes, and is a shareholder in JSE-listed Blue Label Telecoms.

But Richmark's Eric Delport denied that any money went missing.

"This is the first we hear of any such forensic investigation. We find it surprising. In the first place, there are no monies which are missing, nor has Safa ever suggested that there are monies missing," he said.

Delport said if Safa believed that any cash was missing, "why [would] Safa have been prepared to abandon its claims and enter into a full and final settlement agreement [with Stanton Woodrush]".

He confirmed that adidas paid à3-million to Safa as part of its "merchandising sponsorship obligation".

"It was agreed that these funds would be paid over by adidas to SLAM and that SLAM would [use] the funds for merchandising, administration and marketing."

He said any claim that the cash went missing was "entirely unjustified", as the cash was used by SLAM "in the ordinary course of business".

But he refused the Sunday Times's request for access to SLAM's financials, saying they were "confidential".

Neil Lazarus, a lawyer and corporate executive who negotiated the deal for Stanton Woodrush, said SLAM made only about R10-million from the World Cup. He said Safa ended up paying Stanton Woodrush about R10-million in total - R5-million for the Bafana Bafana name and another R5-million as its share of the profits from the World Cup.

Cowley said adidas had no idea what happened to the money it gave Safa. "I can't comment [on whether they used the money appropriately], because we don't know how they used it." But he said Safa ought to have at least told adidas how the money was being used.