Something is fishy about Nike’s ‘commitment bonus’ to Athletics Kenya and we are about to find out

An exchange of $500,000 between Nike and the Athletics Federation of Kenya (Athletics Kenya) in 2011 has come back to haunt the American sports company as the money is now being viewed as a bribe. Kenya’s Directorate of Criminal Investigations is now looking into the transfer, while all three officials of the athletic federation accused of taking money from Nike have been suspended.

Officials with Kenya’s Directorate of Criminal Investigations said they had repeatedly asked Nike to provide more information, observing that the American multinational had so far failed to oblige. “Why was such a huge sum of money paid as commitment? It’s only Nike who can tell us” said one of the detectives, who spoke on the condition of anonymity to the New York Times because he was not authorized to speak publicly.

How it started

The saga started several years ago, when a Chinese clothing company offered to sponsor Kenya’s famous runners, causing Nike, the then sponsor to panic. Nike, who had been sponsoring Kenyan runners for over 20 years with millions of dollars in exchange for the Kenyans wearing its branded wears, did not want to lose its deal. This was understandable as Kenyan runners were famous for winning long distance races at both the Olympic and world championship. In fact, Kenyans hold world records in the 800 meters, 1,000 meters, 3,000 meters, 20,000 meters, 25,000 meters, 30,000 meters, half-marathon, marathon  and more.

Even so, Athletics Kenya officials had already reached some major agreement with the Chinese clothing company on designs for the uniform, while it was said that they had also accepted $200,000.

Nike responded by sending its lawyers to Kenya’s athletic federation warning that there were no legal grounds to terminate its contract. This forced the Kenyan officials to back-pedal away from the Chinese firm. Consequently, the American sportswear maker came up with a new contract, in which it agreed to pay Kenyan Athletic Federation an annual sponsorship fee of $1.3 million to $1.5 million. In addition to this, it also agreed to pay $100,000 honorarium each year and a one-time $500,000 “commitment bonus.”

The $500,000 commitment bonus is however the bone of contention, which a former employee of the Kenyan athletic federation has called a bribe.

The $500,000 which Nike says should have been used to help train and support poor Kenyan athletes was immediately sucked out of the federation’s bank account by a handful of Kenyan officials keeping it off the books. According to a sworn statement provided to Kenyan investigators, a former assistant confessed that the $500,000 commitment bonus was a bribe to ensure that top officials could pay back the $200,000 from the scuttled deal with the Chinese company and also make even more by agreeing to sign up again with Nike.

Nike denies wrongdoing

The American sports company has however denied any wrongdoing, saying in a statement that its payments were intended to help athletes and not as a bribe. To bolster its claim, the American company does not appear to be under investigation by the United States authorities. Analysts, however, observe that due to the tricky nature of the case, it did not appear to fall under the Foreign Corrupt Practices Act, the American law that covers crimes involving American companies and foreign government officials.

Kenya’s law enforcement agencies are, however, determined to get to the bottom of the case, opening an extensive investigation.