By Azadeh Erfani

June 14, 2015

Photo credit: https://www.flickr.com/photos/isakaronsson/

Photo credit: https://www.flickr.com/photos/isakaronsson/

Shortly after sunrise on May 27, 2015, the Swiss police paid a surprise visit to six high-ranking soccer officials at the Baur au Lac, a five-star hotel in downtown Zurich, Switzerland.[1]  Among the recurring customers of this luxury hotel were top officials of the Fédération Internationale de Football Association (FIFA), soccer’s global governing body.[2]

For the six FIFA officials arrested that morning, the police visit was a life-changing wake-up call.  For the rest of the world, their arrests marked the first peek into the U.S. Department of Justice’s (DOJ) groundbreaking investigation into the rampant corruption within FIFA.

What Happens in FIFA (No Longer) Stays in FIFA

Thanks to a lengthy investigation initiated by the IRS and the FBI, the DOJ’s indictments unveiled complex schemes of racketeering, wire fraud, and money laundering at the heart of FIFA’s daily operations.[3]  The DOJ traced the money back to some of the highest-ranking officials in soccer, including current and former vice-presidents and international members of FIFA’s Executive Committee.  To date, the investigation revealed $150 million in bribes and kickbacks; 14 indicted officials face a maximum 20 years imprisonment.[4]

The DOJ’s announcement functions as a proxy indictment of FIFA’s systemic corruption.  Thanks to soccer tournaments, television rights, and corporate sponsors, FIFA may be one of the most profitable non-profit organizations in the world.[5]  FIFA officials do not only reap the benefits of the soccer industry; they routinely solicit and receive bribes to sustain lavish lifestyles (e.g. evading taxes while renting Manhattan apartments for pets).[6]

Given FIFA’s reputation, this news comes hardly as a surprise.  Within its own judicial system, FIFA prosecuted officials for corruption charges, one of whom was accused of bribing soccer officials (at $40,000 per person) during his campaign to become FIFA President.[7]  Despite its official tough stance on corruption, FIFA also failed to investigate charges against Jack Warner, a former Vice-President now indicted by the DOJ.[8]

Recently, Russia and Qatar’s winning bids to host the next two World Cups have also come under scrutiny.  Concerned about appearing complicit with corrupt officials, FIFA’s Ethics Committee commissioned a former U.S. prosecutor, Michael Garcia, to lead a comprehensive investigation into the allegations that both nations bribed their way into hosting rights.  Ultimately, FIFA refused to release Garcia’s full report and Garcia resigned over the Ethics Committee’s handling of his findings.[9]

The Exceptional Character of DOJ’s Indictments

Despite its European location, FIFA has effectively evaded judicial review in European courts.[10]  FIFA has also rejected politicians’ probes into its infrastructure, threatening retaliation by excluding whole nations from soccer tournaments.[11]

In the U.S., the news of DOJ’s indictment casts an unexpected spotlight on soccer’s infrastructure. Attorney General Loretta Lynch, who brought the investigation with her to Washington upon her confirmation, dismissed speculation that her office had any interest in FIFA other than tackling white collar crime.[12]  But the lax prosecution of bankers and corporate executives (closer to Lynch’s original Eastern District of New York) after the 2008 financial crisis suggests a selective approach at best.

The unusual character of the indictments has also involved extraditing many officials for U.S. prosecution.  Although the U.S. and Switzerland have an extradition treaty, the U.S. Government has to file a detailed request to Swiss authorities showing a “reasonable basis” to believe the FIFA officials committed the alleged crimes.[13]  This extra hurdle is a powerful incentive for the indicted officials to challenge their extradition—and delay U.S. prosecution.

What’s Next for FIFA?

Even the DOJ has suggested that the indictments may be the tip of the iceberg.[14]  Sepp Blatter, who presided over FIFA for the past 17 years, successfully shielded most of his leadership from legal repercussions. Three days after the first arrests, Blatter was successfully re-elected and denied any role in the controversy. His ambition was short-lived, as he announced his resignation a few days later.[15]

For Blatter, the threat of a domino effect is real, now that his former colleagues have powerful incentives to implicate other officials at the top.[16]  The DOJ’s initiative has even emboldened Swiss authorities to launch their own investigation into Qatar’s and Russia’s hosting bids, making this prosecution the most powerful threat to FIFA’s infrastructure ever seen.

Editor’s Note: In the forthcoming issue of the Moorad Sports Law Journal, this author provides further discussion of FIFA corruption and human rights abuses abroad in her comment: Azadeh Erfani, Kicking Away Responsibility: FIFA’s Role in Response to Migrant Worker Abuses in Qatar’s 2022 World Cup, 22 Jeffrey S. Moorad Sports L.J. (forthcoming, Summer 2015).


 

[1] See Michael S. Schmidt & Sam Borden, In a Five-Star Setting, FIFA Officials Are Arrested, the Swiss Way, N.Y. Times (May 27, 2015), http://www.nytimes.com/2015/05/28/sports/soccer/in-a-five-star-setting-fifa-officials-are-arrested-the-swiss-way.html?_r=0 (reporting on circumstances of arrest of FIFA officials by Swiss authorities).

[2] See Daniela Pinheiro, The President, Revista Piauí (Braz.) (July 2011), http://revistapiaui.estadao.com.br/edicao-58/the-faces-of-futebol/the-president (noting that Baur au Lac was packed with FIFA officials ahead of 61st Annual Congress and presidential elections in 2011).

[3] See Press Release, U.S. Dep’t of Justice, Nine FIFA Officials and Five Corporate Execs. Indicted for Racketeering Conspiracy and Corruption (May 27, 2015), available at http://www.justice.gov/opa/pr/nine-fifa-officials-and-five-corporate-executives-indicted-racketeering-conspiracy-and (announcing indictment of two FIFA Vice Presidents, Current and Former Presidents of the Confederation of North, Central American and Caribbean Association Football (CONCACAF)); see also Stephanie Clifford & Matt Apuzzo, After Indicting 14 Soccer Officials, U.S. Vows to End Graft in FIFA, N.Y. Times (May 27, 2015), http://www.nytimes.com/2015/05/28/sports/soccer/fifa-officials-arrested-on-corruption-charges-blatter-isnt-among-them.html (reporting that schemes included “using fake consulting contracts to funnel illegal payments; sending money through associates working in banking or currency dealing; creating shell companies in tax havens; hiding foreign bank accounts; using safe deposit boxes; and “bulk cash smuggling.”).

[4] See Clifford & Apuzzo, supra note 3; see also Indictment, United States v. Montgomery, No. 15 CR 0252 (RJD)(RML), 2015 WL 3387790 (E.D.N.Y. Filed May. 20, 2015), 2015 WL 3387790, available at  http://www.justice.gov/opa/file/450211/download (indicting FIFA officials and corporate executives with forty-seven counts in 167-page document describing alleged crimes).

[5] See Arnd Wiegmann, FIFA has $1.4 billion cash pile to fall back on, Reuters (Mar. 21, 2014, 1:06 PM EDT) http://www.reuters.com/article/2014/03/21/us-soccer-fifa-finances-idUSBREA2K1GO20140321 (naming sponsors undeterred by popular protest over FIFA World Cup in Brazil and noting surplus of $74 million after 2014 World Cup).

[6] See, Zac Lee Rigg, Meet Chuck Blazer, the former FIFA bigwig whose cats had a Trump Tower apartment, Fusion.net (May 27, 2015, 2:14 PM), http://fusion.net/story/140185/who-is-chuck-blazer-former-fifa-executive/ (reporting that FIFA official Chuck Blazer, who already pleaded guilty to corruption charges following IRS investigation, rented Trump Tower apartment in New York City for his cats).

[7] See Bin Hammam v. FIFA at ¶¶ 15-23, CAS 2011/A/2625 (Swiz.) (Ct. of Arb. for Sport July 19, 2012), available at http://www.tas-cas.org/fileadmin/user_upload/Award20262520_FINAL_internet.pdf (stating that Mohammed Bin Hammam, Qatari official and former FIFA Executive Committee member was found guilty of bribery by FIFA Ethics Committee and upheld by Appeal Committee, resulting in lifetime ban against engaging in any soccer-related activity). The Court of Arbitration for Sport (CAS) subsequently reversed the lifetime ban. See id, at ¶ 207 (annulling decision of Appeal Committee).

[8] See Robert Hughes, Bin Hammam Is Latest FIFA Official to Go, but Cloud Remains, N.Y. Times (July 24, 2011), http://www.nytimes.com/2011/07/25/sports/soccer/25iht-soccer25.html?_r=0 (reporting that Warner resigned with “presumption of innocence,” in apparent contradiction with FIFA zero tolerance policy); see also Indictment, supra note 4 at 33-42 (detailing allegations against Jack Warner).

[9] See Fifa investigator Garcia steps down, Al Jazeera (17 Dec 2014, 16:07 GMT), http://www.aljazeera.com/sport/football/2014/12/garcia-resigns-from-fifa-ethics-committee-20141217154613521561.html (releasing statement by Garcia where he explains why he appealed Ethics Committee’s findings to Appeal Committee, which ultimately rejected his appeal).

[10] See Alexander Wynn, Red Card Racism: Using the Court of Arbitration For Sport (CAS) to Prevent and Punish Racist Conduct Perpetrated by Fans Attending European Soccer Games, 13 Cardozo J. Conflict Resol. 313, 331 (2011) (“Case law from the European Court of Justice . . . reflects the E.U.’s and European Commission’s policy of allowing sports organizations to govern their own affairs.”); see also James A. R. Nafziger, International Sports Law: A Replay of Characteristics and Trends, 86 Am. J. Int’l L. 489, 509 (1992) (“Courts . . . have traditionally denied standing to plaintiffs or otherwise dismissed actions on grounds of admissibility . . . defer[ring] to sports organizations to apply their own principles and rules or those of national federations.”).

[11] See Gavin Mortimer, Fifa Threat to Ban France Over Political Interference, The Week (June 30, 2010, 8:39), http://www.theweek.co.uk/football/13631/fifa-threat-ban-france-over-political-interference (reporting that Blatter threatened to ban France from international competitions due to “political interference”).

[12] See Josh Gernstein, For Loretta Lynch, a stunning debut on the world stage, Politico (May 27, 2015, 7:30 PM), http://www.politico.com/story/2015/05/loretta-lynch-stunning-debut-fifa-soccer-118353.html#ixzz3ccoOZTAV (addressing Lynch’s focus in prosecution in relation to failed hosting bid of U.S.).

[13] See Nicole Hong, How Will the U.S. Extradite FIFA Officials From Switzerland?, Wall Street Journal Law Blog (May 27, 2015, 3:16 PM), http://blogs.wsj.com/law/2015/05/27/how-will-the-u-s-extradite-fifa-officials-from-switzerland/ (explaining prospect of extraditing FIFA officials).

[14] See Clifford & Apuzzo, supra note 3 (comparing investigation of FIFA corruption to mafia criminal enterprise, DOJ refers to indictments as “the beginning of our effort, not the end”).

[15] See Sepp Blatter, President, FIFA, Remarks at Press Conference in Zurich, Switzerland (June 2, 2015), available at http://resources.fifa.com/mm/document/affederation/footballgovernance/02/61/77/26/presidentaddress2jun15_final_neutral.pdf (announcing intended resignation and need for “profound overhaul,” including formation of “Extraordinary Congress” to elect next president).

[16] See Kevin Baxter, Ex-FIFA Official Jack Warner Promises to Reveal ‘Avalanche’ of Secrets, L.A. Times (June 3, 2015, 8:24 PM), http://www.latimes.com/sports/sportsnow/la-sp-sn-jack-warner-fifa-sepp-blatter-trinidad-election-20150603-story.html (reporting that indicted ex-FIFA Vice President Jack Warner has promised to expose numerous documents involving further corruption).

 

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