The only way to go to the next round both of them is a draw, if we suppose of course that they will win all of their games, just like it happened. So they agreed to it. It is totally fair and legal. It also happens at Chess, Football, etc...

So when you say: "I smell something fishy, and if I find out that some wheeling and dealing has gone on behind the scenes", do you mean the draw aggrement?
I don't see something illegal. It's not the best thing to see, but nothing illegal at all.