23rd November 1997

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WorldTel MOU a sell-out, says Sumathipala

[Image]The alleged Cricket Board bribery scandal has taken a fresh turn with Vice President Thilanga Sumathipala, a central figure in the controversy, accusing Board President Upali Dharmadasa and Secretary Tryphon Mirando of virtually selling out Sri Lanka's rights to the WorldTel Television Company.

The latest revelation came as the Permanent Commission probing bribery and corruption continues to investigate a charge by Mr. Dharmadasa that a senior official of the Board had sought a bribe of Rs. 6 million from WorldTel and obtained half of it on a claim that part of the money had to be given to Sports Minister S.B.Dissanayake. The Minister denied the charge and referred the matter to the Commission.

Mr. Sumathipala in a letter last Wednesday to the Cricket Board's Chief Executive Dhammika Ranatunga claimed that it was he who had first suggested an agreement with WorldTel for television rights for international matches played in Sri Lanka. But without his knowledge and without consulting the board, Mr. Dharmadasa and Mr. Mirando had later signed with WorldTel a Memorandum of Understanding (MOU) which he objected to because he felt it was against the interest of the Cricket Board, Mr. Sumathipala said. In a letter giving fresh insight into the multi-faceted controversy which has hit the national headlines in recent weeks, Mr. Sumathipala said:

Reference the fax dated 31st October, 1997 from WorldTel Inc., I place the following facts before the Board, reserving my right to morefully deal with the matter:

1. In April 1992, an Agreement had been entered into by BCCSL with CSI Ltd., UK; then Treasurer Lal Wickramatunga signing on behalf of BCCSL. This was a Licensing Agreement with the exclusive right to distribute television and video broadcasts, live and recorded, throughout the world, excluding Sri Lanka, of cricket matches played in Sri Lanka against foreign teams. This Agreement was for a 5-year term from 1st June 1992 to 31st May 1997 with a right of first refusal for renewal.

2.In view of the poor performance by CSI Ltd., in exploiting such overseas marketing opportunities, on which I expressed my disappointment by my letter of 11th October 1996, when this 5-year contract was coming to an end in May 1997, I, as the Chairman of the Sponsorship Committee, with the unanimous approval of the Board, caused for competitive proposals to be called from leading international television marketing and production companies, for International Television / Broadcasting Rights and Sponsorship Rights with a view to selecting the best financial proposals for the country, underwritten by a first class international bank guarantee, as was insisted upon by me. Accordingly, the following companies were invited to make presentations on 1st June 1997 by Dhammika Ranatunga, Chief Executive, BCCSL.

Hearsay Communications Worldwide, ISL Asia Pacific, IMG, CSI Ltd., API Television, Transworld International, WorldTel Inc., Asia Sports.

3. Consequently, it was considered that WorldTel had made the best proposal. In this connection, I quote certain extracts from my letter of 6th June 1997 forwarded to the Board;

"You will recall that as far as the 11th of October 1996 I express my disappointment at the manner in which CSI marketed our cricket despite having awarded the rights in 1992.

In fact since 1992 upto 11th October 1996, Sri Lanka had 8 tours, but CSI only marketed South Africa and India in 1993.

In my aforementioned letter I suggested among other things to market our cricket both international and domestic globally in a professional manner. To do this we needed an international marketing company to act as our sports marketing authority.

I am happy to announce today that we have finally shortlisted one such company.

As you are aware Gentlemen the Wills World Cup was covered by M/s WorldTel and their quality is well beyond reproach. In fact I would say that their quality and capability is undisputable. However, most importantly of all it was WorldTel that gave us the best financial security. A minimum guarantee of Rs 330 Million for a period of 3 years".

4. It was, however, decided to identify the Indian Tour to Sri Lanka of August 1997, as the immediate contract, for which WorldTel had offered BCCSL a non-refundable guarantee of US$ 2.0 Million with a 75% share of the Revenue. In view of the option of first refusal in the contract with CSI Ltd., this immediate contract was offered to CSI Ltd., on 4th July 1997, which however they failed to accept within the stipulated deadline of 10 days by 14th July 1997, whereby, on legal advice, BCCSL was free to proceed with WorldTel Inc. Consequently, the contractual arrangement for the Indian Tour to Sri Lanka in August l997 was offered to WorldTel Inc.

5. However, notwithstanding and disregarding the aforesaid, on 14th June 1997, Tryphon R. Mirando, Hony. Secretary, BCCSL had addressed a letter to Mark Mascarenhas, President, WorldTel Inc., intimating that it had been decided to appoint World Tei Inc., as the exclusive television and sponsorship marketing representative for BCCSL, requiring WorldTel Inc., to provide a draft agreement for review and approval. In response thereto, by letter dated 27th June 1997, WorldTel Inc., had forwarded a draft Memorandum of Understanding to Tryphon Mirando, Hony. Secretary BCCSL for review and signature. Whilst the process to call for international offers, with a secured minimum guarantee, was mooted by me and accordingly, Chief Executive, Dhammika Ranatunga had called for offers for international Television/Broadcasting and Sponsorship Rights, Hony. Secretary Tryphon Mirando's aforesaid letter significantly had omitted the word "international".

6. WorldTel Inc., by their letter dated 2nd July 1997 had forwarded the Agreement for the Indian Tour of Sri Lanka in August 1997 to Tryphon Mirando, Hony. Secretary, BCCSL.

This Indian Tour Agreement also provided only for the granting of the exclusive right to distribute television and video broadcast, live and recorded throughout the world, excluding Sri Lanka. Even though, the execution of the immediate contract with WorldTel lnc., for the lndian Tour to Sri Lanka of August l997 was still pending, the aforesaid Memorandum of Understanding (MOU) was executed on 17th July 1997 with WorldTel Inc., for a full 3-year term from 1st August 1997 to 31st July 2000, by the President Upali Dharmadasa and the Hony. Secretary, Tryphon Mirando signing the same. Since I did not agree with the terms therein, I declined to be a party thereto and objected to the execution of the said MOU, specifically pointing out my reasons to the President. The aforesaid letters dated 14th June 1997 and 27th June 1997, forwarding the MOU, had not been tabled at a Meeting of the Board, and accordingly, the signing of the MOU had not been approved/authorised by the Board.

7. Specifically, to me amongst matters, such as insurance, production costs and the absence of a commitment to give a first class international bank guarantee, the objectional condition in the MOU, so signed with WorldTel Inc. on 17th July 1997 was;

"2. BCCSL further grants to WorldTel the exclusive sponsorship marketing rights with respect to BCCSL, the Sri Lankan National Team, and all international cricket events taking place in Sri Lanka under the auspices of BCCSL, including but not limited to the right to market BCCSL, Sri Lankan National Team, and cricket event sponsorships and to exploit any and all related commercial opportunities such as merchandising, promotions, licensing, and official supplier relationships, as well as on-site opportunities such as perimeter advertising boards, drinking card, (the Sponsorship Rights) provided however, that Sri Lankan National Team Sponsorship Rights shall become effective August 1998".

It is in view of the above condition, that I disagreed with the said MOU and refused to sign the same and objected to the execution thereof. It was inconsistent with the process that was mooted by me and not in conformity with the terms on which proposals were called for, by the Chief Executive, Dhammika Ranatunga .

8. Six days thereafter, on 23rd July 1997 at the Emergency Executive Committee Meeting, I reiterated my position, - vide Minutes;

WorldTel Agreement

Mr. Thilanga Sumathipala stated that there are certain shortcomings in the MOU signed with WorldTel with regard to the local selling rights and payments, to WorldTel. It was agreed that the final agreement should incorporate such details and should be thoroughly perused with legal Aid before signing the final agreement."

Subsequently, I forwarded my fax dated 2nd September 1997 to the President, BCCSL and, inter-alia, stated;

"If we can get some legal advice on these lines we can start dealing through our Lawyers instead of us trying to handle this issue any further.

Worst scenario is even if the WorldTel stay away from not paying us money, we can still be better off in long-term by not entering into a one sided agreement which will cost us approximately US$ 1,000,000/- by way of local rights and also losing out the impact the BCCSL holds in the market place."

9. As the Chairman of the Sponsorship Committee, the selection of an international company on the basis of competitive proposals,underwritten by a first class international bank guarantee, was mooted by me, to exploit the overseas television and video marketing opportunities for foreign tours played in Sri Lanka and it was not for the passing on a platter, to such foreign company, domestic sponsorships and advertising opportunities and income arising therefrom, which anyhow already existed, due to the established fund of local loyalty to and the hard earned goodwill of BCCSL. I considered it meaningless to pass on such established domestic market, that has already been developed and which rightfully belonged to the BCCSL to WorldTel Inc. and to pay them 25% thereof and that too, whith the risk of such established market being disturbed. As to how the President, Upali Dharmadasa and Hony. Secretary, Tryphon Mirando had got this mixed-up and permitted, amongst other, the inclusion of the domestic market in the said MOU, I really cannot understand. Even the contract with CSI Ltd., UK had specifically excluded such Sri Lankan domestic market opportunities.

10. Subsequently, however, whilst participating to finalise the draft main legal agreement with Attorney-at-Law, Ajit Thilakawardena, as a matter of compromise, I was only agreeable to considering conceding local sponsorship rights to WorldTel Inc., only in respect of revenue levels over and above a defined level that the BCCSL would anyhow enjoy. This too, I am of the view, should be by international sponsors brought to the table by WorldTel Inc. It is significant to note, that though the Indian Tour Agreement had been received on 2nd July 1997 and BCCSL had been free to conclude this Agreement on 14th July 1997, this Indian Tour Agreement signing, upon which WorldTel was obliged to give BCCSL a non - refundable Bank Guarantee of US$ 2.0 million, remained unsigned, whereas the Indian Tour in fact had taken place and concluded on 23rd August 1997 and in October 1997 WorldTel had paid BCCSL only US$ 1.0 million, with no such Bank Guarantee in place.

I have acted in the interest of Sri Lanka cricket, the BCCSL and the country, I regret very much the recent controversy created, harmful to such interests. Furthermore, the BCCSL had appointed me as a Member of PILCOM, Member - ICC World Cup '99 Advisory Committee and Member - ICC Development Committee.

Thilanga Sumathipala,

Vice President, Chairman - Sponsorship Committee.

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