The AFL has suspended former Melbourne coach Dean Bailey and the club's ex-football operations manager Chris Connolly as result of their tanking investigation.

But the league has ruled that the club did not deliberately set out to lose games during the 2009 season.

The Demons have been under investigation for the past seven months over allegations they "tanked" during the 2009 season to maximise draft picks.

Connolly, who still works at Melbourne, is suspended until February next year for conduct prejudicial to the interests of the AFL.

Bailey, now an assistant at Adelaide, is suspended for the first 16 rounds of this season for the same reason.

The AFL also fined Melbourne $500,000, which league operations manager Gillon McLachlan said was the third-largest fine in the game's history.

McLachlan said Melbourne, Connolly and Bailey had accepted their penalties.

The AFL confirmed Melbourne chief executive Cameron Schwab, who had that role in 2009, had been cleared.

The investigation found the Melbourne board had not issued any directive to deliberately lose games during the 2009 season.

The league decided on the penalties after the investigation by its integrity unit, which submitted an 800-page report.

Melbourne strongly denied the club tanked during 2009 and had threatened legal action.

The AFL and the Demons had been negotiating about the penalties before Tuesday's announcement.

It is the first time the AFL has penalised a club or officials over this sort of scenario.

Connolly is banned until February 1 from any involvement at an AFL club.

Connolly has still been working at Melbourne, but no longer in the football department.

McLachlan said Connolly was banned because of comments he made in a football department meeting during the 2009 season.

He added Bailey had admitted to bowing to pressure and making decisions in regards to selection and player management.

"There is no allegation that is able to be sustained that Dean Bailey didn't coach on his merits or any players didn't play to their utmost abilities," McLachlan said.

"Connolly has accepted he went into a football department meeting and he made a terrible and stupid decision in the context of an AFL rule that has now changed (priority draft picks) and in the context of a pressure and expectation of success," McLachlan said.

"He made a comment regarding the performance of the team, a desire to secure a priority pick, and I know he now regrets that comment."

The investigation was launched after years of speculation about Melbourne's performance during 2009, when they finished last.

The catalyst was comments former Melbourne player Brock McLean made in a television interview last July.
Melbourne president Don McLardy was due to hold a media conference on Tuesday afternoon in response to the AFL's announcement.

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