FIDE Money Transferred To Fiduciary Accounts

On May 4, FIDE transferred its money to two fiduciary accounts after the Swiss bank UBS had closed its account at the start of the month. This was revealed by FIDE's treasurer on Sunday.

It took the World Chess Federation two weeks, but finally the national chess federations and everyone else have been informed about the whereabouts of FIDE's money. And still, questions remain.

It all started in February, when FIDE treasurer Adrian Siegel shared with the world that FIDE's bank, UBS in Switzerland, threatened to close their bank account because of president Kirsan Ilyumzhinov's presence on the sanctions list of the U.S. Department of the Treasury. 

UBS agreed to postpone the deadline to April 30, but no longer. And indeed, the account was closed, and FIDE has been without a bank account since.

Active as ever on social media, GM Nigel Short has been focusing on this money issue since he announced his candidacy for the FIDE presidential elections. On Twitter he asked the same questions as in our previous report, wondering whether FIDE's money was now "in a mattress" or "sent to Qatar"—the latter, because the Qatar Chess Federation's president Khalifa Mohammed Al-Hitmi had offered FIDE to use his accounts.

A day later, Siegel posted an update on the FIDE website in which he confirmed that per May 1, FIDE was not able to reach its UBS account. For three days it was frozen, and on May 4, UBS allowed FIDE to transfer money to a trust company. According to FIDE officials, no bank wants to do business with FIDE.

Siegel also specifically replied to Short, first pointing out that FIDE doesn't own "millions" and that "a quick look into the annual balances would have shown this."

In our interview last month, Deputy President Georgios Makropoulos said that the current balance is "over 1,700,000 Euros" but it's not so easy to check. Chess.com asked the FIDE office but as it turns out, the annual balance sheet for 2017 is not available yet because it is in the process of being audited and will only be published in August 2018, together with the agenda for the general assembly. 

Siegel gave some more details about the transfer of the money:

"[I]n the tweets it is claimed that FIDE transferred the money prior to the closure on 30 April. This is completely wrong. The money was transferred on May 4th after UBS froze our accounts for three days. There was no alternative but to transfer our money because UBS was not willing to keep our money and we had to consider the possibility and risk that the money will be frozen for even longer."

Short called the letter a "pompous response" and wanted to know more. He wrote a lengthy, open letter with a number of follow-up questions. Short asked about where the money was sent exactly, the structure of the trust company, FIDE's decision-making process, whether the current arrangement meets legal, KYC and compliance standards and how the transfer took place.

Short got support from GM Garry Kasparov, who lost to Ilyumzhinov at the FIDE presidential elections four years ago.

Yesterday, the FIDE website posted Siegel's reply (backdated to May 12). As it turns out, FIDE's money was sent to not one, but two fiduciary accounts: one at Kei Trading Services in Hong Kong and one at Arkion SA (Switzerland). Siegel noted that all the transactions were handled by FIDE's lawyers and that "at no stage were the funds at risk."

Siegel told Chess.com that the largest part of the money is being held in Switzerland. Arkion SA can easily be found online and about the aspect of compliance, it writes on its website:

"The jurisdictions in which we operate have laws regulating international money laundering. We are fully committed to meeting our obligations under these laws and we therefore require our clients to formally confirm their identities and addresses, and the nature and rationale behind any particular business structure or activity."

Hong Kong's Kei Trading Services is not so easy to Google; perhaps this company does not have an online presence. At request, Siegel did not provide a website URL.

Adrian Siegel (right) watching Ilyumzhinov being congratulated after winning the 2014 presidential elections in Tromsø, Norway. | Photo: Maria Emelianova/Chess.com.

Asked how the presidential board could give the green light for the money transfer—while their last meeting took place early April—Siegel explained:

"The Presidential Board decision was achieved over five days by written approval (sent by email). Against the background of the different domiciles of the Presidential Board members it was not possible differently. The Presidential Board members signed without any dissent that Nigel Freeman and myself are allowed to operate the new accounts and sign jointly."

Siegel finishes his letter by saying:

[I]n the spirit of complete transparency, I would like to invite Nigel Short to make an appointment to visit the FIDE office in Athens (where Nigel lives) so that he can inspect the documents and satisfy himself all is in order."

There's a slight issue with that, because Short is not in Athens and won't be for another month. He is the top seed in a tournament in Kolkata, India which starts today, and he will be away from home for over a month. In a tweet, he asked for scans of the documents.

Questions remain, such as whether the two trust companies in Switzerland and Hong Kong are reliable, and whether the recent actions of FIDE officials have followed the correct procedures. A more general question is whether FIDE could have avoided the loss of its UBS account, and the legal costs connected to this.

"I am afraid that we have to pay an essential five-digit amount for the lawyers since the really had to struggle with UBS which initially have even frozen our money," said Siegel.

Related stories:

• FIDE: UBS Closing FIDE Bank Account Today
• Swiss Bank To Close FIDE Account Over Ilyumzhinov
• U.S. Sanctions Kirsan Ilyumzhinov For Supporting Syrian Government
• Ilyumzhinov Loses Even More Power As FIDE President