The FIFA corruption scandal has been in the press since the first arrests in late May. If you haven't had time to follow the numerous media reports, then here are the nine things you need to know:
- What is the latest news on this scandal?
Last week the United States asked Switzerland to extradite the seven FIFA officials arrested on corruption charges in May. It is believed that all seven officials plan to appeal. This is a process that could take months as it could go all the way to Switzerland's Supreme Court. Alternatively, the officials could agree to a quick extradition, and apply for bail after engaging a lawyer in the US.
The latter option may seem the preferable one to the officials given that they have been deemed a flight risk by the Swiss and have not been granted bail in Switzerland.
- Who is involved and where are they from?
Nine former and current (at time of arrest) FIFA officials were indicted. The other four indicted were sports marketing executives and one individual who was in the broadcasting business, but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials.
These 14 individuals are citizens of various countries in North and South America as well as the United Kingdom. Interestingly, some of these countries ranked fairly poorly in Transparency International's latest Corruptions Perceptions Index. For further information see links below for our summary or the full version of the index's results.
- What are the charges?
Interestingly, for a case built on allegations of bribery and corruption, there has been no charge of bribery laid. As the FIFA officials are not foreign government officials, the more well-known Foreign Corrupt Practice Act ('FCPA') does not apply to them. Instead, they were indicted on 47 counts for 'a pattern of racketeering activity', including charges of violating the Travel Act, 18 U.S.C. 1952, in aid of racketeering, money laundering conspiracy, wire fraud, and wire fraud conspiracy amongst other charges.
The indictment says that the corruption was planned in the US, and then carried out elsewhere. As with many international corruption issues, the extent to which the US feels it can impose its laws on foreign nationals or corporations is seen as controversial by some. The key to the investigation appears to be the use of US banks to transfer funds. The indictment also describes the various (some very creative) ways those indicted carried out the alleged wire fraud and money laundering.
- " How long had the alleged offences been going on?
The FBI have been investigating FIFA for the last three years, following the bidding processes for the 2018 and 2022 World Cups. The investigation was later expanded and the indictment states that the alleged offences took place for a period of 24 years from 1991, or as Jon Stewart put it, 'a Jennifer Lawrence ago'.
- How much is involved?
Well over USD150 million in bribes and kickbacks according to the indictment.
- Did Sepp Blatter resign?
Sepp Blatter is still president of FIFA, after he was re-elected for a fifth term days after the arrests. He later made an announcement that he was resigning. However, this 'resignation' doesn't appear quite as clear cut as it seemed. In the past weeks, Mr Blatter has stated that he has not resigned, but rather 'has made his mandate available at an extraordinary congress'. The extraordinary congress at which FIFA's executive committee will reconvene, is to be held sometime between December 2015 and March 2016.
This has led some to suggest that Blatter's initial 'resignation' was merely PR. As UK legal blogger @Jackofkent tweeted for convenience's sake, a head of an organisation will announce a resignation, whereby the media will spread the news, taking the pressure off that person. This however leads to no-one actually leaving the office!
Or more succinctly:
Media: X should resign! X: I may resign after some inexact process. Media: BREAKING - X HAS RESIGNED! [Media moves on.] X: Still here.
— Jack of Kent (@JackofKent) June 26, 2015
Mr Blatter has been at the helm of FIFA for the past 17 years, and as of now, has not been arrested or indicted for any offence. However, investigations by both US and Swiss authorities are ongoing.
- What does this mean for sponsors of the most popular sporting event in the world?
The majority of FIFA Partners and sponsors have voiced concerns about the scandal and have welcomed Mr Blatter's decision to resign, but none have yet withdrawn their sponsorship. There have been calls in the UK to review whether sponsors may have breached the UK Bribery Act, in particular Section 7, which relates to the failure of commercial organisation to prevent bribery.
- Has this corruption scandal affected Australia?
Yes. As noted in our blog last week, there is now intense scrutiny of the $500,000 payment by the Football Federation of Australia to Jack Warner in 2010, during the bidding process for the 2022 World Cup.
- What other interesting things I should know about the scandal?
An interesting point for entertainment buffs is that Hollywood announced last week that a film would be made about the scandal. Ben Affleck and Matt Damon are reported to be among the producers of the film, which is expected to focus on the role of Chuck Blazer, a former FIFA official and former CONCACAF general secretary, who secretly provided US prosecutors with information about alleged bribery and kickbacks in connection with the biddings to host the 1998 and 2010 soccer World Cups. As noted above Mr Blazer pleaded guilty to 10 criminal counts in 2013.
Hopefully this movie generates more revenue than the movie made by FIFA about itself 'United Passions', which reportedly cost it a $26.8 million loss and earned $918 at the box office. And perhaps, more realistically, muddied sheets will be used instead of clean white ones to shield the officials when they are arrested.
For practical steps your company can take to demonstrate a culture of zero tolerance of bribery and corruption, please contact one of our anti-fraud and corruption specialists.
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