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Soccer hit by corruption at FIFA

MUMBAI: Soccer, the beautiful game, is stained by “rampant, systemic and deep-rooted” corruption.

Nine FIFA officials and five executives of sports management companies were arrested on suspicion of receiving bribes totalling over $150 million, according to the US Department of Justice.

The Swiss prosecutors also announced their own criminal investigation into FIFA’s award of the 2018 and 2022 World Cup tournaments to Russia and Qatar.

A 47-count indictment was unsealed in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses. This is in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer.  The guilty pleas of four individual defendants and two corporate defendants were also unsealed.

The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The defendants charged in the indictment include high-ranking officials of FIFA as well as officials of other soccer governing bodies that operate under the FIFA umbrella.

Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the US – are among the soccer officials charged with racketeering and bribery offenses.  The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

The charges were announced by Attorney General Loretta E. Lynch, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Director James B. Comey of the FBI, Assistant Director in Charge Diego W. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI’s Los Angeles Field Office.

Also, Swiss authorities in Zurich arrested seven of the defendants – Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and José Maria Marin – charged in the indictment, at the request of the US.  Also this morning, a search warrant is being executed at CONCACAF headquarters in Miami, Florida.

The guilty pleas of the four individual and two corporate defendants that were also unsealed include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former US representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International Inc. and Traffic Sports USA Inc., which is based in Florida.

Lynch said, “The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States. It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.  And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable.  Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.”

Lynch extended her grateful appreciation to the authorities of the government of Switzerland, as well as several other international partners, for their outstanding assistance in this investigation.

Currie said, “Today’s announcement should send a message that enough is enough. After decades of what the indictment alleges to be brazen corruption, organised international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States.  Let me be clear: this indictment is not the final chapter in our investigation.”

Currie also extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organised Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues abroad, for their tremendous effort in this case.

Comey said, “As charged in the indictment, the defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world. Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at Fifa.  I want to commend the investigators and prosecutors around the world who have pursued this case so diligently, for so many years.”

Weber said, “When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable. Corruption, tax evasion and money laundering are certainly not the cornerstones of any successful business.  Whether you call it soccer or football, the fans, players and sponsors around the world who love this game should not have to worry about officials corrupting their sport.  This case isn’t about soccer, it is about fairness and following the law.  IRS-CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”

As alleged in the indictment, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws.  The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.

As alleged in the indictment, one key way the enterprise derives revenue is to commercialise the media and marketing rights associated with soccer events and tournaments.  The organising entity that owns those rights – as FIFA and CONCACAF do with respect to the World Cup and Gold Cup, their respective flagship tournaments – sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments.

The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors and other sub-licensees who want to broadcast the matches or promote their brands.  The revenue generated from these contracts is substantial: according to FIFA, 70% of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.

The Racketeering Conspiracy

The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering.  Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks.  All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.

Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialisation of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organised CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores and the Copa do Brasil, which is organised by the Brazilian national soccer federation (CBF).  Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major US sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.

The Indicted Defendants

As set forth in the indictment, the defendants and their co-conspirators fall generally into three categories: soccer officials acting in a fiduciary capacity within FIFA and one or more of its constituent organisations; sports media and marketing company executives; and businessmen, bankers and other trusted intermediaries who laundered illicit payments.

Nine of the defendants were FIFA officials by operation of the FIFA statutes, as well as officials of one or more other bodies:

  • Jeffrey Webb: Current FIFA VP and executive committee member, CONCACAF president, Caribbean Football Union (CFU) executive committee member and Cayman Islands Football Association (CIFA) president.
  • Eduardo Li: Current FIFA executive committee member-elect, CONCACAF executive committee member and Costa Rican soccer federation (FEDEFUT) president.
  • Julio Rocha: Current FIFA development officer.  Former Central American Football Union (UNCAF) president and Nicaraguan soccer federation (FENIFUT) president.
  • Costas Takkas: Current attaché to the CONCACAF president.  Former CIFA general secretary.
  • Jack Warner: Former FIFA VP and executive committee member, CONCACAF president, CFU president and Trinidad and Tobago Football Federation (TTFF) special adviser.

Eugenio Figueredo: Current FIFA vice president and executive committee member.  Former CONMEBOL president and Uruguayan soccer federation (AUF) president.

  • Rafael Esquivel: Current CONMEBOL executive committee member and Venezuelan soccer federation (FVF) president.
  • José Maria Marin: Current member of the FIFA organising committee for the Olympic football tournaments.  Former CBF president.
  • Nicolás Leoz: Former FIFA executive committee member and CONMEBOL president.

Four of the defendants were sports marketing executives:

  • Alejandro Burzaco: Controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.
  • Aaron Davidson: President of Traffic Sports USA Inc. (Traffic USA).
  • Hugo and Mariano Jinkis: Controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.

One of the defendants was in the broadcasting business but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials:

  • José Margulies:  Controlling principal of Valente Corp. and Somerton Ltd.

The Convicted Individuals and Corporations

The following individuals and corporations previously pleaded guilty under seal:

On 15 July 2013, the defendant Daryll Warner, son of defendant Jack Warner and a former FIFA development officer, waived indictment and pleaded guilty to a two-count information charging him with wire fraud and the structuring of financial transactions.

On 25 October 2013, the defendant Daryan Warner waived indictment and pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy and the structuring of financial transactions.  Daryan Warner forfeited over $1.1 million around the time of his plea and has agreed to pay a second forfeiture money judgment at the time of sentencing.

On 25 November 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts (FBAR).  Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing.

On 12 December 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice.  Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.

On 14 May 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.

All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.

FIFA Statement

In a statement, FIFA said that it welcomes actions that can help contribute to rooting out any wrongdoing in football. “We understand that today’s actions by the Swiss Federal Office of Justice on behalf of the US authorities and the Swiss Office of the Attorney General (initiated by FIFA through the submission of the file on the 2018/2022 FIFA World Cup bidding process) relate to different matters.

“Firstly, the arrest of six individuals this morning in Zurich concerns investigations by the US Attorney’s Office for the Eastern District of the State of New York. The Swiss authorities, acting on behalf of their US counterparts, arrested the individuals for activities carried out in relation with CONCACAF and CONMEBOL business.

“The second instance follows FIFA’s initiative of presenting the file on the 2018/2022 World Cup bidding process to the Swiss Office of the Attorney General in November 2014. The authorities are taking the opportunity of the FIFA Congress to interview those FIFA executive committee members who are not Swiss residents who voted back in 2010 and are still in office.

“Today, the Swiss Office of the Attorney General announced that it has opened criminal proceedings against persons unknown in relation to the 2018/2022 FIFA World Cup bidding process. FIFA is fully cooperating with the investigation and is supporting the collection of evidence in this regard. As noted by the Swiss authorities, this collection of evidence is being carried out on a cooperative basis.

“We are pleased to see that the investigation is being energetically pursued for the good of football and believe that it will help to reinforce measures that FIFA has already taken.”