The International Olympic Committee fined the Austrian Olympic Committee for failing to prevent the blood doping violations at last year's Winter Olympics. It is the largest fine to be levied by the Switzerland-based body. The decision came a month after the IOC issued lifetime Olympic bans on six Austrian cross-country skiers and biathletes involved in the doping.
The scandal also cast a shadow over Austria's bid to host the 2014 Winter Olympics. The Austrian city of Salzburg is competing against Sochi, Russia, and Pyeongchang, South Korea.
The IOC said the AOC "breached its obligations under the Olympic Charter, the IOC code of ethics and applicable anti-doping regulations."
It also said the AOC was guilty of a series of violations despite having received a "severe warning" in 2002 after a blood doping scandal at the Salt Lake City Winter Games.
In addition, the IOC also said the evidence proved "significant collusion within the Austrian team, involving not only the athletes, but also coaches, trainers, management and medical personnel" and stressed that the AOC was also responsible for the "acts and omissions" of the national ski federation.
Earlier this month, an IOC disciplinary panel held hearings in Lausanne, Switzerland, into the role of Austrian Olympic and ski officials in the scandal.
The investigation put several Austrian sports officials under scrutiny, including ski federation chief Peter Schroecksnadel.
On Thursday, AOC president Leo Wallner accused the ski federation of a "serious failure" and proposed various disciplinary measures, including banning for life from the Olympics officials who were in charge of Austria's cross-country and biathlon teams in Turin.
The federation "compromised the Olympic spirit," Wallner said, adding that the ski body had put "an entire generation of athletes" at risk.
Wallner also said that the ski federation could wind up having to pay the fine.
The federation said it would reject that demand until all investigations and proceedings are completed. It added that the AOC secretary general Heinz Jungwirth was responsible for accreditation of athletes and officials.
In a surprising development, the federation said Schroecksnadel would suspend his "function" in the AOC pending proceedings in the Court of Arbitration for Sport. Schroecksnadel has served as the AOC's vice president.
Four Austrian cross-country skiers have asked the CAS to overturn their lifetime Olympic bans issued last month by the IOC.
Salzburg 2014 officials forged ahead in trying to keep the doping fallout to a minimum in the run-up to July 4, when the IOC will select the winning bid in Guatemala City.
"How often have there been doping cases in Russia and they're not mentioned in connection with the Sochi bid?" Jungwirth said.
Gernot Leitner, one of the bid's executive directors, noted that IOC president Jacques Rogge has repeatedly dismissed speculation that the doping case could harm Salzburg's prospects.
"We can't hide our head in the sand now," he said. "We'll do our job and want to win in six weeks."
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