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FIFA: Officials Arrested On Corruption Charges As World Cup Inquiry Launched

FIFA "is facing an unprecedented crisis on the eve of its congress in Zurich after Swiss authorities arrested a string of officials on corruption charges and opened criminal proceedings over the awarding of the 2018 and 2022 World Cups," according to Gibson & Gayle of the London GUARDIAN. More than a dozen plainclothed officers "descended on the five-star Baur au Lac hotel on Wednesday," where officials gathered for FIFA’s annual meeting. The arrests were made on behalf of U.S. authorities, "after an FBI investigation that has been under way for at least three years." The U.S. Department of Justice said that "authorities had charged 14 officials," nine of whom are current or former FIFA execs. Those arrested in Zurich "face extradition" to the U.S. Hours later, Swiss federal prosecutors said that "they had opened criminal proceedings in connection with the award of the 2018 World Cup to Russia and the 2022 tournament to Qatar." The decisions have been "shrouded in claims of bribery and corruption" ever since the vote in December '10. The arrests on behalf of the U.S. authorities form part of an int'l investigation into bribes worth $100M "spanning three decades." Swiss officials said that the allegations date back to the '90s and involve "the acceptance of bribes and kickbacks" (GUARDIAN, 5/27).

'ENDEMIC' CORRUPTION: In London, Scannell, Aglionby, Moore & Garrahan wrote the bribes "were allegedly concealed in consulting agreements, and through bankers, financial advisers and currency dealers" and transferred through shell companies, bank accounts in tax havens and "bulk cash smuggling." Authorities said the corruption, which spanned 24 years, was "endemic" and fueled the rise of certain defendants. Former FIFA VP and former CONCACAF President Jack Warner allegedly "began soliciting bribes in the early 1990s, including over the vote to award South Africa the 2010 World Cup tournament." It was alleged he "used money from one football account to purchase property in Miami," with the payments funneled through N.Y. and Florida branches of regional, U.S., Swiss and Brazilian financial institutions, among others (FINANCIAL TIMES, 5/27). REUTERS' Collett & Homewood wrote those arrested did not include FIFA President Sepp Blatter, "but included several people just below him in the hierarchy of sports wealthiest body." Of the 14 indicted by the U.S. Department of Justice, seven FIFA officials, including VP Jeffrey Webb, were "being held in Zurich." The department said that four people and two corporate defendants "had already pleaded guilty to various charges." The DoJ said that the Miami HQ of CONCACAF, the football federation that governs North America, Central America and the Caribbean, "were being searched on Wednesday" (REUTERS, 5/27). In Sydney, Jacquelin Magnay wrote overnight Swiss police "questioned 10 of the 21 members who voted in the 2018 and 2022 elections -- where Australia’s technically sound bid scored just a solitary vote -- as well as FIFA members who formed the executive committee" back in '10. Important electronic data and documentary evidence "was seized in the hotel rooms of the officials, but also in a morning raid on the headquarters of FIFA just outside Zurich" (THE AUSTRALIAN, 5/28). In N.Y., Apuzzo, Schmidt, Rashbaum & Borden wrote the arrests "were carried out peacefully." One FIFA official, Eduardo Li of Costa Rica, "was led by the authorities from his room to a side-door exit of the hotel." He was allowed to bring his luggage, "which was adorned with FIFA logos." The arrests "were starting to blow to FIFA." The inquiry is also a "major threat" to Blatter, who is "generally recognized as the most powerful person in sports, though he was not charged." Blatter "has for years acted as a de facto head of state." The Department of Justice indictment named 14 people "on charges including racketeering, wire fraud and money laundering conspiracy." Charges "were also made against" sports-marketing execs Alejandro Burzaco, Aaron Davidson, Hugo Jinkis and Mariano Jinkis. Authorities "also charged Margulies as an intermediary who facilitated illegal payments." U.S. Attorney General Loretta Lynch said, "The indictment alleges corruption that is rampant, systemic and deep-rooted both abroad and here in the United States" (N.Y. TIMES, 5/27).

CARTE BLANCHE: FORBES' Jason Belzer wrote while the majority of those arrested domicile overseas, extradition to the the U.S. "is unlikely to be a major obstacle." As seen during the war on terrorism, the U.S. Justice Department has "almost carte blanche authority to bring indictments against foreign nationals living abroad." Such cases "can depend on a minimal connection between" the accused and U.S., including travel to and from the country or even the usage of an American bank. That being said, the sports marketing execs, along with FIFA Exec Chuck Blazer, have already "entered guilty pleas according to officials." Lynch: "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" (FORBES, 5/27).

THE LION'S SHARE: In London, Damien Gayle wrote the sale of media and marketing rights to int'l tournaments "accounts for the lion’s share" of FIFA’s multibillion-dollar business. FIFA "sells its rights to sports marketing companies, which in turn sell them on to TV and radio broadcast networks and sponsors." According to the indictment, businessmen paid FIFA officials more than $150M in bribes and kickbacks "in an effort to corner the market." The indictment said other alleged schemes relate "to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF [the Brazilian football league] by a major US sportswear company, the selection of the host country for the 2010 World Cup and the 2011 Fifa presidential election" (GUARDIAN, 5/27).

FIFA CARDED: Also in London, Cockroft, Robinson, Tomlinson, Hall & Sale wrote in a "dramatic press conference, officials claimed to have exposed complex money-laundering schemes, found millions of dollars in untaxed incomes and tens of millions in offshore accounts held by FIFA officials." U.S. officials would not be drawn on whether or not other senior FIFA figures not named in the indictment, such as Blatter, "could be charged." Acting U.S. attorney for the eastern district of N.Y. Kelly Currie said that "Wednesday's actions mark the beginning rather than the end of the probe." FBI chief James Comey said, "It's a beautiful game because the field is flat. But the game has been hijacked." Taking to the platform after Lynch, Richard Weber, chief of U.S. tax agency's criminal investigation division said, "This really is a World Cup of fraud and today we are issuing FIFA a red card" (DAILY MAIL, 5/27). The AP's Graham Dunbar wrote Swiss federal prosecutors "opened criminal proceedings related to the awarding of the 2018 and 2022 World Cups, throwing FIFA deeper into crisis." The Swiss investigation against "persons unknown on suspicion of criminal mismanagement and of money laundering" again "throws into the doubt the integrity of the voting." The Swiss prosecutors' office said that "the U.S. probe was separate from its investigation but that authorities were working together" (AP, 5/27). In London, Aglionby wrote Swiss prosecutors said they were coordinated “for reasons of criminal procedure ... in such a way as to allow the procurement of any criminally relevant data in an effective manner, and to avoid any possible collusion." This "appears less serious at first glance" because FIFA is the injured party and no sums of money have been disclosed. But "the stakes are potentially much higher because it involves alleged corruption in the bidding for the highly lucrative 2018 and 2022 World Cup tournaments awarded to Russia and Qatar respectively." FIFA insists that "while individuals might have acted corruptly, the overall bidding process was legitimate" (FT, 5/27). REUTERS' Baghdjian & Franklin reported the Swiss Federal Office of Justice said that "it had blocked accounts at several banks in Switzerland" after police arrested some of the most powerful figures in global football on Wednesday in U.S. and Swiss corruption cases. The office said in a statement, "Further to three U.S. requests for legal assistance, the FOJ has also ordered the blocking of accounts at several banks in Switzerland through which bribes are claimed to have flowed as well as the seizure of related bank documents" (REUTERS, 5/27).

FIFA/MARKETING OFFICIALS CHARGED
NAME POSITION
Jeff Webb FIFA VP (Exec Committee member), CONCACAF President
Jack Warner Former FIFA VP (Exec Committee member), former CONCACAF President
Eugenio Figueredo FIFA VP (Exec Committee member), former CONMEBOL President
Eduardo Li Incoming FIFA Exec Committee member
Julio Rocha FIFA Development Officer, former Nicaragua Football Federation President
Costas Takkas Attaché to the CONCACAF President
Rafael Esquivel CONMEBOL Exec Committee member, Venezuela Football Federation President
Jose Maria Marin Former Brazilian Football Confederation President
Nicolas Leoz Former FIFA Exec Committee member, former CONMEBOL President
Alejandro Burzaco Argentine sports media exec
Aaron Davidson Traffic Sports USA President, NASL BOD Chair
Hugo Jinkis Full Play Group Controlling Principal
Mariano Jinkis Full Play Group Controlling Principal
Jose Margulies Valente Corp. Controlling Principal

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