30 May 2015 – The factual backdrop to this affair is well-known. FIFA, world football’s governing body has, for a number of years, been the subject of allegations of corruption. Then, after a series of dawn raids on 27 May 2015, seven FIFA officials, of various nationalities, the most famous being Jack Warner, the Trinidadian former vice president of FIFA, were arrested in a luxury hotel in Zurich where they were staying prior to the FIFA Congress. This was pursuant to an indictment that accused them, alongside five corporate officials, of using their positions within FIFA to engage in schemes involving the solicitation, offer, acceptance, payment, and receipt of undisclosed and illegal payments, bribes, and kickbacks. The defendants and their co-conspirators were also accused of corrupting the enterprise by engaging in various criminal activities, including fraud, bribery, and money laundering, in pursuit of personal and commercial gain.
Corruption, and its fellow traveller money laundering, tends to cross borders, and with an entity such as FIFA and an event such as the World Cup, it would be difficult to imagine that there could not be an international element to the case. But the indictment in one country of nationals of various countries, and arrests in another pursuant to an extradition request, have given rise to different conceptions of criminal justice: one internationalist, the other nationalist. I will get to those points at the end of this post.
Oh, the money. The money.
So bribery and corruption appear to be endemic within FIFA, as indeed within much of the world within which we live. Pundits have noted that the FIFA scandal is an “absolute disaster” for the multinationals who sponsor it – because they cannot escape taint from the perceived lapses of football’s supreme governing body. Allegedly the reputational damage is “huge”.
So why aren’t these huge and powerful global companies following the lead of Visa – which said it would review its sponsorship deal if FIFA does not clean up its act?
Well, part of the answer is implicit even in the mild sabre-rattling of Visa. Because it is striking that even Visa only said it might review its commercial relationship with FIFA, not that it was doing so. The point is that Coca Cola, Hyundai, Budweiser, McDonald’s, Gazprom and Visa (among others) have signed legally binding contracts. So they may not be able to get out of the contracts without paying spectacular damages – given that they are each believed to be paying FIFA up to $200m over four years for the marketing opportunities associated with the World Cup.
They are all asking their lawyers to examine whether they have “moral” clauses in their contracts, which would allow them to get out because of FIFA’s behavior. Which frankly is surprising … I find nothing “astonishing” anymore … that sponsoring and endorsing organizations do not insist on “moral” clauses given the stream of toxic events across the entire sports universe and the myriad literature on the subject.
But as in all things in the world it’s about the money. As noted by one of the FIFA sponsors, the World Cup is “the best sponsorship opportunity on the planet”. How so? Well, association football is arguably the world’s most global sport – though the Olympics and Formula One also have serious worldwide reach. And the World Cup allows the sponsors to get their names in front of hundreds of millions of consumers, both in the rich West and in the faster-growing economies of Asia and South America.
And based on the Financial Times series on the subject, what makes World Cup sponsorship particularly special is that FIFA is far less prescriptive about how the sponsoring companies promote their brands and conduct their marketing than the Olympic Organizing Committee.
As one sponsor representative said (off-the-record) “although all the sponsors want to be seen to be doing the “right thing” by putting pressure on FIFA to reform, they are fearful that if they completely incinerate their relationships with the World Cup, they may simply be providing a precious and rare marketing opportunity to their bitterest rivals”.
And really, let’s face it. It’s the nature of the toxicity. If Fifa was engaged with something viewed as damaging to the environment (pollution, reckless use of scarce resources etc) or something socially corrosive (eg child labor, exploitation of women, prejudice against ethnic or minority groups), public pressure on brand owners to divest and shareholder pressure to re-invest marketing resources elsewhere would be much stronger. However, the allegations here seem to point to more “acceptable” forms of toxicity such as bribery and the “victimlesss” crime of money laundering — with few tangible outcomes other than the disappointment of those whose attitudes and aspirations are more honest (or less dishonest) and the inconvenience inflicted on a small number of overpaid athletes who will have to play World Cup football in Qatar in 2022. Where there is less outrage there is inevitably less pressure.
Death in the afternoon
And no, I am not ignoring the brutality. For the most obvious example of this, look to Qatar. The decision to award the 2022 World Cup to the rich Gulf state with a terrible human rights record was a controversial one right out of the gate. There have been extensive allegations of bribery: why else, some figured, award the Cup to a tiny country with sweltering summer heat and no soccer culture to speak of?
Human rights advocates’ worst fears about Qatar seemed to be confirmed as Qatar began building the infrastructure to host the Cup, and reports of migrant worker deaths started to pile up. The numbers, to the extent that we know them, appear startling: A Guardian investigation last year revealed that Nepalese migrant workers were dying at a rate of one every two days. In sum, the Guardian put the total Qatar death toll of workers from Nepal, India and Bangladesh at 964 in 2012 and 2013.
It is hard to know how many of those are specifically World Cup associated. Hundreds of thousands of migrant workers come to Qatar each year, and there could be hundreds of deaths even without a World Cup — figures from the Indian embassy show, for instance, that 200+ Indian workers died in Qatar in 2010, before the World Cup announcement. But the numbers could also be worse: a report by the International Trade Union Confederation has estimated 1,200 deaths so far, with up to 4,000 additional worker deaths by 2022.
The looooooooooooong arm of the U.S. legal system
In John Gapper’s Financial Times analysis of the FIFA investigation he noted that … yet again … America displayed the longest arm in international law. He notes:
Imagine if the attorney-general of Switzerland asked the New York Police Department to drive up Park Avenue and arrest several senior officials of Major League Baseball. The cops would probably do it, if the extradition charges were drawn up correctly, but one or two New Yorkers might demand to know what business it was of the Swiss to interfere in a traditional American pastime.
The tradition of U.S. law enforcers and courts reaching overseas “to get their men and women” often irritates. Just chat with anybody involved in e-discovery cross-border litigation and investigations.
Gapper defends the U.S. and says when global organizations become havens for bribery and kickbacks — unlike Major League Baseball — they cannot be left to fester simply because enforcing justice is too hard. By its own admission, plenty of misbehavior has occurred within FIFA. Concacaf, FIFA’s member confederation covering the US and Central America, concluded two years ago that both Chuck Blazer, its former general secretary (since turned FBI informer), and Jack Warner, its former president, had received millions of dollars in illicit payments from its coffers.
And until recently, Sepp Blatter, FIFA chief and a Swiss citizen, has been in a good spot to ignore this shambles. As Mark Pieth, the Basel University professor who was asked by FIFA to propose reforms in 2012, as quoted in the Financial Times at the time, Switzerland “has this legacy of being a kind of pirates’ harbour . . . it’s attractive [to the 60 international sports organisations based there] because there is little regulation”.
NOTE: Switzerland has since tightened the law to deter corruption in international bodies, and is conducting a second investigation — separate from that of the US — into how Russia and Qatar were awarded the 2018 and 2022 World Cups. The Zurich raids included the seizure of documents by the office of the Swiss attorney-general as a part of this investigation.
Even so, the US has a longer tradition of, and displays much greater vigour in, pursuing international criminality, including piracy. The US constitution gives Congress the power to “define and punish piracies and felonies committed on the high seas, and offences against the law of nations”. The Founding Fathers did not have football in mind but this is broad enough.
And as we all know the most powerful law is the 1977 Foreign Corrupt Practices Act, which makes it an offence for a US company — or, crucially, a company with US operations — to pay bribes to officials. BHP Billiton, for example, paid a $25m penalty last week for financing the attendance of 176 government officials at the 2008 Olympics in Beijing.
In the FIFA case, U.S. law stretched as far as it needed. Blazer was based in New York, and defendants from FIFA and sports marketing bodies passed through the city. After he became an FBI informer, according to the New York Daily News, he carried a key chain with a microphone to London to record conversations with officials visiting the 2012 Olympics.
The different conceptions of criminal justice in the FIFA investigation … one internationalist, the other nationalist … is interesting. The former can be seen on the part of US officials, who, when announcing the arrests and indictments, thanked the government of Switzerland and other unnamed States for their “outstanding assistance” in the investigation. Given that the conduct related in large part to money laundering into and out of the United States and to bribes that went through US banks and deposited abroad, it is no surprise that the cooperation of other States was required. What might be surprising though is that mutual legal assistance, at best a sclerotic system, seems to have worked in this case, although it was helped by guilty pleas by four FIFA officials including the ex-US member of the FIFA executive committee. It is notable that the rhetoric of the United States was very much of the internationalization of the crimes and the effect they had in developing countries. As IRS Chief of Investigation, Richard Weber (clearly no stranger to a bon mot) described the charges, they relate to a “World Cup of corruption”.
On the nationalist side, however, we have … well, Russian President Vladimir Putin (perhaps not the most objective of observers, given that Russia obtained the 2018 World Cup from FIFA) who criticised the indictments and arrest as:
“It looks very strange…. They are accused of corruption – who is? International officials.…it’s got nothing to do with the USA. Those officials are not US citizens. If something happened it was not in the US and it’s nothing to do with them…. It’s another clear attempt by the USA to spread its jurisdiction to other states.”
But as Robert Cryer (professor of International and Criminal Law at the University of Birmingham and a chap who covers the internationalist/nationalist aspects of justice) noted on his blog:
“Leaving aside the fact that two of the defendants were US nationals, and one has been accused in the indictment of obtaining that nationality fraudulently, Putin’s comments can easily be refuted. In spite of the transnational nature of the crimes alleged and the international co-operation that they engendered, in fact the vast majority of charges relate to conduct occurring at one level within the United States, most particularly, New York and Florida, in that the money went through banks there, or related to conduct there. Owing to the principle of ubiquity of crime–i.e. that if any part of a crime occurs in the territory of a State, they have jurisdiction over it–the United States quite clearly has territorial jurisdiction in those cases”.
It might therefore be thought that this simply makes it a national U.S. matter. However, the picture is more complex. What this affair shows is the intermingled nature of even domestic crimes with territorial links, with international cooperation and activity. Frequently owing to their nature, such crimes require international cooperation and relate to conduct that crosses borders, which also leads to multiple investigations in different States, as the Swiss investigation shows.
What Putin’s comments also show, however, are the frequent charges of the politicization of international criminal justice, understood in its broad sense. Putin has alleged that the timing of the arrests, mere days before the FIFA presidential election was “a clear attempt not to allow Mr Blatter to be re-elected as president of FIFA”. It is true that the timing could be seen as a remarkable political coincidence, the United States being no friend of Mr Blatter. However, as is often the case when dealing with large scale conspiracies and racketeering, it was useful to have as many of the alleged conspirators together at one time (in one country) to make for a maximally effective arrest operation, and to prevent collusion between them.
Time and time again in these situations we hear “ok, you’ll always have a few bad apples in the barrel”. No, most times it’s the whole barrel that is bad. Once you totally commercialized the World Cup — with the idea of covering the costs, paying the players, and building the stadiums — you created enormous opportunities for the abuse of power. The barrel become rotten.
Yes, surely there is a way to have an idealistic global tournament of a sport that doesn’t require either massive government funding or massive corruption. I know! Let’s ask the people at the Olympics who must … ah, oops. Let me think about that.
