ChessGate ?

Chess is a fabulous game!   A game with a rich past and an even richer future.  I love and admire most of what I have personally encountered in my adventures in chess.  Andrew Paulson and Nigel Short are two of the most passionate individuals that I have seen so far….it is my sincere desire that one day both of these gentlemen will join forces and help to move chess into the 21st century.  But for now, there are conflicts that must be resolved and issues aired and clarified….
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Following yesterday’s publication of the allegedly secret memorandum between  Agon and Fide, I received this polite and informed response from Andrew Paulson.  I have no idea of where this particular issue will lead, but somewhere in the back of my mind is the hope that one day Andrew will run and succeed in being elected FIDE president
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Dear Mr. Spraggett,

The document you have posted today on your blog was stolen from my office by an employee who took a job working for the Kasparov Campaign and ‘gave’ it to Garry Kasparov who gave it to Nigel Short who leaked it to the Sunday Times. 

I would advise you to seek legal advice and would hope that you would take it down based on the attached document which was sent to The Sunday Times.  (At my request, instead of spiking the article, The Sunday Times simply postponed the article for a week so that the journalist (new to chess) would have time to develop an understanding of the context.)  Failing that, I would request that you post the attached document and this email.

 

Nigel Short claims that this document proves that Kirsan Ilyumzhinov is a shareholder in AGON.  I have repeatedly stated that this is false.  The last sentence of the document demonstrates that the document does not prove anything of the kind:  “We are willing to discuss other possible variants, including an initial [or including the original] model, in which all financial risk would lie on our side.”

 

There were several models that we explored over many iterations while establishing the shareholder structure of AGON after the FIDE/AGON contract had been negotiated. I am the sole owner of AGON and the sole shareholder.  I am currently in the process of selling the company, as I am running for Deputy President of the European Chess Union and owning AGON would constitute a conflict of interest.

 

 Mr. Makropoulos (Deputy President of FIDE) is not and has never been a consultant for AGON and he has never received any money from AGON.  The proposal in the draft Memorandum was rejected by Mr. Makropoulos, who insisted that no one at FIDE should be paid by AGON and that Mr. Ilyumzhinov should not be a shareholder in the company.

Right now this stolen draft document is being used by Nigel Short to draw attention away from ethical violations by Mr. Kasparov and his contract with Ignatius Leong.

Best Regards, Andrew Paulson

AGON

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LEGAL DOCUMENTATION PROVIDED

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Solicitors & Attorneys Ltd /News Corp UK & Ireland Ltd /3 Thomas More Square/London E98 1XY/United Kingdom

Attention:

The Editor & the Legal Dept. The Sunday Times /By Fax: 0207 782 5860/By email:   tnllegal@newsint.co.uk/brid.jordan@news.co.uk /pat.burge@news.co.uk  /Mr. Tim Rayment  /By email: tim.rayment@sunday-times.co.uk

18 January 2014

* URGENT LEGAL NOTICE*

*ON THE RECORD BUT NOT FOR PUBLICATION *

Dear Sirs,

Re: Mr. Andrew Paulson

We refer to our letter of yesterday evening and your acknowledgement. In relation to Mr. Rayment’s questions, please note our client’s responses below.

1. Who owns Agon and who will benefit from any profits it makes.

Our client, Mr. Paulson, is the Founder of, and owns 100% of the ordinary voting shares in AGON Ltd (AGON) both legally and beneficially. There are no other shareholders in AGON and no other classes of shares. This is Jersey Limited Company Registered Number: 109840. Mr. Paulson is the sole shareholder. There are two shares and share capital of £2. There are no directors.

2. The precise nature of your business relationship with Mr Ilyumzhinov.

Mr Ilyumzhinov is the President of the World Chess Federation (FIDE). On 20 February 2012 FIDE entered into a contract with AGON whereby AGON acquired the commercial rights to

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The World Chess Championships Cycle. The contract was approved by the Presidential Board of FIDE and ratified by the General Assembly in 2012. This contract is publically available on FIDE’s website and we refer you to it for its precise terms. The Board and Assembly approvals are also publically available.

3. I have been given information to the effect that you are a minority shareholder in Agon and the company is actually controlled by Mr Ilyumzhinov. Is this true?

This is false. See 1 above.

4. Is it true that Mr Ilyumzhinov has a controlling interest, and that under Agon’s ownership model he has more than 50% of the voting shares?

This is false. See 1 above.

5. Is it also true that Mr Ilyumzhinov stands to benefit from future dividends through a holding of non-voting shares?

This is false. See 1 above.

6. Is it correct that you control the day-to-day operation of Agon (through the board of directors) while Mr Ilyumzhinov controls company strategy (through the board of shareholders)?

This is false. See 1 above.

7. I have been told that under Agon’s financial model, Mr Ilyumzhinov was to lend Agon up to $3m ($2m in 2012, $1m in 2013). If he did not make his payments on time, his share in Agon was to be reduced.

This is false. See 1 above.

8. How much credit, in total, has Mr Ilyumzhinov extended to Agon?

None. Mr Ilyumzhinov is not a personal creditor of AGON and did not himself, or via any third party or corporate entity, advance funds to AGON

.

9. Has his share in Agon been reduced from the original 51%?

This is false. See 1 above.

10. Has Agon been able to pay FIDE the $500,000 deposit described on page 6 of the contract on FIDE’s website?

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AGON has never paid the $500,000 deposit due to FIDE, with the consent of FIDE, because of unexpected expenses incurred by AGON on FIDE’s behalf in relation to the last minute relocation of the Chelyabinsk Grand Prix to London.

11. Why has Agon been structured as a private company in Jersey, with its audited accounts reported only to the four individuals who make up the FIDE-Agon “interface.” Is that a correct understanding?

AGON is a private company and its accounts are private. Jersey was selected as a highly regulated but tax effective location. AGON’s income is international and such a jurisdiction is appropriate to avoid incurring unnecessary national taxes imposed by jurisdictions other than at income source. Under the contract with FIDE, for transparency, two elected FIDE officials have access to the accounts of AGON. This was determined to be sufficient by FIDE.

12. Under the contract on FIDE’s website, FIDE is entitled to a proportion of sponsorship revenue. If Agon’s accounts are not public, how can the millions of people who feel passionate about chess feel confident that FIDE is getting the benefits to which it is entitled?

See 11 above.

In Summary

It appears that Mr. Rayment has been misinformed. We understand that he is referring to confidential communications and negotiations and a heads of agreement between AGON and Mr Ilyumzhinov in early 2012. These discussions and communications evolved but ultimately did not result in any final and binding agreement and the proposal was abandoned.

We repeat –the only agreement is that between AGON and FIDE as referred to at point 2 above. Further, please be advised that Mr. Rayment can only have obtained his information from a party breaching obligations of contractual confidence. If he is holding any documents, they will belong to either Mr. Paulson or to Mr. Ilyumzhinov. Neither party has published or disclosed the same. Please return these confidential documents to our client.

The gist of Mr. Rayment’s allegations appears to be that there is an agreement in place that would create a serious conflict of interest for Mr Ilyumzhinov if he had not disclosed it to the Presidential Board. There is no such agreement. Had there been a final binding agreement, we have no doubt that any proper disclosures, as required by the FIDE statutes, would have been made, as required. These allegations should be put to Mr Ilyumzhinov, who will confirm the above.

We also note that if your source, via a Mr. Nigel Short, is Mr. Robert Fontaine, you should know that he is a former disgruntled employee of Mr. Paulson who left to work as Campaign Manager for Mr. Kasparov. Mr. Kasparov is standing against Mr. Ilyumzhinov for the presidency of FIDE and is clearly seeking to discredit him. We understand that Mr. Short is also working for the Kasparov Page | 4

campaign and is politically motivated. We remind you of the requirement to critically assess your sources and their allegations as a matter of responsible journalism.1

1

Reynolds v Times [1999] UKHL 45. The standard for responsible journalism requires critical analysis of sources, the status of allegations and, crucially, verification and honest belief in truth.

2

See Barclays v Guardian [2009] EWHC 591 (QB), Northern Rock v FT [2007] EWHC 2677 (QB) and HRH v Associated [2006] EWCA Civ. 1776.

We repeat that if internal memoranda or documents have been supplied to you by Mr. Fontaine, they will have been taken in breach of his contractual obligations and obligations of good faith and confidence and our client may be entitled to restrain publication of them.

2 Please undertake not to publish any such documents by return.

Further, should the above result in additional questions –our client will again require a meaningful opportunity to respond to those

precise questions. Our client is not available for the rest of today due to a Board Meeting.

Yours faithfully,

Victoria McEvedy

McEvedys, Solicitors & Attorneys Ltd., Company No. 7786363: Registered Office: 29

th Floor, One Canada Square, Canary Wharf, London E14 5DY. Principal: Victoria McEvedy. Authorised and Regulated by the Solicitors Regulation Authority, SRA No. 564276. VAT No. 122 3590 43. T:0207 243 6122, F:0207 022 1721 http://www.mcevedys.com

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