Uncomfortable Truths: the Youthstream Shares Saga

The 60-second summary

In 2003, the FIM – headed by then-President Francesco Zerbi – awarded a long-term world championship promotional rights contract to Youthstream, a company in which:


  • members of President Zerbi’s immediate family became shareholders two months after the contract was announced; 
  • FIM Juridical Panel member Gianluca d’Aloja (a Rome-based lawyer with a self-acknowledged close professional connection to Francesco Zerbi), had a significant shareholding when the contract was in the process of being negotiated; and 
  • a Liechtenstein-based foundation, the beneficiary of which enjoys protected anonymity, also became a shareholder shortly after the contract was announced. Many observers question whether the beneficiary of this foundation may also be/have been a person connected with the FIM.


This constituted a clear commercial conflict of interest. 


It was also completely unethical. 


While steps have been taken by the FIM to prevent a repeat of this embarrassing episode, doubts remain as to whether their house has been completely cleaned. Shamefully, the FIM never formally pressed those within the organization suspected of questionable behavior to explain their actions. 


The contract signed in 2003 was due to expire in either 2021 or 2026, and has reportedly been further extended to 2031. We believe it should have never been awarded in the first place.

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Uncomfortable Truths: the Youthstream Shares Saga

The 60-minute story

Frankly, this is not an easy tale to tell. But we feel it is important to maintain an accurate and permanent record of the details behind Youthstream’s promotion of the Motocross World Championship, and to keep the information available to those who might be interested today or in the future. To paraphrase a line from the movie The Big Short, “MXGP Action Group saw the giant problem at the heart of the Motocross World Championship, and they saw it by doing something the rest of the Industry never thought – or wanted – to do: they looked”. The story you’re about to read is what we found. 

 

Youthstream's promotion of the FIM Motocross World Championship is an emotive topic. While Youthstream have their supporters in various quarters (i.e. within certain teams, media outlets and sections of the fanbase), there are many who disagree with the direction that Youthstream has taken the sport. These observers not only question various decisions that have been made – such as the removal of prize money and huge increases in rider entry fees and local organizer sanction charges – but also the benign way in which the FIM has allowed them to be taken. They wonder how Youthstream came to receive an extraordinarily long contract that initially ran until the end of 2021 or 2026, and which has reportedly been extended again - seemingly without going to competitive tender - to 2031. They cannot help but notice the sparse line-ups behind the start-gate, where pay-to-play competitors can simply purchase a 'ticket to ride' regardless of their ability on a motocross bike. They see that the venues being visited by the World Championship are becoming ever-more far-flung and expensive, but they are skeptical of the ‘emerging markets’ justification when those tracks and facilities are frequently sub-par. Above all, they keep thinking that something has not been quite right behind the scenes.  


This article seeks to provide some answers as to how elite-level motocross ended-up in a position where the tail appears to be wagging the dog. It deliberately avoids hysteria and hearsay, and instead concentrates purely on stating the facts in an objective, dispassionate way. Many months have been spent seeking, verifying and analyzing the source material – all of which resides, or resided, in the public domain – on which this story is built. 


Who is involved?


Answering this simple question required us to exhaustively explore various company registries around the world for archived records stretching back decades. 


Youthstream Consultores e Servicos Lda (hereafter referred to as 'Youthstream') was formed on 12th April 2001 in Madeira, with two initial shareholders: North Ascanelee E. Marine Inc. and World Discovery Company SA, a pair of off-the-shelf Panamanian companies, originally incorporated in 1988 and 1995 respectively, and assumed to be controlled by, or connected to, Giuseppe Luongo. In 2001, when Youthstream was formed, the FIM Motocross World Championship was being promoted by Dorna Off-Road, a Spanish company which had acquired the rights from the previous holder – Giuseppe Luongo’s Action Group International Limited (hereafter referred to as ‘AGI’) – twelve months earlier. Mr. Luongo was working for Dorna Off-Road in 2001, in the role of Vice President and partner for motocross and supercross. 


For a large part of its corporate life, AGI was based in London and run by Giuseppe Luongo, supported by fellow directors Nikolaos Gounaris, Eric Sévenet and Phillipe Rahmani. Luongo, Sévenet and Rahmani were shareholders in AGI, along with Claudio Becchis and ‘Severus Stiftung’ – a name that will become highly significant in the timeline of the Motocross World Championship. It is important to understand that Severus Stiftung is not an individual, but a Liechtenstein-based limited-liability foundation. A stiftung acts as a legal entity without shareholders but which has beneficiaries who are entitled to enjoy the foundation’s assets and/or income according to the will of the founder. Liechtenstein has very strict privacy laws which preserve the anonymity of a stiftung’s beneficiary/ies. Whoever the person/s hiding behind ‘Severus’ is, they are clearly anxious to remain unidentifiable.

 

Who could Severus be? We don’t know for certain, and, in all honesty, we may never know. All that we do know for certain is that a) Giuseppe Luongo transferred 10 per cent of his shares in AGI to Severus Stiftung in October 1998, b) Severus Stiftung has held shares in two different companies that both promoted the Motocross World Championships at different times, and c) Jura Trust AG administers/ed the Severus foundation (since at least 1998). The person/s behind Severus Stiftung must be both well-connected and very interested in motocross. Within MXGP Action Group’s ranks we’re fortunate to have a member who’s very interested in both motocross and ancient Rome. You might find this short synopsis helpful. In the year 193 AD, the former governor of Pannonia – a territory located in present-day Austria and Western Hungary – became the head of the Roman Empire and ushered-in a new dynasty called the Severi. The new Roman Emperor became Septimius Severus. Coming from Pannonia, Severus wasn’t really a Roman at all, and instead can be viewed as a foreigner in Rome, known for his ability to bring a measure of stability in fractious or delicate proceedings. 


Let’s abandon the ancient history lesson and return to the story. Except for Mr. Becchis, AGI shareholders Luongo, Sévenet, Rahmani, Gounaris and Severus – along with some other prominent individuals who we will introduce shortly – also feature among the current and former shareholders of Youthstream, as we now explain in detail. 


In November 2001, and with Dorna Off-Road still running elite-level Grand Prix motocross on the FIM's behalf, Youthstream's original ownership changed, with the two Panamanian companies transferring their shares as per Table 1 below.

TABLE 1: YOUTHSTREAM SHARE TRANSFERS, NOVEMBER 2001

The 60-minute story (continued)

These transfers resulted in Gianluca d'Aloja becoming the largest shareholder in Youthstream at that point in time. d’Aloja is a key figure in Youthstream's shareholder history, although his name may be unfamiliar to many. He is an Italian lawyer based in Rome and served as an official member of the FIM's International Juridical Panel from 1995 to 2010. He is currently listed as a federal official within the Federazione Motociclistica Italiana ('FMI'), the national governing body of Italian motorcycle sport. At the time of writing his professional bio is publicly available online if you wish to see his activities, but we wouldn’t be surprised if it disappeared or was heavily edited at some point. Therefore, you can find a saved copy of the 2018 bio here should you ever need it.


During our original investigation for the website published in May 2013, we obtained an earlier version of Mr. d’Aloja’s curriculum vitae. It was publicly available online but has, unsurprisingly, long since disappeared. Luckily, we saved a copy, and you can see it here. Under the heading ‘ESPERIENZE LAVORATIVE’ (‘work experience’), one of the entries is as follows:


  • Maggio 1994 al Settembre 2003: attivita professionale in proprio ed in collaborazione con l’avv. Francesco Zerbi, presidente della Federazione Internazionale di Motociclismo in Via Sistina 149 Roma


This translates as “May 1994 to September 2003: professional activity in own and in collaboration with the lawyer Francesco Zerbi, president of the Federazione Internazionale di Motociclismo in Via Sistina 149 Rome”.


So, following the November 2001 transfers Youthstream’s largest shareholder was a) someone who collaborated with FIM President Francesco Zerbi and b) a serving member of an FIM panel. 


In 2002, Franceso Zerbi won a second term as President of the FIM, having first ascended to the highest office in the election of 1995. Mr. Zerbi's professional background parallels that of d'Aloja, in that he was also a practicing lawyer and held a senior role at the FMI's headquarters in Rome (President, to be precise). Francesco Zerbi remains an Honorary President of the FIM, and an Honorary Member of the Union Europeene de Motocyclisme ('UEM', and which today is known as FIM Europe).  


An interesting development occurred in 2002, namely the FIM’s decision to renew the contracts with Dorna Off-Road (the rights holder for Motocross, Supercross and the Motocross des Nations) and Octagon (the rights holder for Superbike and Supersport) until 2021. The ‘interesting’ part is the contract duration, as it represents a major strategic shift on the part of the FIM. To understand this shift and why it’s significant, we need to go back in time and speak about AGI again. 


WARNING: this next part is long and complex, but of fundamental importance.


AGI came into existence in 1995, after the Becchis brothers persuaded Giuseppe Luongo to return to motocross after a period of self-imposed exile (which we tell you about in the 'The Monaco Years' on this website). In an interview which Mr. Luongo gave in August 2008, he recalled that “we [AGI] called the Slovak Federation and bought the rights for the 1995 Motocross of Nations. After the excellent results of this event, Action Group started to have strong and close relations with all Motorcycle Federations of Eastern Europe.” 


The collapse of the Eastern bloc in Europe during the late 1980s paved the way for the former satellite states of the Soviet Union to embrace democracy. A slew of freshly democratized countries swiftly developed links to the West, and their nascent motorcycle federations were welcomed into the wider FIM community. The new federations also became armed with FIM voting rights, which could prove powerful at election time. Giuseppe Luongo, a man with a keen eye for a political and/or commercial opportunity, clearly recognized the value of building relationships with the new federations of Eastern Europe. Is it too far-fetched to think that Mr. Luongo could have used his lobbying skills to influence these federations to vote in favor of Francesco Zerbi in the Presidential election/s, a decision which would potentially prove very valuable to Luongo in the future?


Elsewhere in the interview, Mr. Luongo explained his first meeting with Wolfgang Srb, the Austrian head of the FIM’s Motocross Commission (‘CMS’), in 1995. Dr. Srb was “very firm”, stating that “when you [Luongo/AGI] have a real plan to put Motocross on television, then we can talk.” AGI subsequently created such a proposal, which the FIM gave due consideration to. In January 1996, the FIM’s executive board met, and according to the official minutes of the meeting (which the FIM has obligingly summarized and published online) President Zerbi “announced that he had found a better solution than that proposed before.” This involved the pan-regional broadcaster Eurosport working with Moteurs Productions (a French TV company) and AGI.

 

The FIM’s minutes show that “after discussions, the executive board accepted to sign a contract for one year with Action Group / Moteurs Productions.


So, in early 1996 AGI, along with Moteurs, was granted a one-year contract for the 1997 Motocross World Championship. 


In mid-1996, AGI asked the FIM to renew the contract with a five-year duration. The records state this was “not acceptable” to President Zerbi, as he believed a contract should not exceed the period of one [Presidential] mandate. Zerbi proposed a three-year contract instead, and in September a new agreement between the FIM and AGI was signed for the 1997 to 2000 Motocross World Championship seasons. 


In June 2000 everything changed. The FIM’s records state “just one single phrase in the minutes [of the June council session] covers what would be a major change in the modern era for the FIM: the take-over of Action Group by Dorna Promocion del Deporte. The press release was dated 4 June and mentions the simple purchase of a part of Action Group by Dorna with Action Group remaining responsible for the motocross championships.” 


Dorna were – and still are – the FIM’s chosen promoter for MotoGP, having worked with the FIM since 1992 (i.e. the pre-Zerbi period). Upon Dorna’s acquisition of AGI's rights contract, Giuseppe Luongo became Vice-President of the newly-formed Dorna Off-Road, with responsibility for the promotion of the Motocross World Championship. We understand Dorna paid in the region of €20m for the rights.


In 2001, President Zerbi’s stance on contract durations shifted markedly from his position of 1996. In the first management council meeting of the year, Zerbi reminded his fellow executives of the present situation and current length of contracts signed with different promoters. His argument was centered on guaranteeing the long-term revenue of the FIM. Following this meeting, a working group was convened to look at the contractual positions and propose a suitable/acceptable future approach. 


In June 2001, the FIM management council met again. During this gathering it was confirmed that “the contracts with Dorna and Dorna Off-Road had been extended and modified according to the requests of the working group.” Despite President Zerbi stating in 1996 that no contract should extend beyond the period of one Presidential mandate, long-term deals were now suddenly en vogue. In November 2001, Gianluca d'Aloja became Youthstream's biggest shareholder, with a 45 per cent stake.


In February 2002, the management council minutes reveal that “the contracts with Dorna Off-Road (motocross, supercross and motocross of nations) were renewed until 2021.” In the space of 12-months, President Zerbi had abandoned his contracts-must-not-exceed-the-period-of-one-mandate position and instead handed out deals with durations not far short of 20-years. That’s quite some volte-face. Moreover, we do not know of many industries where such generous contract lengths exist. 


2003 was a pivotal year, with several highly significant events. Firstly, despite having a contract until 2021, and with Giuseppe Luongo at the helm, all was not well at Dorna Off-Road. The 2002 Motocross of Nations, organized by Dorna at a new venue in the USA, had been an unmitigated disaster due to its cancellation at short notice. This wholly negative experience, combined with many other problems and Dorna’s general lack of experience in motocross, paved the way for the restitution (i.e. handing-back) of the rights to the Motocross World Championship and Motocross of Nations.


The FIM’s records show that during the first quarter of 2003 “it had become necessary to locate a new commercial partner who would take over the motocross contract (including the annual payment to Dorna).” Our curiosity is piqued by the reference to the ‘annual payment to Dorna’. We’re presently in the process of getting to the bottom of this. 


The records go on to say, “the change in partner sparked a discussion in the council who decided to mandate the president to negotiation for a new partner.” We added the bold emphasis, as we don’t want you to miss the significance of what the FIM record is stating: namely that the FIM authorized the president to negotiate with a new commercial partner for motocross.


Guess who President Zerbi decided to negotiate with? That’s right. Giuseppe Luongo. And negotiations didn’t take long, as on 23rd May 2003 Youthstream's acquisition of the rights to the FIM Motocross World Championship was announced after a letter of intent had been signed. In his email of May 2013, Giuseppe Luongo made clear that "Youthstream took these rights from Dorna and YS paid the acquisition to Dorna" (we understand the fee was in the region of €2m). Luongo also stated that the Dorna contract ran until 2026. This is slightly odd. As we've shown, in February 2002 the FIM extended and renewed Dorna Off-Road's contract to 2021. Problems mounted with the running of the Motocross World Championship throughout 2002. In February 2003, the restitution of the rights agreement was being discussed within the governing body. So why would the FIM have extended the Dorna contract to 2026, an action which must have occurred between March 2002 and January 2003 (i.e. during increasingly difficult times for Dorna Off-Road)? Their records make no mention of this happening, nor does it make any sense to us. A speculative alternate scenario is that Giuseppe Luongo negotiated a contract extension with Francesco Zerbi in the discussions that took place prior to the 23rd May 2003 announcement, thus shifting the end date of the rights agreement he was reacquiring from 2021 to 2026.


So, the Zerbi-led FIM awarded Youthstream – with FIM Juridical Panel member and fellow professional lawyer Gianluca d'Aloja the largest shareholder – a long-term contract. It had been quite a time for Giuseppe Luongo. After selling AGI's rights contract to Dorna in June 2000 (for circa €20m), and then receiving a Vice-President-level salary (circa €400k) at Dorna Off-Road for a few months, by May 2003 he was back in the driving seat of the Motocross World Championship. And he now had a contract which expired in either 2021 or 2026 in his pocket. 


Let’s get back to the continuing share transfers in Youthstream. The following changes took place in 2003, beginning in January, when Eric Sévenet returned his shares back to one of the Panamanian companies, as detailed in Table 2 below.

TABLE 2: YOUTHSTREAM SHARE TRANSFERS, JANUARY 2003

The 60-minute story (continued)

More interestingly (or damningly depending on your point of view), in July 2003 the dealings in Table 3 below occurred. Just to remind you, these activities took place just 8 weeks after President Zerbi, presumably following much discussion with Wolfgang Srb, the FIM’s CMS Director, awarded a long-term contract to Youthstream. 


You’ll note the return of a familiar name, Severus Stiftung, plus the entrance of a new shareholder, Z Consulting Srl. 

TABLE 3: YOUTHSTREAM SHARE TRANSFERS, JULY 2003

The 60-minute story (continued)

As we have previously highlighted, Severus Stiftung was a former shareholder in AGI. Liechtenstein's strict privacy laws dictate that only minimal information is made publicly available where trusts and foundations are concerned: therefore, the name of the ultimate beneficiary is unknown. However, we believe that ‘Severus’ should be viewed as a highly significant shareholder and one who is very relevant both to this historical synopsis and the present-day situation in the Motocross World Championship. Severus may also have a direct connection to the FIM. 


The facts relating to Z Consulting Srl are much easier to firmly establish. According to Chamber of Commerce records, the company was registered in Rome on 30th September 1993 with two shareholders: Alessandro Zerbi (Francesco Zerbi's son) and Sandra Betti (Francesco Zerbi's wife, as confirmed in a footnote on page 12 of this innocuous article on archaeology).


So, to summarize the situation at this juncture. In July 2003, just after the announcement of Youthstream's acquisition of the rights to the Motocross World Championship:


  • Youthstream's largest shareholder was Gianluca d'Aloja, a Rome-based lawyer and member of the FIM’s International Juridical Panel with a self-acknowledged close professional relationship with FIM President Francesco Zerbi;
  • Youthstream's second largest shareholder was Z Consulting Srl, a company co-owned by the son and wife of the man whose organization (the FIM) had awarded a long-term contract to Youthstream earlier that same year; and
  • Severus Stiftung – a foundation shielding from view someone who may or may not be/have been a high-ranking FIM official– was the third largest shareholder.


Forgive the obvious question, but does anyone see a slight issue with this position?


2004 was Youthstream's inaugural year of running the Motocross World Championship. In May – a little over 12-months from the FIM's announcement of the contract – Z Consulting Srl disposed of its shares as per Table 4 below.


TABLE 4: YOUTHSTREAM SHARE TRANSFERS, MAY 2004

The 60-minute story (continued)

Andre Maes is connected to the Spa Francorchamp circuit in Belgium (he promotes the F1 race). In June 2004, a round of the S1 Supermoto World Championship, the promotional rights of which were also in the hands of Youthstream from 2003, was held at Spa. A Youthstream staff list from 2005 shows an ‘Andre Maes’ holding the role of New Technology General Manager, with a Youthstream email address (and a Belgian mobile telephone number). Unless we’re missing something, his tenure as a shareholder is not of significant relevance to this story. He’s a bystander, not a main player. 


In 2006 more share transfers occurred, as seen in Table 5 below. In February, Andre Maes vacated Youthstream’s shareholder register and Ursula Anderson (a.k.a. Mrs. Giuseppe Luongo) took residency. This looks to be a straightforward transaction. Much more notable is Gianluca d’Aloja’s apparent transfer of his entire holding to Giuseppe Luongo and Philippe Rahmani in July.  

TABLE 5: YOUTHSTREAM SHARE TRANSFERS, FEBRUARY & JULY 2006

The 60-minute story (continued)

Why ‘apparent’? According to currently available records in Madeira, Gianluca d’Aloja is shown as having transferred his shares to Luongo and Rahmani in the above transaction of 24th July 2006. However, according to Madeiran records sourced in 2014, along with two sets of independently-sourced accounts (also obtained in 2014), there is no evidence of this supposed July 2006 transaction. These anomalies lead us to openly question if this transaction really did occur in 2006, or whether it was an activity performed after 2014 and somehow backdated for reasons that may or may not have been legitimate. You’ll understand why we think that shortly.


On a related note, Mr. d'Aloja has also acted as lawyer for Giuseppe Luongo and Youthstream, and the MXGP Official Guide for the 2014 and 2015 championship seasons both cited him holding the position of lawyer in Youthstream’s Legal Department. And although d’Aloja disappeared from Youthstream’s shareholder list, he hasn’t disappeared from the Motocross World Championship. Trackside advertising signage carrying the name ‘d’Aloja & d’Aloja’ have been seen at various GPs: Brazil (2014) and Indonesia (2018) being two examples.

The 60-minute story (continued)

An Italian law firm is a rather unusual advertising sponsor for the Motocross World Championship don’t you think? We’re sure there’s a rational explanation, but we genuinely can’t conceive what it is.


Before we leave the 2006 transfers, you'll note it is only at this stage that Giuseppe Luongo officially appears as a shareholder in what he has always alluded to be his company. 


Anyway, let’s pick up the share transfers thread once more. 


In September 2010, the then executive management of the FIM was made aware of the rather ‘unconventional’ relationship between Youthstream and the FIM. We have found no evidence to suggest that Vito Ippolito, the urbane Venezuelan who succeeded Francesco Zerbi as President in 2006 (and who was re-elected for a second term in 2010), was aware of, or party to, the ethically-questionable dealings of his predecessor. Nevertheless, this unwelcome discovery prompted Ippolito to order the fumigation of the FIM’s house. As a result, in Table 6 below we see that Severus Stiftung disposed of their shares in March 2011. 

TABLE 6: YOUTHSTREAM SHARE TRANSFERS, FEBRUARY & MARCH 2011

The 60-minute story (continued)

We believe the above share transfers – which occurred after Ippolito became aware of the issue (i.e. those made in February 2011 and March 2011), and perhaps the earlier transfers from d'Aloja to Luongo and Rahmani (which may or may not have happened in 2006) – are evidence of a hazardous material clean-up exercise ordered by President Ippolito in late 2010/early 2011. So long, farewell, auf Wiedersehen, goodbye Severus (maybe).


We also note the following:


  • changes to the company incorporation deeds and company name (from Youthstream Consultores e Servicos to Youthstream Group LDA), both of which came into effect on 30th June 2011;
  • the appearance of Severus Stiftung as a registered entity in Madeira, at the same address used by Youthstream Group LDA;
  • the dissolution of Youthstream Group LDA in Madeira, since 9th February 2017;
  • the creation of Youthstream Group SAM (Société Anonyme Monégasque) in the Principality of Monaco, with the initial legal submissions taking place on 3rd December 2014 and 21st April 2015, the approval of the Minister of State received on 16th July 2015, and the approved articles of incorporation submitted on 25th August 2015; 
  • the current operating structure, with Youthstream Logistic (based in Kosice, Slovakia), Youthstream Media (based in Geneva, Switzerland) and NV3A-Youthstream Organisation SAM (based in Monaco) all sitting under the umbrella of Youthstream Group SAM.


Our research indicates the shareholding position as at 14th March 2011 remains the same today. Taken at face value, no FIM personnel (actual or alleged) are currently and/or legally shareholders of Youthstream. However, we cannot shake the thought that bad actors* might still be lurking in the shadows, covertly benefitting from the ongoing profits being reaped from the commercial rights contract. Severus may have disappeared from the list of Youthstream shareholders, but we doubt if Severus has vanished from motocross. Ippolito may have ordered the fumigation of the house, but cockroaches are notoriously hard to kill. To their eternal shame, the FIM never formally pressed those within the organization suspected of questionable behavior to explain their actions. We believe Ippolito blocked Gianluca d'Aloja's subsequent attempt to become President of the FIM's International Commission of Judges (CJI), but that's hardly punishment.


(*The term ‘bad actor’ is commonly found in regulations which govern practices in the financial sector. It is used in conjunction with ‘preventing certain people or companies from participating in certain processes or taking advantage of certain privileges.’ We believe the ‘bad actor’ description is apt, given the events highlighted in this article.) 


Let us therefore be clear. There is no suggestion of commercial impropriety in the current recorded ownership structure of Youthstream. Indeed, Youthstream – as a privately held company – has always retained the right to choose whatever shareholders it wishes. Furthermore, we do not believe it was illegal for Gianluca d'Aloja and Francesco Zerbi's family members to hold shares. So, if it is not illegal, what – exactly –  is the problem?


What is the issue?


Put simply, a glaringly-obvious commercial conflict of interest. FIM President Francesco Zerbi – via his wife and son's company – stood to personally benefit financially from a long-term contract which the very organization he presided over awarded to Youthstream in 2003. The records confirm that the FIM management council gave a mandate to Mr. Zerbi to negotiate for a new partner. In May 2003, Youthstream was announced as the next rights holder to the Motocross World Championship. Two months later, Z Consulting Srl – with Zerbi’s son and wife (Alessandro Zerbi and Sandra Betti) listed as its owners – became the second largest shareholder in Youthstream, alongside at least one other established member of the FIM. This is one of the most unethical and indefensible decisions ever to be seen in any branch of professional motorsport. 


When unsportsmanlike behavior occurs among competitors (i.e. those talented individuals who are putting their lives on the line to provide the FIM and its rights holders with a product to market and earn revenue from), the governing body punishes wrongdoers without hesitation and in the most punitive and public ways imaginable. In 2004, Stefan Everts was sternly rebuked for bringing the sport [of motocross] into disrepute following an incident with Mikael Pichon. In 2015 Valentino Rossi took a hefty grid penalty after he was adjudged to have deliberately caused Marc Marquez to crash during the MotoGP round in Malaysia. “The recent events have had a damaging effect on the staging of our competitions and poisoned the atmosphere around the sport,” said Vito Ippolito [of the Rossi/Marquez incident]. How very apt (and ironic). 


What penalties for the unsportsmanlike, unethical and – some might say – downright scandalous behavior perpetrated by certain individuals featured in this story? Seemingly, not much, beyond a redrawing of the FIM’s statutes to prevent a repeat of this unsavory episode. No monies repaid. No public apologies. No hint of contrition. No suggestion of a re-tendering exercise. No revocation of Honorary President status. No cessation of involvement with the FIM. No awkward questions posed by the mainstream motocross media. No collective anger in the paddock. No apparent shame or embarrassment. Just an air of “nothing to see here, move along quickly please.” For fans of motocross, which is all we are at the end of the day, the lack of remorse among those whose self-serving actions have caused significant harm to the sport we care passionately about, is shameful. The lack of unity and action within the GP paddock, motocross media and other industry stakeholders is also deeply disappointing. But should we really be surprised by this display of inertia and apathy? On balance, no. 


However, there have been some positive developments. The FIM's Statutes and By-laws of 2003 did not explicitly address issues relating to conflicts of interest and/or loyalty, and so it is gratifying to know that such elements were inserted into subsequent iterations as part of Vito Ippolito’s house-cleaning exercise. For reference, we have reproduced the relevant parts of these updated statutory elements below.   


12.1.10.5 Incompatibilities with position
1. The President of the FIM may not hold any office or position in an FMN, CONU or in an industry or business connected with motorcycling. If such links exist at the time of the election, the President must terminate them within 4 months of the election. 

  

13.8 Conflicts of interest and/or loyalty
Any member of the BD, EB or a Commission who has a conflict of interest and/or loyalty either financial or personal in any proposal that is put before the meeting of the relevant body must declare that conflict of interest and/or loyalty and must leave the meeting and not seek to influence debate on the proposal nor vote on the proposal. In the case of any challenge to a persona being eligible to vote on any matter then the person chairing the meeting will take a decision.
 

Procedure & conditions applicable to candidatures & to the appointment of Commission members
5. Persons nominating to be considered for appointment to a Commission must, at the time of their nomination, notify the FIM in writing of any direct or indirect link, interest or other relationship with an industry or business involved with motorcycling. This includes any relationship with any sponsor, industry promoter or other commercial interest. Failure to do so shall render that person ineligible for appointment to a Commission and if appointed will lead to immediate expulsion from the relevant Commission. Owners of teams, partners or associates in teams, as well as competitors in FIM sporting events are not eligible as candidates.
 

6. All persons appointed to a Commission must sign a conflict of interest agreement in such form as is prescribed by the BD. A person's appointment will not take effect until such agreement is signed.


Two further elements merit mention.


Firstly, the Swiss Code of Best Practice for Corporate Governance. Published in 2002, the 'Swiss Code' is compiled by Economiesuisse, the federation of Swiss businesses. It details guidelines and recommendations for the governance of Swiss public limited companies. Section 2 II(d) of the Code contains the following specific recommendations on dealing with conflicts of interest and advance information:


Each member of the Board of Directors should arrange his personal and business affairs so as to avoid, as far as possible, conflicts of interest with the company.


  • Should a conflict of interest arise, the member of the Board of Directors or Executive Management concerned should inform the Chairman of the Board. The Chairman, or Vice-Chairman, should request a decision by the Board of Directors which reflects the seriousness of the conflict of interest. The Board shall decide without participation of the person concerned.
  • Anyone who has interests in conflict with the company or is obligated to represent such interests on behalf of third parties should not participate to that extent in decision-making. Anyone having a permanent conflict of interest should not be a member of the Board of Directors or the Executive Management.
  • Transactions between the company and members of corporate bodies or related persons should be carried out at 'arms length' and should be approved without participation of the party concerned. If necessary, a neutral opinion should be obtained.


As the head of a Swiss-based organization between 1995 and 2006, Francesco Zerbi appears not to have followed these guiding principles in his handling of the commercial relationship with Youthstream.


Secondly, there is the Federal Act on the Amendment of the Swiss Civil Code. While Swiss law, which the FIM is governed by, does not have a general provision on conflicts of interest, the Code of Obligations section of the Swiss Civil Code – the codified law ruling in Switzerland – states:


Section 717(439)

IV Duty of care and loyalty

1. The members of the board of directors and third parties engaged in managing the company's business must perform their duties with all due diligence and safeguard the interests of the company in good faith.


We believe it could be questioned whether Francesco Zerbi, as a member of the FIM's board of directors, violated this Obligation in 2003 through the awarding of a commercial contract to Youthstream, a company in which one his close confidantes (d'Aloja) and immediate family members (wife and son) held shares. Did this action constitute 'safeguarding the interests' of the FIM, or instead leave it vulnerable to allegations of malpractice? 


Why is it wrong?


To answer this, we must first understand the role of the FIM. 


The FIM, in its own words, proclaims to be the "supreme and sole international authority empowered to control international motorcycling events". The "official titles of World Championships" are, they assert, "the exclusive property of the FIM.”
 

The FIM's stated aims are to:

  • "Safeguard the material and moral interests of its members”;
  • “Defend the interests of the members of the FIM"; and
  • "Oversee the organization of the events carrying its name.”


In our opinion, it was materially, morally and ethically wrong for the FIM to award a contract to an outside promoter when FIM officials and/or the President's family were set to benefit financially from such a commercial agreement. 


Furthermore, the circumstances in which the original contract was awarded in 2003 appears to a) directly ignore the recommendations of the Swiss Code of Best Practice for Corporate Governance, b) be at odds with the Federal Act on the Amendment of the Swiss Civil Code, and c) contravene the FIM's current rules concerning conflicts of interest. 


Final thoughts


It is our view that the FIM's role should be to act as supreme guardian and regulatory overseer of all branches of motorcycle sport, including motocross. It is perfectly understandable that the rights holder’s aim is to maximize company profits: it is business, after all, and we have absolutely no problem with that. However, we believe the FIM should be there to exercise restraint where needed and ensure that any decisions are made not just in the interests of the rights holder, but to equally benefit the sport's participants, other key stakeholders and - most importantly - the sport itself. It is difficult to believe that it is possible for that role to have been properly and impartially fulfilled if senior officials within the FIM were able to reap personal financial benefit(s) from decisions made in favor of the rights holder. Perhaps this is a plausible explanation as to why certain contentious decisions made by Youthstream, resulting in the redirection of a considerable flow of money away from the sport’s participants and into Youthstream's coffers, have been obligingly approved by the FIM? 


In his August 2008 interview, Giuseppe Luongo stated that “the agreements [with the FIM] are very clear: we have to care about the promotion and business, and the FIM makes sure we work in the right way, by controlling sport and fairness.” We’ve not seen any compelling evidence of fairness on the part of the FIM in relation to the rights for the Motocross World Championship. Instead, there’s ample evidence that illustrates the wholly inappropriate situation architected by their former President – a situation which should never have been allowed to happen and could have been easily avoided if sufficient levels of governance and oversight were in place – and the subsequent attempted detoxification of the FIM by his successor. 


The FIM's current – and future – leadership may wish to consider if the contract for the promotional rights remains valid or whether it should be subject to a transparent re-tendering process to nullify any potential suggestions of wrongdoing. We also call on the FIM to revoke Francesco Zerbi’s Honorary President status, as he does not deserve to be recognized or revered in this way. In researching this story, we shone a very bright light into some very dark corners. Given we’re MXGP Action Group, we were principally concerned with uncovering any commercial improprieties connected to elite-level motocross. Based on what we’ve found during our long voyage of discovery, we cannot dismiss the notion that other promotional rights contracts signed during the reign of Francesco Zerbi may have been tainted by issues of ethicality similar or identical to the ones we have identified in this article.  


In July 2006 Francesco Zerbi announced his decision to step-down from the role of President. The press release contained warm words for the FIM’s chosen promoters, who, according to Zerbi, “had been and will be our foremost collaborators”. In the case of Youthstream, this relationship went beyond collaboration and, it could be argued, strayed into the troubling territory of collusion. 


We hope that history hasn’t already repeated itself elsewhere.  


We do know who the next FIM President will be. Following Wolfgang Srb's sudden withdrawal from the election process - and resignation from FIM Europe - Jorge Viegas will be confirmed as President at the FIM General Assembly in Andorra on 1st December 2018. Srb's decision was announced on 15th November 2018, just 72 hours after MXGP Action Group's return and the publication of material on this website which we believed to be extremely important in relation to Srb's presidential ambitions. While we're not claiming sole credit for the momentous events, it’s satisfying to think that our re-emergence with fresh evidence at a crucial point in proceedings may have helped tip the balance a little.  


We wish Senhor Viegas well.  


MXGP Action Group