SII Focus 9th April 2020

FIFA indictment illustrates that a new FIFA model is long overdue

A superseding indictment unsealed in a Brooklyn Federal Court has charged three new defendants and a sports marketing company with fraud, money laundering and related offences. The charges are in connection to bribes allegedly paid in connection with the TV rights to major football tournaments over 20 years. They are historic charges, but they illustrate that a new FIFA governance model is long overdue.

The ‘new defendants’ are Hernan Lopez and Carlos Martinez, formerly of 21st Century Fox; and Gerard Romy, former CEO of Spanish media company Imagina Media. The sports marketing company is Full Play Group, which has been mentioned in previous US investigations into corruption in football. It is owned by Hugo and Mariano Jinkis, father and son.

The 53 count indictment (PDF below – click if it doesn’t appear) also details how football executives were offered bribes to vote for Russia as host of the 2018 FIFA World Cup and Qatar as the host of the 2022 World Cup. The indictment involves 16 individuals, many of which were high profile football executives. Defendants Lopez, Martinez and Full Play are due to appear before Judge Pamela K. Chen in Brooklyn today, read a statement.

The ‘new defendants’

The indictment alleges that Lopez and Martinez, alongside Full Play and ‘other co-conspirators’, made annual payments of millions of dollars in bribes to Latin American football confederation (CONMEBOL) officials in exchange for the broadcasting rights to football events. In 1999, T&T Sports Marketing – a joint venture between Torneos y Competencias (TyC) and Traffic Group bought the rights to market TV contracts to the Copa Libertadores through to 2018. T&T was part owned by Fox Pan American Sports, a subsidiary of Fox.

It alleges that between 2005 and 2015, five sports marketing executives and Full Play facilitated annual bribes to certain CONMEBOL officials. The five executives were Alejandro Burzaco – a former CEO of TyC and a key witness in the so-called FIFAGate trials; Full Play and its owners Hugo and Mariano Jinkis; and Hernan Lopez and Carlos Martinez of Fox.

It alleges that the CONMEBOL officials that received the bribes were Luis Bedoya, Carlos Chavez, Rafael Esquivel Sergio Jaude, Jose Maria Marin, and Angel Napout. Bedoya was sanctioned with a lifetime ban by FIFA in 2016 and is awaiting sentencing after giving evidence at the FIFAGate trials in 2017. Chavez, the former CONMEBOL Treasurer, was arrested in 2015 on charges of corruption. 

Esquivel was sanctioned with a life ban in 2017 alongside Richard Lai and Julio Rocha. A 20 May 2015 indictment outlined that a joint company set up by Hugo and Mariano Jinkis and Traffic Group paid $317.5 million to CONMEBOL for the broadcasting rights to the 2015, 2019, and 2023 editions of the Copa America and the 2016 Copa America Centenario. The 2015 indictment alleged that the joint company agreed to pay $110 million in bribes to football officials, one of which was Esquivel. 

The joint company was called Datisa. How it operated is also detailed in this week’s indictment (see tweets below). 

The indictment alleges that a similar scheme was put in place by Media World, a subsidiary of Imagina, partially owned by defendant Gerard Romy, regarding the rights to World Cup qualifier rights. It alleges that Traffic USA was also a party to this scheme and mentions Aaron Davidson, its former President and also former Chairman of the North American Soccer League (NASL). He was sanctioned with a life ban by FIFA in 2018. He was originally named in the original 47-count indictment released by the US Department of Justice (DoJ) on 27 May 2015.

A similar scheme was also put in place by Full Play, alleges this week’s indictment. It allowed Full Play to retain the rights to market the TV rights to World Cup qualifiers and friendly matches.

José Maria Marin was sanctioned with a life ban by FIFA last year. He was one of the FIFA officials originally arrested at the Baur au Lac hotel in 2015 at the same time the DoJ’s 2015 indictment was unsealed. In 2018 he was sentenced to a four year prison term, however it is understood he has now been released. 

Juan Angel Napout was sanctioned with a life ban by FIFA last year. This was after he was sentenced to a nine year jail term in 2018. Bribes were allegedly also paid to the defendants Manuel Burga; Luis Chiriboga, Marco Polo del Nero, Eduardo DeLuca, Eugenio Figueredo, Jose Luis Meiszner, Roma Osuna, and Ricardo Teixeira. All of these have previously implicated in corruption or have been sanctioned by FIFA. This includes life bans issued to Burga, DeLuca and Meiszner last November. 

This week’s indictment also accuses Zorana Danis, the co-founder of US company International Soccer Marketing (ISM) of paying bribes to DeLuca in order to retain the sponsorship rights to the Copa Libertadores. This identifies DeLuca as either Co-Conspirator #1 or Co-Conspirator #2, as mentioned in a previous indictment (PDF below – click here if it doesn’t appear).

World Cup hosts

Ricardo Teixeira…

The indictment alleges that ‘several’ members of FIFA’s Executive Committee were offered or received bribes in December 2010, when FIFA appointed Russia and Qatar as the hosts of the 2018 and 2022 World Cups. The decision to appoint both hosts at the same time was widely criticised as encouraging corruption. Over half of the 22 voting members from the December 2010 FIFA Executive Committee meeting have since been fined, suspended, banned for life or prosecuted for corruption.

‘For example, the defendant Ricardo Teixeira, Nicolas Leoz and Co-Conspirator#1 were offered and received bribe payments in exchange for their votes in favor of Qatar to host the 2022 World Cup’, reads the above indictment. ‘In addition, the defendant Jack Warner was promised and received bribe payments totaling $5 million and Rafael Salguero was promised a $1 million bribe in exchange for their votes in favor of Russia to host the 2018 World Cup’.

This is not the first time that US prosecutors have alleged that Russia bribed FIFA officials in relation to its appointment as host of the 2018 World Cup. A plus 400 page Report (PDF below) into the Federal Bureau of Investigation’s (FBI) Crossfire Hurricane investigation was published in December last year. Whilst the Report was commissioned to investigate if individuals associated with the Trump administration to interfere in the 2016 US Presidential election, it also alleges that the Kremlin bribed FIFA officials.

Detail from the FBI Report appears to confirm that the Kremlin was aware that Russia had bribed FIFA…

The above Report mentioned Christopher Steele, a former British Intelligence Officer with MI6 who ran its Russian desk between 2006 and 2009, when he co-founded Orbis Business Intelligence. ‘In July 2011, Steele provided a report that summarized an alleged conversation between then Russian President Dmitry Medvedev and then Prime Minister Vladimir Putin in which, according to the report, Putin acknowledged that a Russian oligarch had bribed the President of FIFA so that Russia could win the right to host the World Cup tournament in 2018’, reads page 86 of the Report. ‘Second, in 2012, Steele introduced the FBI to two British officials with information concerning Russia’s alleged efforts to bribe FIFA executives. Our review of Steele’s Delta file also revealed that Steele furnished the FBI with a report dated June 2015 that quoted a Kremlin official as having admitted that the Kremlin bribed FIFA executives in order to secure rights to host the 2018 World Cup.’

Mutko, former FIFA President Joseph Blatter, and Vladimir Putin…

In 2010 Vitaly Mutko, the former Russian Minister of Sport implicated in State doping, was a member of the FIFA Executive Committee. In 2017, he stepped down as Chairman of the Russia 2018 World Cup, after being sanctioned with a life ban from the Olympics by the International Olympic Committee (IOC), which accepted evidence that he was involved in State doping. In October 2016, after Richard McLaren published his first Independent Person (IP) Report for the World Anti-Doping Agency (WADA) into Russian State doping, he was promoted to Deputy Prime Minister. He was successful in overturning the IOC’s ban on appeal to the Court of Arbitration for Sport (CAS) last year. 

Ricardo Teixeira is a former President of the Brazilian football confederation (CBF) and a former FIFA Executive Committee member. In November last year, FIFA sanctioned him with a lifetime ban after finding that he had accepted bribes in exchange for his vote for Qatar as host of the 2022 World Cup. 

FIFA’s full Decision (PDF below) named three former CONMEBOL officials as recipients of bribes in connection to the appointment of Qatar as host. The Decision outlines that Teixeira redirected a US$1 million bribe in connection to an agreement for an agency to market sponsorship and TV rights for CONMEBOL to Julio Grondona, former Vice President of FIFA, as part of a payment for voting for Qatar.

Detail from FIFA’s Teixeira ruling appears to confirm that the Qatar 2022 World Cup was bought…

‘Based on your conversations with Julio Grondona, which CONMEBOL officials were to receive money for their votes in connection with the Qatar selection?’, witness ‘A’ from Company 2 is asked in the above Decision. ‘Ricardo Teixeira, Nicolás Leoz and Julio Grondona himself’, reads the reply.

Company 2 confirmed to Company 4 that a bribe of $1 million each was paid to the three officials, reads the above Decision. If this is accurate, and previous reports suggest that it is, it means that all three CONMEBOL representatives featuring on the 22 man FIFA Executive Committee in December 2010 were bribed to vote for Qatar.

Teixeira has also been found guilty of accepting bribes relating to the award of TV contacts. In June 2010, the Zug prosecutor’s office confirmed that FIFA officials had accepted payments from its former marketing partner ISMM/ISL. No details were revealed as under Swiss law, both parties had to agree for a judgment to be published. Former FIFA President Joao Havelange and Teixeira were amongst those named as having received ‘commission’, after the Swiss Federal Court ruled on 11 July 2012 that the publication of the judgment of the Zug prosecutor’s office was in the public interest.

FIFA did not take immediate action. “Back then, such payments could even be deducted from tax as a business expense”, said former FIFA President Joseph Blatter in an interview on FIFA.com. “Today, that would be punishable under law. You can’t judge the past on the basis of today’s standards”.

Nicolas Leoz is not a defendant in this week’s indictment, as he died in August last year. It is understood that during the December 2010 vote in Zurich, he was confronted in the toilets by Teixeira and Grondona due to backing Japan and then Korea to host the 2022 World Cup, after which he changed his vote to Qatar. 

Rafael Salguero was a member of the FIFA Executive Committee and was sanctioned with a seven year ban by FIFA last year. It is understood that he admitted accepting a bribe to vote for Russia as host of the 2018 World Cup as part of US court proceedings in 2018, but never received payment. 

This week’s indictment also alleges that football officials in Costa Rica, El Salvador and Guatemala were bribed to allow their national teams to participate in friendly matches in the US. This business venture was allegedly operated by Miguel Trujillo and Fabio Tordin of Traffic USA. 

Another scheme involved an alleged $3 million bribe payable to Jeff Webb before he became President of CONCACAF in order to obtain the rights to its World Cup qualifiers. The CFU’s rights were awarded to Traffic USA after he became CONCACAF President. Webb was sanctioned with a life ban by FIFA in 2016.

Jack Warner, left, with former FIFA President Joseph Blatter…

In June last year, Jack Warner failed in a bid to block his extradition from Trinidad & Tobago to the US after being indicted on various corruption charges. The former FIFA Vice President was sanctioned with a life ban from football in 2015. Earlier that year, FIFA and South Africa admitted paying Warner US$10 million, but South Africa denied that the payment was a bribe to secure votes in 2004, when FIFA appointed South Africa as host of the 2010 World Cup. More on this later.

Warner was President of the Confederation of North, Central American and Caribbean Association Football (CONCACAF) until 2011. This week’s indictment alleges that Warner received $5 million through shell companies in return for votes to appoint Russia as host of the 2018 World Cup between November 2010 and April 2011.

‘Diaspora’ payment

The indictment alleges that in 2004, a FIFA official and the South African government suggested to Warner that they would be prepared to pay a $10 million bribe to secure his vote and that of other CONCACAF representatives on the FIFA Executive Committee in return for votes for South Africa to host the 2010 World Cup. The bribe was allegedly disguised as a payment to ‘support the African diaspora’ in the Caribbean. 

FIFA and the South African government have previously admitted arranging for the money to be withheld from South Africa’s operational budget for the 2010 World Cup to finance the project, however the South African government insisted that the payment wasn’t a bribe for votes. The indictment casts doubt on this defence and alleges that $5 million of the total was paid directly into accounts owned by Warner.

The indictment also alleges that Warner engineered the arrangement of bribes for votes in FIFA Presidential elections. In 2011, FIFA President Sepp Blatter’s opponent, Mohammed bin Hammam, allegedly visited CONCACAF headquarters, after which Caribbean Football Union (CFU) officials were given $40,000 in envelopes. Bin Hammam was banned for life by FIFA in 2012, however a statement announcing this appears to have been removed from its internet site. He is still being investigated regarding corruption allegations today.

Cash is king

If the indictment is accurate, it now appears probable that the right to host the Russia 2018 and Qatar 2022 World Cup were at least partly secured through bribes. The Kremlin and Alexey Sorokin, who replaced Vitaly Mutko on the FIFA Council and as Chairman of the Russia 2018 World Cup, have denied bribing FIFA officials to secure the tournament, reports the Associated Press. 

Yet the indictment is unequivocal in its claim that Salguero and Warner received bribes, and that bribes were received to vote for the hosts of both tournaments. The FBI’s Crossfire Hurricane investigation is unequivocal in its claim that such bribes were acknowledged by Russian President Vladimir Putin and the Kremlin.

The WADA IP Report found that Mutko ordered the covering up of a footballer’s positive test…

If Putin and the Kremlin have acknowledged such bribes but the Russia 2018 World Cup organising committee is unaware of them, as Sorokin claims, that suggests State engineered bribery. At the time, the President of the Russian Football Union (RFU) and Russia 2018 was Vitaly Mutko, Russia’s Minister of Sport.

Mutko was directly implicated in the Independent Person (IP) Reports produced for the WADA by Richard McLaren as covering up the positive test of a footballer whilst he was Russia’s Minister of Sport. Mutko celebrated wildly when Gianni Infantino was appointed as FIFA President in 2016. In 2017, it emerged that FIFA had removed three senior figures on FIFA judicial bodies after they began investigating or questioning Mutko’s roles within football. 

Mutko welcomed the appointment of Gianni Infantino as FIFA President…

In November 2017, FIFA confirmed it was still investigating allegations of doping within Russian football. At the time, it could not confirm if it is still investigating allegations that a separate sample-swapping system was in operation within Russian football. No more has been said about either issue. However, sporting bodies often do not report on the outcomes of such investigations unless there is a case to answer.

In 2015 Domenico Scala, the Independent Chairman of FIFA’s Audit and Compliance Committee, said that the appointment of both Russia and Qatar as hosts could be invalidated if it was found that votes had been bought. Given the evidence outlined above, it appears almost indisputable that votes were bought. Scala resigned in 2016, arguing that FIFA had eroded the independence of its ethics bodies.

FIFA and Qatar have not commented on the latest indictment. It appears unlikely that any action will be taken until after any verdict in the US courts and even then, only against any guilty individuals. Given the situation regarding Covid-19 and taking into account the effort and investment that has gone into hosting a tournament in the desert, rescinding it would be near impossible.

The investigations into corruption at FIFA, which have come to be known as FIFAGate, date back to at least 1992. Shocked into action by the DoJ in 2015, FIFA made extensive reforms, but holes still exist. Who finances FIFA Presidential election campaigns and how, for example? 

FIFA’s 2018 Annual Report details that the FIFA Congress cost $16.6 million. Article 1 of the Standing Orders of the Congress, on page 84 of the FIFA Statutes, mandates that FIFA covers the costs of travel and accommodation for three delegates from each of the 211 member associations that attend. 

That potentially involves travel and accommodation costs for 633 people. Any FIFA Presidential candidate attempting to remove such a provision from the Statutes faces ruining their chances of being elected. The promise of cash for the member associations controls FIFA, and Infantino was elected after promising them more money. This lack of change in culture within FIFA did not go unnoticed by FIFPro at the time. 

At FIFA, cash is king. The detail highlighted above is necessary to illustrate that this cash culture, combined with FIFA’s failure to reform for so long, allowed corruption to take seed, grow, and flourish over time. Under Joseph Blatter’s tenure, football officials became used to a culture where decisions were rewarded with cash. This paved an easy path for corrupt arrangements around the awarding of TV, marketing, and sponsorship rights to take place along similar lines. 

The longevity and complexity of the corrupt deals around football’s TV and marketing rights highlighted above is staggering. But they are a byproduct of FIFA’s historic cash culture. You want our support? You pay – as FIFA do. 

The corrupt deals alleged in this latest indictment are historic, but they show that the cash culture had permeated every level of FIFA governance – from TV deals in the Caribbean to the award of the World Cup to governments, as South Africa’s ‘diaspora’ payment illustrates. FIFA’s versions of the Golden Globes – the Presidential elections, Congress and World Cup – are still largely decided on the promise of cash. A new model is long overdue.

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