Kenya is already in the thick of things when it comes to corruption – and now the latest victim has been Nike. After a sponsorship contract was signed several years ago, Nike agreed to pay hundreds of thousands of dollars in honorariums and a one-time $500,000 “commitment bonus.” The money was supposed to help and support Kenyan athletes, but was instead swallowed up by government officials.

Now, after a Chinese clothing company swooped in and offered to sponsor Kenya’s runners, Nike panicked.

“Can we talk about the situation?” a Nike executive wrote to a Kenyan official after hearing the news that the Kenyans wanted to end their deal with Nike. “You and I go back a long way.”

What followed — according to email exchanges, letters, bank records and invoices, provided by a former employee of Kenya’s athletics federation — has led to a major scandal in Kenya, a country in the midst of its biggest war against corruption in years.

Although the US has yet to open an investigation against Nike, John Githongo, one of Kenya’s leading voices against corruption, said they should.

For more than 20 years, Nike Inc. has been paying the Kenyan national runners’ association millions of dollars in exchange for the Kenyans wearing Nike’s signature swoosh, superb advertising in the running world.

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 — the list goes on. Professional runners from other countries say they feel a sense of dread every time the Kenyans show up at a track meet in their red, green and black uniforms and start doing their toe-touches.

Kenyan athletes were so outraged when they learned in November that hundreds of thousands of dollars from Nike had been stolen by their bigwigs that they staged a protest at their headquarters in Nairobi, with elite athletes camped out in the grass and holding up signs that read “blood sucers.” (Some of the runners never finished school.)

But the one question that Kenya officials are asking Nike is whether the company made it easier for officials to take the money. But this is not the only incident that is being investigated. So far there has been :

 – a government ministry buying plastic pens for $85 apiece
– a Supreme Court judge taking a $2 million bribe
– questions about what exactly happened to the proceeds of a multibillion-dollar bond deal.

Officials at Kenya’s running federation then struck a new sponsorship deal with the Li-Ning Company, a Chinese sports empire founded by a famous gymnast, Li Ning. A marketing agent, working as a middleman between the company and the Kenyan federation, then sent nearly $200,000 to Athletics Kenya, money that a top official quickly withdrew.

However, it’s now apparent that it will be quite difficult to shake off Nike as a sponsor.

After they received a letter from a Nike lawyer saying there were no legal grounds to terminate the contract, the Kenyan officials abruptly changed course. They negotiated a new contract in which Nike agreed to pay Athletics Kenya an annual sponsorship fee of $1.3 million to $1.5 million — plus $100,000 honorariums each year and a one-time $500,000 “commitment bonus.”

But these terms raise red flags in the anti-corruption unit:

Whenever I see the words ‘commitment fees,’ ‘commitment bonuses,’ ‘access fees,’ ‘access bonuses,’ that for me raises a red flag.

It’s language used to dress up bribes traditionally.

While it’s important to Nike to keep the contract as it is a brand that is synonymous with runners, Kenya is doing what it wants, how it wants.

[source: nytimes]