I had a similar problem years ago, I used a stiff brush with alcohol, and after it was clean and dry I treated the leather handle with neats foot oil. Some time later I applyed melted paraffin to the handle (read about it somewhere, probably an article in an old issue of Tactical Knives) haven´t had any more problems.
Edited to add:
Both the neats foot oil and the paraffin affect the appearence of the leather, some darkening, etc. if the knife is a user it´s OK, if it´s a collector piece you may not want to use them.
Edited again to correct:
I had said liquid paraffin,should have been melted paraffin.