Katusha’s CAS Appeal – How It Won Back Its Licence

Monday, 6 May 2013

Luca Paolini won a stage of the Giro but he and his Katusha team weren’t supposed to ride. The UCI had originally denied Katusha a licence for 2013, only for Katusha to win back their place in the World Tour via an appeal at the Court of Arbitration for Sport (CAS).

Now the full ruling from the CAS is available and for the first time we can see the reasons why the UCI wanted to exclude Katusha. It turns out it was on both financial and ethical reasons. We can also see the behind-the-scenes work done by the Katusha team to win back its licence as it attempts to turn around the worst record in World Tour for doping.

A reminder that teams must fulfil four criteria to become a UCI Pro Team in the World Tour:

  • administrative
  • financial
  • ethical
  • sporting

Normally the sporting aspect is the big deal, namely which team has enough riders with ranking points to join the top-18 teams in the world (all explained here). Administrative means getting the paperwork in order, filing various registration documents and supplying a range of documents from rider contracts to team financial accounts.

The UCI Licence Commission tried to call up the Katusha team on two aspects. First was the financial story where ballooning expenses seemed unexplained. In 2012 the team’s “competition expenses” grew by 195% from 2011, rising to the astronomical sum of €28 million. To put that number in context the entire budget (wages, travel, everything) for several World Tour teams is less than €10 million a year. It’s so high is there a mistake? Here’s an excerpt from the CAS report just in case you think I’ve read it wrong:

When the UCI’s auditors enquired about this they did not get any satisfactory answers back which meant a fail for the financial component and this meant the UCI could not rubber-stamp the team’s licence renewal but instead it had to go for review in front of the licence commission. Another point of contention was  the team’s overall financial position but team sponsor Itera had agreed to inject another €2 million to keep the team afloat.

Second was the team’s anti-doping past, it had seen several positive tests and the UCI’s Licence Commission felt it had to review this

The December Hearing
We know the UCI blocked Katusha’s licence at the last-round hearing in December 2012. But we now know why it did this.

The financial issues were not fixed for good but were resolved to a sufficient degree not to withold the licence. As you can read up above in the excerpt the accounts “are still difficult to fathom” but in the end the money from Itera appears to have been enough to bolster the team’s finances. The team’s giant travel budget is blamed on the team manager who “bought TV rights and spent large amounts of money on travel and invitations to journalists” but the team promised to stop “such wastage.”

Consequently it was the team’s anti-doping stance that saw the team blocked by the Licence Commission:

  • several incidences of doping in the team (two in 2009, one in 2011, one in 2012)
  • hiring seven riders with known doping convictions from the past
  • the presence of staff involved in doping in the past, notably Erik Zabel and Dr Andrei Mikhailov
  • 12 whereabouts mistakes since 2009

But all these issues were known and raised in the 2011 Licence Commission review. New factors came along that dissuaded the Licence Commission, notably the case of Dennis Galimzyanov who was positive for EPO in the spring of 2012. He wrote a letter from hospital confessing to EPO use, waiving the B-sample test and saying he bought it all alone. But his own team manager Hans-Michael Holczer didn’t believe the letter.

The opinion of Hans-Michael Holczer, Denis Galimzyanov, who was badly ill and speaks poor English, could not have written that letter by himself. The team’s general manager also pointed out that the national federation had put a lot of pressure on this rider, who was considered as a promising rider.
- paragraph 6, page 6

Holczer later met Galimzyanov who told him the same thing but Holczer seems to have told the UCI’s Licence Commission that he still did not believe this. Confronted with the past problems Holczer said he could not guarantee the team would never have a doping scandal again. Now that’s realistic, no corporate leader can give guarantees but the UCI seems disappointed by his attitude, as if the team did not at least put in stronger safeguards to prevent these cases arising.

The UCI stated Katusha had the worst doping record of all the teams and that Galimzyanov EPO positive was evidence of a “worsening situation” and that following a severe warning in 2011 the team had not worked hard enough to fight doping and so the UCI rejected its licence.

In summary it was the strange case of Galimzyanov that proved to be the final straw. The team was on a warning from 2011 and the EPO positive and the doubts expressed by the team’s own manager that seems to have prompted the non-renewal of the team’s licence.

The CAS Verdict
So it all went to a hearing at the CAS. You can understand why, the team had been warned but found itself rejected for a factor apparently beyond its control, a “lone wolf” exposed with EPO suddenly sinks the whole team. By contrast the UCI saw this as just another name on the longest list.

Katusha moved in the right direction

In the hearing Katusha showed that it had moved to implement new “doping prevention” measures for 2013, including contractual matters banning riders from all drugs, even homeopathic varities, unless approved by the team doctor. The team undertook other methods including starting a power-profiling program to help detect sudden increases in rider ability, plus it was plannig to join the MPCC. In full these measures run to pages of bullet points. The CAS panel agreed that these were substantive and “an important step” to satisfying the UCI’s concerns.

In fact there seems to have been a communications error as Katusha was incorporating a stronger anti-doping stance for 2013 but never spelled this out in full, it just said something like “we’re improving things” so the UCI Licence Commission didn’t know how far it was going. It took a hearing to find that all the measures the team was implementing in preparation for 2013 actually matched a list of suitable objectives set by the UCI. In addition the panel considered the Galimzyanov case and frowned on the UCI’s actions because it appeared to be an additional sanction on the doper and team when the rules are clear that if a rider is caught they are banned but no more punishment on top of the agreed rules is allowed.

“The Panel notes that, in light of the measures adopted by Katusha, the Decision to deny the registration for 2013 appears to be grossly disproportionate”
- paragraph 109, page 37

Should it have come to this?
You can see both points of view. Officially the worst record for scandal and on warning for 2012, plus some murky accounts too – no wonder the UCI got fed up. But for Katusha it was responding to the UCI’s criticism and it apparently had nothing to do with Galimzyanov’s positive so the collective punishment was excessive.

Given both sides had views to explore the sport surely has to consider reviewing the timing of this process. A team budget and sponsors can’t be left hanging until the end of the year and then go to appeal during the start of the following season. If possible all this admin should be brought forward so that there is time to review and even appeal this ahead of the new season.

Conclusion
It started as a financial matter over the curiously high travel costs. This isn’t just a curiosity because the sums are high and auditors could not get to the bottom of this. But one team’s facts and stats aside, it’s pointed to a structural weakness in the sport with the licensing process.

But once the case was referred to the Licence Commission the panel became increasingly frustrated by the Katusha’s team’s record on anti-doping. Strangely the UCI wanted Katusha to shape up and it turned out the team was doing this with revised contracts and even the pledge of power-profiling only the two parties never sat down to discuss this, nor even send over a list of boxes to tick. The decision to cite the Galimzyanov case was also a mistake because if it was another dent on the team’s reputation, there was no evidence to link the EPO use to the Katusha team or its staff and therefore hitting the team was a form of collective punishment above and beyond the WADA Code.

Thanks to reader for pointing me in the direction of the full CAS ruling.

Pin It

{ 33 comments }

TheDude May 6, 2013 at 7:04 pm

Any cases in history of cycle sport where a team is used a a front to “launder” or otherwise “obfuscate” funds flows. In the U.S., small used car dealerships have been notorious for high volumes of cash flow, yet looking at inventory, not many products are sold. Hmmmmm.

The Inner Ring May 6, 2013 at 7:06 pm

Yes, see this piece about the Roslotto team from Russia:
http://inrng.com/2010/04/money-laundering-mafia-pro-cycling/

Anonymous May 6, 2013 at 7:15 pm

My guess is that the crooks who run UCI were upset that THEY didn’t receive their “commission” on all the money that seems to have been laundered. How can they exclude a team on ethical/sporting reasons while seeming to have no trouble with a team run by the guy once known as “Mr. 60%”?

The Inner Ring May 6, 2013 at 7:46 pm

I think that’s pushing it. Remember the Licence Commission at the UCI are independent people, for example one is a judge with the Swiss Supreme Court. They’re not some imaginary office juniors doing admin in Aigle.

Anonymous May 7, 2013 at 8:59 am

You’re right, Katusha should have spent some of that cash on a few expensive dope-testing machines and donated them to the UCI…that would probably have taken care of the issue!

Ankush May 6, 2013 at 7:10 pm

Once again, excellent piece.

28 million in travel expenses is ludicrous. Do all Katusha riders fly first class or what? But I still believe that CAS ruling undermined the UCI license committee. They were trying to set a precedent with Katusha ruling and were eventually thwarted. And then we shout that UCI is useless.

The Inner Ring May 6, 2013 at 7:48 pm

The UCI was right to try and set a precedent perhaps…

…but it has to be done clearly, if Katusha was trying harder to implement the rules then this was worth understanding. Almost nobody, even teams and advisors, know exactly what the ethical criteria mean in precise terms. It’s this imprecision that created the room here for dispute and misunderstanding

Nick Evans May 7, 2013 at 2:04 pm

It’s worth noting in the CAS decision that they asked the UCI’s Anti-Doping Manager what sort of things teams should be doing to show they’re satisfying the conditions, and the list he gave (see para. 101) was extremely similar to the sort of thing that Katusha had said they were doing. In those circumstances, and on the basis that this had been enough for the UCI to grant Katusha a pro-conti licence when the ethical criteria are the same, it did seem daft for the Licence Commission to refuse the pro tour licence.

So, yes, CAS did undermine the licence committee because the committee didn’t follow the rules that bind it.

So far as creating a precedent is concerned, this extract from the decision (para 108) is worth noting: “in order to keep the License and obtain the registration for the following season(s), Katusha should confirm during the entire 2013 season that it is actively implementing the measures adopted, in accordance with the Regulations”. The decision also seems quite firm on the point that, if the Galimzyanov case was that big a deal, maybe the UCI should have revoked Katusha’s licence at the time rather than seeking to rely on it later.

YYCycle May 6, 2013 at 8:00 pm

Maybe Makarov acted as chauffeur?

http://inrng.com/2012/02/makarov-uci-jetset/

Doubter May 6, 2013 at 7:19 pm

Great article, INRNG. Well done.

A Russian team playing fast and loose……..?? Sounds like par for the course for Russian business ventures.

Seriously, none of the English speaking teams are cheating, it’s all those foreign guys……..

MadBlack May 7, 2013 at 7:29 am

???? “Seriously, none of the English speaking teams are cheating, it’s all those foreign guys” ???? – Are YOU serious?!?

David Millar, Lance Armstrong, Tylor Hamiliton, Floyd Landis, Christian Vande Velde, George Hincapie, Dave Zabriskie, Levi Leipheimer, Frankie Andreu, Jonathan Vaughters, …
Need I go on?

I don’t know where you’ve been hiding but cheating has engulfed the entire sport.

Timo May 7, 2013 at 7:52 am

He was bring facetious.

Duncan May 6, 2013 at 7:37 pm

Good read. I think your point on the process being reviewed early is esssential because it sounds like both sides didn’t know what the other side wanted and it needed an extra group of people at the CAS to mediate.

Andrewp May 6, 2013 at 7:41 pm

Seems you might be creating an Internet legend based on what looks like typo in the decision. Just inserting a decimal point means the 2 million extra stumped up by sponsors covered the near 200% overspend.

The Inner Ring May 6, 2013 at 7:45 pm

Sound advice and I’d like to hope it’s so but would the CAS ruling have a typo?

andrewp May 6, 2013 at 8:11 pm

Assume there is also one in the preceding paragraph of the same decision
“The representative of the Auditor Ernst&Young confirmed that this equity capital appears to be positive to dare and that the reservation expressed in its report to the UCI may be lifted on this point”
As dare would seem best replaced with date.

Vanilla_Thrilla May 6, 2013 at 8:57 pm

So the UCI considers Katusha the dirtiest team on the World Tour. Now there’s a surprise…

The Inner Ring May 6, 2013 at 10:52 pm

Given the number of cases, in the arithmetic sense it is true plus a cultural one as well given the lack of safeguards, prevention etc. Some of this is changing now, which is for the better. Up to them to keep working at this.

Shawn May 6, 2013 at 10:08 pm

Perhaps it’s because this was drawn out but I’m having trouble with the time line. Katusha applies for 2013 licence renewal in 2012 and fails–in part–due to ethical misconduct after having been previously warned about their record on such matters. CAS then looks at what the team put into contracts and team policies for 2013 as a reason to overlook their 2012 and previous ethical violations? Isn’t this refusing to judge a team worthiness on ethical grounds because they have already revising their negligent policies? Very odd.

The Inner Ring May 6, 2013 at 10:53 pm

It’s the timing where the UCI was assessing the squad for 2013 so what’s in the team contracts for 2013 matters… but it seems Katusha didn’t make these changes clear to the UCI, so the confusion.

Anonymous May 6, 2013 at 10:36 pm

The plotters thicken their broth!

cthulhu May 6, 2013 at 11:38 pm

After reading this I still don’t understand the CAS reasoning. Apparently Katusha forgot to tell the Commission in time about their Anti doping measurements fully and in detail , that would mean they missed the deadline. The reaction was within the _known_ rules even if it was “grossly disproportionate”. Didn’t a different team got to be ProConti last year, because they handed in their money reports too late?

Nick Evans May 7, 2013 at 2:12 pm

The point is that even when judicial bodies have a degree of discretion, they can’t be completely arbitrary in the way that they use it. So if it would be “grossly disproportionate” to take a course of action in particular circumstances, it effectively becomes outside their powers to do so. In this particular case, given that Katusha claimed to have put in place measures to address ethical failings which matched the sort of things that the UCI saw a good practice elsewhere, it was disproportionate to hold that they had failed to address their ethical failings.

So far as having documents in place is concerned, there’s some stuff that *must* be submitted in a particular form (e.g., accounts) and other stuff that can be submitted any old how. In this particular case, as Katusha had said effectively “we’ve fixed this problem”, it was the UCI’s mistake not asking “how?” before deciding to withold the licence.

Simon May 7, 2013 at 1:34 am

I’ve always been confused by team budgets. The figures for the less well off teams don’t make sense. Garmin seem to have a budget of 10 million or thereabouts. How does that pay for Hejsdal , Millar Martin etc and travel expenses on top. I get the feeling that a lot of teams have a secondary budget.

The Inner Ring May 7, 2013 at 11:35 am

You hire them cheap, for example Hesjedal had never won a stage race until the Giro so he came relatively cheap. And many fly Ryanair, the low-cost carrier, to get to races.

Natty May 7, 2013 at 2:24 am

Is CAS restricted to making their decision based on the same documents / testimony that the UCI had access to?

Purely out of curiousity it would be interesting to know how much of the new ethical measures being implemented by Katusha were ‘threshed out’ after the original decision.

The Inner Ring May 7, 2013 at 11:37 am

That’s complicated, the Licence Commission has to base its decision on documents available at the time but the CAS used some hindsight in its judgement. But only by looking back, it was not asking what Katusha will do, only what it has done.

Anonymous May 7, 2013 at 4:28 am

Just read http://inrng.com/2011/12/tinker-tailor-cyclist-spy/.

It does seem like it might not all add up as neatly as it should.

Bundle May 7, 2013 at 1:41 pm

Very instructive and clarifying piece. Good job of finding the information and processing it.
I also hope Russian tax authorities process what indeed seems like possible fiscal fraud, with regard to those hard-to-believe travel expenses.

LM May 7, 2013 at 3:27 pm

If you read the piece linked in the previous comment, you’ll see that the realization of your hopes is unlikely.

Initially, it seems as thought the Russians are just criminals, but maybe it’s just that they’re more transparent about “business as usual” than other, equally unethical, governments.

vimes May 7, 2013 at 3:26 pm

I like the part about “the presence of staff involved in doping in the past”. As if that was unusual. Andersen, Volpi, Vinokourov, Stangelj, Blijlevens, the Galdeanos, Vaughters, Sergeant, Stephens, Riis come to mind for a start, and there certainly are a lot more.

The Inner Ring May 7, 2013 at 3:35 pm

Indeed. I suppose it was just another one to add to the list. But Dr Mikahailov does have a special place in the pantheon of team doctors since he has a criminal conviction.

Dingbat May 7, 2013 at 5:01 pm

“Pantheon” ? More like “pandemonium”! (Couldn’t resist the etymological joke.)

Comments on this entry are closed.

Previous post:

Next post: