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Corruption

End FIFA Now

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On Wednesday morning 27 May, Swiss authorities arrested 10 senior FIFA officials gathered in Zürich for the international body’s annual meeting. The Swiss were serving extradition requests for the US Department of Justice, which has been investigating the football association’s activities for years. All of the 10 officials arrested were senior lieutenants of FIFA President Sepp Blatter and two of them were Presidents of their Regional Football Associations (CONCACAF and CONMEBOL). These arrests occurred at the same time as the organization’s Miami offices were being raided. A total of 47 indictments were served, 14 of them to FIFA officials[1]. Sepp Blatter, FIFA President, has not yet been charged.

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The indictments alleged racketeering, wire fraud, money laundering and soliciting bribes to the tune of 150 million dollars. Justice issued a statement citing “rampant, systematic and deep-rooted” corruption in the football body. FIFA operates a global system of patronage and moves vast amounts of money: the organization raked in over 4 billion dollars[2] from the 2014 World Cup in Brazil and paid no taxes whatsoever to the host nation. FIFA says it doesn’t keep the money for itself, as it is a nonprofit; it claims that it pays out over 550,000 dollars per day in soccer development aid, for stadiums, fields, kits, balls and training centers. Perhaps, but that sums to 201 million per year, or 804 million dollars over four years. The World Cup is held every four years: so what does FIFA do with the remaining 3.2 billion dollars?

Add the fact that FIFA’s organization has been described by insiders as “byzantine and impenetrable”[3] and the opportunities for embezzlement and corruption need no further description.

FIFA has been dogged by scandals for years. Sepp Blatter, President since 1998, has been accused of being a ruthless dictator, an insensitive dinosaur who hoards power like a starving man hoards food. The awards of the 2018 Cup to Russia and the 2022 Cup to Qatar are still disputed by accusations of bribery and vote selling.  Blatter has ignored all calls for greater transparency or an independent investigation. Under pressure, he did agree to launch an internal investigation, hiring former US prosecutor Michael Garcia. Mr. Garcia produced a 430-page document of findings which has never been made public. Mr. Garcia cannot reveal the contents of his work either since he is under a non-disclosure contract, but he has said that the information FIFA has made public is “incomplete and erroneous.” [4]

Shocking.

None of this is particularly revelatory. Everyone on the planet is well aware that FIFA is an odious cartel, an open cesspool, a legalized Mafia. It is an organization without any supervision, wielding its dictatorial powers over national football bodies and host governments from its offices in Switzerland, a nation not known for transparency. But no one cares; as long as the game is played and the Messi’s and Neymar’s keep the sport beautiful, and the Germans keep winning, then the costs of this grotesquery simply aren’t deemed important. Despite the fact that recent polls indicate that 83% of fans want to dump Blatter and 69% say they have no confidence in FIFA[5], the attendance at matches and the sale of jerseys doesn’t fall. “Iron Fist” Blatter can ignore them with impunity.

But the costs are very high and people should be outraged. FIFA is not just guilty of “white collar” financial shenanigans, it is an organization that is up to its neck in blood.

  • Brazil spent over 15 billion dollars preparing to host the 2014 tournament, at enormous cost to the public. FIFA and the Cup sponsors didn’t pay a penny in taxes to repay this tremendous investment. FIFA did hand over 100 million as a gift though…[6]
  • There were evictions and there were protests in response to Brazil’s efforts to “clean up” its favelas in advance of the arrival of millions of fans from around the world. These were not all peaceful; an unknown and unknowable number of people were killed by the police during these protests. But since they were the poor and faceless residents of Brazil’s shanty towns, no one cares;
  • Qatar, paragon of democracy that it is, is using slave labor to construct its stadiums under conditions that would have made Dante puke. Thousands of immigrant workers will die[7] in the construction of these facilities before the first match is played. FIFA is not responsible for the laws on immigrant labor of the Emirate; it simply didn’t care that it was awarding the biggest event in global sports to a slave state.

deaths

  • Russia, another great respecter of human rights, will host the 2018 World Cup. If the Sochi Olympics are any guide, this a great opportunity for enrichment for Mr. Putin’s friends and associates, a vast trough laid out for the pigs to feast upon. Given the state of affairs in Ukraine and the belligerent actions and threats of the Russian government, this event resembles nothing so closely as the 1936 Olympics held in Nazi Germany. But the Swiss had no problem working with them either and Mr. Blatter remains true to form.

What’s next? WC2026 in the Islamic State? They have the oil and drug money to pay-off Blatter and his caporegime. Certainly the incentive to win would be even greater as the losers would likely be beheaded by their ghoulish hosts.

It’s Not Just FIFA

FIFA may be the biggest, most powerful and most odious of the sports mafias, but it is not the only one. World sport is rotten to the bone, a symptom of the lack of public oversight of its activities. The International Olympic Committee has been rocked by similar bribery scandals and the selection process for the hosts is a dog-and-pony show more than a transparent and independently verifiable process.  The IOC has come much farther than FIFA – which has not moved an inch – but far too much remains to be done to clean them up.

World cycling appears more like a rehab program for junkies than a professional sport. Lance Armstrong and Alberto Contador have done immense damage to it, but the fact is that performance-enhancing drug use has been rife since international competitions started being held at the beginning of the last century. The list goes on: our own NCAA cannot be held up as a model of anything, for example.

If all this is a relatively open secret, why has the United States acted now and not earlier? And why hasn’t anyone else stepped forward? Three reasons principally:

  1. There is undoubtedly a hint of sweet revenge. The US was the front-runner for the 2022 World Cup and was robbed out of hosting the event by the votes Qatar was able to buy;
  2. FIFA has less leverage over the US; soccer in our country simply doesn’t compare financial to the heavyweights at the NFL, NBA, MLB and even NHL. MLS is a very poor cousin and has very little economic – and therefore political – pull. Americans play soccer, but don’t watch it. And those that do are justifiably enraged at FIFA and Blatter anyway for reason 1 above. Your average European might rise up in armed rebellion if their government cost their national team a spot at the tournament for taking on the Football body;
  3. The United States government actually takes its anti-corruption laws seriously. Every industrialized nation has laws on their books similar to our Foreign Corrupt Practices Act (FCPA) and they have all singed the 1997 OECD Anti-Bribery Convention, but more than half of OECD nations do not have a single prosecution on bribery-related charges. Not even charges.

The United States leads the way in cleaning up their business practices with more than half of all the OECD corruption-related prosecutions between 1999 and 2012. These 236 cases constitute 55% of all prosecutions during the period. Across the globe. Only Germany even comes close.

anti-bribery

This attitude is commendable, and the US benefits overall from having a less corrupt business environment, but it does cost American companies a lot of money in terms of lost bids for international projects. The most obvious recent example is the Panama Canal kerfluffle, where the winning bid was led by a Spanish-Italian-Panamanian consortium led by Spanish construction firm, Sacyr Vallehermoso[8]. This will come as no surprise to those who are familiar with business practices here in Spain – particularly in the bidding for public contracts, where a shameless 98% of the contracts experienced cost overruns[9]. The “winning bid” was USD $1 billion lower than the competition – including fellow Spanish company ACS – while the “unexpected cost overruns” are now assessed at USD $1.6 billion. In fact, competitors complained that “Sacyr’s bid wouldn’t even cover the cost of the cement…”[10] Nor is it entirely surprising that the Sacyr Consortium includes Panamanian company CUSA, headed by Rogelio Alemán, who just happens to be the cousin of Panama Canal Administrator Alberto Alemán[11].

Unfortunately, this is how things are done in many parts of the world, including some supposedly advanced nations; but these nefarious practices are not simple “a cost of doing business”. They have a real economic and human cost in distorting markets, exaggerating inequality, lowering living standards and violating the rule of law in places where it is still quite fragile. Corruption is an economic parasite battening on the lifeblood of a nation until, bloated and obscene, it kills its host.

I applaud the actions of the Justice Department and the bravery of Loretta Lynch, who has only been in office for a month. I expect that DOJ will not stop with these 47 indictments: the arrested FIFA officials will be put through a wringer and I find it hard to believe they are keen to spend years in a Federal prison in order to protect Sepp Blatter. Justice will have them singing like Pavarotti soon enough and I hope the Mr. Blatter will not escape the dragnet for too much longer.

In the meanwhile, FIFA is holding its elections for President: that was the whole purpose of the gathering in Zürich and undoubtedly influenced the timing of the indictments. Mr. Blatter cannot be allowed to be re-elected. Jordanian Prince Ali bin al-Hussein is the only remaining candidate after Luis Figo dropped out of what he called a fix, a “dictatorship to deliver absolute power to one man.”[12] Brazil has already indicated that it thinks the election should be delayed; a FIFA spokesman has said it will proceed[13]. If he is reelected, I sincerely hope that Mr. Blatter will soon be before a Federal Judge rather than a press conference.

If Mr. al-Hussein is elected, he has a monumental task before him. FIFA must be purged from top to bottom; it is not an exaggeration to say that the Federation ought to be disbanded in its current form and subsequently reformed. Even after cleaning out the Augean Stables, the same opportunities for corruption will exist and eventually, they will be taken. The new FIFA boss will have to implement a major overhaul of the football association’s oversight and transparency standards to avoid future scandals and remove the taint from the game.

The US has taken a bold first step, but now the rest of the world of football must act. It would be enough if the big five European national associations[14] rose in revolt, plus Brazil and Argentina. The sordid reign of Sepp Blatter and FIFA must come to an end.


 

Sources and Notes

[1] Michael E. Miller and Fred Barbash, “U.S. indicts world soccer officials in alleged $150 million FIFA bribery scandal,” Washington Post, 27 May 2015

[2] Mike Ozanian, “World Cup Brazil Will Generate $4 Billion for FIFA, 66% More Than 2010 Tournament,” Forbes, 06 May 2014

[3] Stephanie  Clifford and Matt Apuzzo, “After Indicting 14 Soccer Officials, U.S. Vows to End Graft in FIFA,” New York Times, 27 May 2015

[4] “Michael Garcia resignation a ‘new failure for FIFA,’ says Michel Platini,” ESPN FC, 18 December 2014

[5] “4 in 5 Football Fans Say Blatter Should Not Stand For FIFA President: Poll of 35,000 in 30 Countries,” Transparency International, 26 May 2015

[6] Stephan Wade, “FIFA Is Giving Brazil $100 Million After The Country Spent $15 Billion On The World Cup,” Business Insider, 20 January 2015

[7] Christopher Ingraham, “The Human Toll of FIFA’s Corruption,” Washington Post, 27 May 2015

[8] Fernando Betancor, “Criminal Minds: Foreign Corrupt Practices,” Common Sense, 17 February 2014

[9] Lomi Kriel and Sonya Dowsett, “Insight: Lowball bid comes back to haunt Panama Canal expansion,” Reuters, 20 January 2014

[10] Wikileaks, Cable 09PANAMA550, 2009-07-09 21:36, US Embassy in Panama

[11] Wikileaks, Cable 10PANAMA1_a, 2010 January 8 17:15, US Embassy in Panama

[12] Ben Rumsby, “Luis Figo quits Fifa race with scathing attack on Sepp Blatter’s ‘dictatorship’,” The Telegraph, 21 May 2015

[13] “THE LATEST: Ex-FIFA VP Warner leaves jail in ambulance,” Associated Press, 28 May 2015

[14] Germany, United Kingdom, France, Italy and Spain

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