FIFA Corruption

INSIGHT | SOCCER

Corruption crisis leaves Fifa in limbo The arrest of a troop of senior officials and marketing executives and the impending departure of its longstanding president, Sepp Blatter, has left the future of Fifa in complete uncertainty. Even by recent standards, it has been a tumultuous month for world soccer’s governing body.

By Eoin Connolly

F

ifa, the governing body of world soccer, remains at a crossroads after the most dramatic, eventful and controversial month in its modern history. Sepp Blatter is to step down from his role as its president, bringing to an end the reign of one of the most powerful men in global sport.

The 79-year-old Swiss, head of the organisation for the past 17 years, announced his decision at a hastily arranged press conference at Fifa headquarters in Zurich on 2nd June, just four days after seeing off the challenge of Jordan Football Association president Prince Ali Bin Al+XVVHLQ WR VHFXUH D Ă€ IWK WHUP LQ RIĂ€ FH ´, KDYH EHHQ UHĂ HFWLQJ GHHSO\ DERXW P\ presidency and about the 40 years in which my life has been inextricably bound to Fifa and the great sport of football,â€? said Blatter. “I cherish Fifa more than anything and I want to do only what is best for Fifa and for football. I felt compelled to stand for reelection, as I believed that this was the best thing for the organisation. That election is over but Fifa’s challenges are not.â€?

On announcing his resignation, Blatter asked the Fifa executive committee to arrange an extraordinary congress to elect his successor “at the earliest opportunity�, adding: “This will need to be done in line with Fifa’s statutes and we must allow enough time for the best candidates to present themselves and to campaign.�

The next ordinary Fifa congress is due to take place on 13th May 2016 in Mexico City. However, Fifa audit and compliance committee chair Domenico Scala has said the election could take place anytime from December of this year to March of next year.

36 | www.sportspromedia.com

A Fifa executive committee meeting has been scheduled for 20th July in Zurich. The dates for the extraordinary elective congress will be set there, with 16th December mooted as a likely date by several media outlets.

Prince Ali has stated his intention to stand again for the Fifa presidency, as has former France international David Ginola, who entered the race this time round but dropped out after failing to garner enough support. Liberian FA president Musa Bilaty and Brazilian legend Zico have also steppded forward. Uefa president Michel Platini, Asian Football Confederation (AFC) president Sheikh Salman bin Ebrahim al Khalifa, Kuwaiti powerbroker Sheikh Ahmad Al-Fahad Al-Sabah, and South Korea’s Chung Mong-joon are among those to have been mooted as possible contenders, although none has yet formally declared his candidature.

Following Blatter’s resignation, Fifa is now expected to enact a series of reforms, including the introduction of WHUP OLPLWV IRU HOHFWHG RIĂ€ FLDOV DQG WKH publication of salaries. Commenting in his resignation statement, Blatter acknowledged Fifa is in need of “a profound overhaulâ€?. “While I have a mandate from the membership of Fifa, I do not feel that I have a mandate from the entire world of football – the fans, the players, the clubs, the people who live, breathe and love football as much as we all do at Fifa,â€? Blatter added. “Therefore, I have decided to lay down my mandate at an extraordinary elective congress. I will continue to exercise my functions as Fifa president until that election.â€?

Despite his election victory, Blatter had come under increasing pressure following a dramatic sequence of events that began with the arrest of nine Fifa RIÀ FLDOV DPRQJ WKHP FXUUHQW &RQFDFDI president and Fifa vice-president Jeffrey Webb, at the luxury Baur au Lac hotel on the eve of Fifa’s 65th congress in Zurich.

The arrests were made as part of an investigation led by the US Department of Justice and the FBI into the activities of international soccer bodies including Fifa and Concacaf, with senior administrators accused of participating in racketeering and bribery schemes worth US$150 million over 24 years.

Announcing the details of the investigation, Loretta Lynch, who became US Attorney General in April, said: “The indictment alleges corruption that is

Recent events have turned Fifa upside-down, and saw the previously untouchable Blatter “laying down his mandate� just days after re-election

rampant, systemic, and deep-rooted both abroad and here in the United States. “It spans at least two generations of VRFFHU RIĂ€ FLDOV ZKR DV DOOHJHG KDYH abused their positions of trust to acquire millions of dollars in bribes and kickbacks. “It has profoundly harmed a multitude of victims, from the youth leagues and developing countries WKDW VKRXOG EHQHĂ€ W IURP WKH UHYHQXH generated by the commercial rights these organisations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable.â€? $V HDUO\ UHSRUWV RI WKH DUUHVWV Ă€ OWHUHG through the global newswires and across social media, Swiss police also announced a separate investigation into the process by which Russia and Qatar

“The indictment against Fifa alleges corruption that is rampant, systemic, and deep-rooted.� were awarded the 2018 and 2022 Fifa World Cups.

Uefa president Michel Platini, who had led calls for Blatter to resign when the arrests were made and supported his presidential rival Prince Ali in the election, welcomed Blatter’s decision to step down. ´,W ZDV D GLIÀ FXOW GHFLVLRQ D EUDYH GHFLVLRQ and the right decision,� said the Frenchman.

Prominent Fifa sponsors also welcomed the news. In a statement Adidas, one of the organisation’s top-tier partners, said: “We

welcome Fifa’s commitment to change.

As stated before, the Adidas Group is fully committed to creating a culture that promotes the highest standards of ethics and compliance. Today’s news marks a step in the right direction on Fifa’s path to establish and follow transparent compliance standards in everything they do.�

A statement from Coca-Cola said: “We believe this decision will help Fifa transform itself rapidly into a much-needed 21st century structure and institution.�

SportsPro Magazine | 37

INSIGHT | SOCCER

Prince Ali of the Jordan FA was defeated by Blatter in the presidential elections, 133 votes to 73

Meanwhile Visa, which had been the PRVW YRFDO RI )LID¡V Ă€YH WRS WLHU SDUWQHUV in its pre-election warnings to the body, VWDWHG ´7KLV LV D VLJQLĂ€FDQW Ă€UVW VWHS towards rebuilding public trust, but more work lies ahead. “We repeat, however, that it is our expectation that Fifa will take swift and immediate steps towards addressing the issues within its organisation to quickly rebuild a culture with strong ethical practices that will restore the reputation of the game for fans around the world.â€?

Another party to applaud Blatter’s resignation was FIFPro, the worldwide representative organisation for all professional soccer players. “This creates an overdue and unique opportunity to fundamentally reform the governance of football,â€? the body said in a statement. “The world’s professional footballers, through FIFPro, have a pivotal role to play in the structural overhaul of football. “We are deeply committed to achieving this critical outcome in conjunction with all of the game’s key stakeholders. FIFPro LQVLVWV WKDW RQO\ Ă DZOHVV JRYHUQDQFH ZLOO be acceptable to protect the wellbeing of the players and the integrity of the game.â€?

Blatter’s resignation came just hours after Fifa general secretary JÊrôme Valcke was linked in reports to a US$10 million bribe made to secure votes for the 2010 World Cup, held in South Africa. Fifa rejected the accusation that Valcke had knowledge of or had allowed the transfer 38 | www.sportspromedia.com

of an illicit payment in 2008 from then South African Football Association 6$)$ SUHVLGHQW 0ROHÀ 2OLSKDQW WR Trinidad and Tobago’s Fifa vice president Jack Warner through a Fifa bank account.

This was despite the publication of a 2008 letter requesting the payment from 2OLSKDQW¡V RIÀFH DGGUHVVHG WR 9DOFNH which was discovered and published by the Press Association chief sports reporter Martyn Ziegler.

The publication of the letter had initially cast doubt on Valcke’s future at Fifa, with speculation swirling when it emerged he would not be present at Blatter’s snap press conference, but his position looks relatively secure for the time being.

The same cannot be said for Walter De Gregorio, the Fifa director of communications and public affairs who was given the unenviable task of fronting up to the world’s media in the hours after the raid on the Baur au Lac. De Gregorio left his post ‘with immediate effect’ on 11th June, though he will be retained as a consultant

Blatter (right) shakes hands with Domenico Scala

until the end of the year. The change was publicly presented as a resignation but reports indicate that he was forced to step down, in part because of a joke he told about the scandal in a Swiss television interview but also due to criticism of his handling of the affair by key Blatter aides.

Tellingly, the tributes to De Gregorio were led not by Blatter, but Valcke.

Blatter himself is now reported to be XQGHU LQYHVWLJDWLRQ ZLWK 86 RIĂ€FLDOV quoted in the New York Times saying they hoped to gain the cooperation of some of WKH )LID RIĂ€FLDOV XQGHU LQGLFWPHQW WR WU\ WR build a case against the outgoing president.

The FBI investigation, meanwhile, is now said to have expanded to include the 2018 and 2022 bid process, while other reports have indicated misgivings about the award of 1998, 2006 and WRXUQDPHQWV 6FDOD FRQĂ€UPHG in an interview with Swiss newspaper Sonntagszeitung on 7th June that the award of the next two tournaments could be rescinded in the light of “evidence that the awards to Qatar and Russia came only because of bought votesâ€?.

But, he added: “This evidence has not yet been brought forth.�

In another separate development in the days after Blatter’s announcement John Delaney, the president of the Football Association of Ireland (FAI), revealed that Fifa had paid the FAI a ₏5 million settlement to prevent legal action over the Republic of Ireland’s defeat in a qualifying play-off for the 2010 World Cup. The Irish were eliminated following a 2-1 defeat to France in Paris with the second goal, scored by William Gallas, coming after a clear handball by French striker Thierry Henry.

A further embarrassment came later in June with the US opening of the Fifa cinematic history, United Passions. Fifa reportedly contributed close to US$25 million of the project’s budget of just XQGHU 86 PLOOLRQ 7KH ÀOP KDG premiered at the Cannes Film Festival before last year’s World Cup but had SUHYLRXVO\ VWUXJJOHG WR ÀQG GLVWULEXWRUV LQ key markets for reasons that would soon become clear. Despite the presence of a hitherto respected cast – with Gerard Depardieu playing World Cup inaugurator Jules Rimet, Sam Neill appearing as João Havelange and Tim Roth portraying Sepp Blatter – reviews were almost uniformly

dire. Audiences stayed away, too, as the À OP WRRN 86 RQ LWV RSHQLQJ ZHHNHQG in America, and a record-low US$918 in total before being pulled from cinemas.

Another ongoing sideshow, which has entertained rather more viewers in the US and around the world, has seen the disgraced Warner become embroiled in a spat with the American-based but Britishborn comedian John Oliver, the presenter of HBO’s weekly satirical show Last Week 7RQLJKW 2OLYHU KDV EHHQ D SUROLĂ€ F FULWLF RI Fifa and in June turned his attentions to Warner, even buying airtime on Trinidad and Tobago’s TV6 to call the 72-year-old’s bluff on threats to expose further evidence of corruption. Warner, in turn, issued a rambling monologue on YouTube, set to a dramatic score, decrying the intervention of a “comedian foolâ€? and adding: “It is really incomprehensible how a local TV station, a national TV station, could allow a foreigner, most of all an American foreigner, to come into this country, to embarrass its citizens, to embarrass our people.â€?

The episode may have no material importance but it has illustrated the GLIÀ FXOW\ )LID KDV LQ EUHDNLQJ FOHDU RI LWV SDVW DQG LQ FRQWUROOLQJ WKH SURÀ OH RI À JXUHV OLNH :DUQHU +LV UHVLJQDWLRQ IURP all soccer administration in the wake of Mohammed Bin Hammam’s tainted 2011 presidential bid has done little to diminish interest in him – or eradicate his PDQ\ KLVWRULF OLQNV WR VHQLRU RIÀ FLDOV DQG initiatives throughout the soccer world.

The increasingly toxic nature of the Fifa brand has led to inevitable questions about the viability of its sponsorship programme, with the carefully worded statements of public relations departments being heavily scrutinised in the days either side of the election and Blatter’s resignation. That has become a popular media pastime in recent years in the wake of scandals surrounding not only Fifa’s ethical transgressions but also concerns over the plight of migrant workers in Qatar and the foreign and domestic policies pursued by Vladimir Putin’s Russia.

Patrick Nally, the founder of the West Nally agency who was one of the architects of Fifa’s commercial revival in the 1970s, was circumspect about the prospect of sponsor desertion in an interview with the Financial Times. “Broadcasters and sponsors are not going to be dissuaded from supporting the

US Attorney General Loretta Lynch is heading up the Department of Justice’s investigation into Fifa

World Cup, a massive global event, which will go on and on,� he said.

Former International Olympic Committee (IOC) marketing director Michael Payne has also noted a tendency to focus too greatly on Fifa’s sponsors. “Technically, Fifa can survive without sponsorship revenue without too much trouble,� he told World Football Insider. “The broadcast media revenue is so big.

The media is all focused on the sponsors VD\LQJ WKH\ FRQWURO DQG LQà XHQFH EXW WKH sponsor revenue is less than 25 per cent.�

Payne, whose tenure at the IOC included the organisation’s rebound from the scandal surrounding the Salt Lake City bid for the 2002 winter Olympics, also suggested that sponsors were being held to a different standard from other Fifa stakeholders. ´7KH VHFRQG LVVXH ZKLFK , Ă€ QG somewhat hypocritical, is looking at all of the politicians, jumping on the bandwagon saying that Fifa must change, without in any way wanting to condone or defend the practices that have taken place,â€? he argued. “Those same politicians don’t think twice about using billion-dollar trade UXOHV WR LQĂ XHQFH YRWHV IRU PDMRU HYHQWV Look at the billion-dollar deals the French government was striking with Qatar in the days before the vote. “There are a few other issues that need to be looked at as to how votes are SXUFKDVHG DQG LQĂ XHQFHG Âľ Fifa made US$5.7 billion in the four years leading up to the 2014 World Cup in Brazil, US$1.6 billion of which came from sponsors. US$2.4 billion came

from broadcast revenues. The value of World Cup rights is such that US broadcaster Fox was persuaded to drop its objections to a Qatar tournament in the northern hemisphere winter – in a period which would clash with the National Football League (NFL) season – by an extension of its new deal until after the 2026 competition.

Sponsors’ reactions to Fifa’s declining reputation have differed, with global partners Sony and Emirates among those to have chosen not to renew partnerships at the end of 2014. “When unsavoury allegations, such as corruption, are targeted at federations, clubs or individuals within the context of sports sponsorships, more risk-averse sponsors will often swiftly distance themselves in an attempt to protect their reputation and brand,â€? explains Alex Kelham, managing associate in the sports JURXS DW /RQGRQ EDVHG ODZ Ă€ UP /HZLV Silkin. “Fifa has not been immune to this in the past, with Sony indicating that it won’t be renewing its UKÂŁ178 million sponsorship deal. It is unsurprising therefore that the dawn raids led to speculation about the tenability of Fifa’s key sponsorship agreements. “The majority of large sponsorship agreements now include a ‘morality’ or ‘good citizen’ clause that allows the sponsor, and in some cases the rights holder, to end the partnership if they feel the sponsorship is dragging them through the proverbial mud. But while some sponsors may have a legal right to cut ties, actually exercising that right is a big commercial decision. Sports SportsPro Magazine | 39

INSIGHT | SOCCER

sponsorship deals remain lucrative and extremely sought after. The Fifa scandal illustrates that while tarnished individuals may come and go, the passion for and popularity of the sport, which is what the sponsors wish to associate with, will remain strong. As a result, it may be well worth riding out the turbulence.”

Kelham points out that Blatter’s popularity in many emerging markets, as well as the lesser coverage the corruption story received outside Europe and the Americas, will have persuaded some

partners to take a more pragmatic view.

“The potential for negative association rubbing off on sponsors would have had been far less in emerging markets, such as Africa, where support for Sepp Blatter remained strong,” she adds. “On the other hand, utilising a morality clause and pulling out of a sponsorship agreement might be the business savvy decision for a brand looking to present itself as a moral leader or, perhaps cynically, for a sponsor which was looking for a way out anyway.”

For those sponsors who have remained

Timeline 2nd June: Blatter announces intention to resign as president, pending assembly of extraordinary Fifa congress.

3rd June: FBI confirms its investigation is to be expanded to include campaign for 2018 and 2022 World Cups.

26th May: Fifa officials and sports marketing executives arrested on corruption charges in dawn raids at Baur au Lac hotel in Zurich, facing extradition to the US at the request of the FBI. Swiss police confirm investigation into awards of 2018 and 2022 Fifa World Cups.

28th May: Fifa congress opens as scheduled.

29th May: Sepp Blatter re-elected for fifth term as president of Fifa, winning 133 votes to 73 secured by rival Prince Ali of Jordan.

1st June: Fifa ethics committee suspends Concacaf general secretary Enrique Sanz and Congolese Football Association (Fecafoot) officials Jean Guy Blaise Mayolas and Badji Mombo Wantete.

New York Times report connects Fifa general secretary Jérôme Valcke with US$10 million payment from South African Football Association to Jack Warner in 2008, which is alleged to have been a bribe. Report is corroborated by letter addressed to Valcke obtained by Press Association’s Martyn Ziegler.

40 | www.sportspromedia.com

10th June: Fifa confirms decision to suspend voting process for 2026 World Cup. Valcke admits to authorising US$10 million payment but denies any wrongdoing.

Swiss police retrieve IT data from Fifa headquarters in Zurich.

11th June: Walter De Gregorio leaves role as Fifa director of communications and public affairs.

15th June: Fifa issues statement dismissing claims of former Blatter adviser Klaus Stoehlker that its president could go back on his decision to resign.

20th July: Fifa executive committee meeting to be held in Zurich to confirm date of elective congress.

16th December: Likely date of extraordinary elective congress to choose new president.

Jérôme Valcke remains as general secretary

in place, the departure of Blatter could now provide an opportunity to be part of a more positive story. “The sponsors can now position themselves as companies ready to help Fifa reform and, provided they aren’t themselves implicated as further wrongdoings come to light, the value of their investment may just have increased,” suggests Kelham. “It seems they were right to weather the storm, although increased scrutiny of Qatar 2022 could mean it’s not all plain sailing.”

While Fifa’s commercial associates may have been persuaded to wait out the scandal, others have been less forgiving.

Interpol received a €20 million gift from Fifa in 2011 at the outset of a ten-year collaboration to combat corruption but it will return around a quarter of that sum – the €3 million as yet unspent from the €11 million received so far – after suspending the partnership. In a move which will be seen as personally damaging to Blatter – who is believed to covet the Nobel Peace Prize for his efforts in fostering football development and furthering dialogue between the likes of the Israeli and Palestinian soccer bodies ² WKH 1REHO 3HDFH &HQWHU DOVR FRQÀ UPHG it would terminate its association with the Fifa ‘Handshake for Peace’ initiative.

In the period before he makes way for a successor, Blatter expects to lead the process of reforming Fifa, making WKDW KLV À QDO OHJDF\ UDWKHU WKDQ WKH FKDRV of recent weeks. In a statement given after a meeting with Scala in Zurich on 4th June, he said: “I am pleased to take advice and guidance from Mr Scala. I want a comprehensive programme of reform and I am very aware that only the Fifa Congress can pass these reforms.

Furthermore, the executive committee has a particular duty to share the

responsibility of driving this process.” An image shared on social media also showed Blatter, pen in hand, revealing that he was ‘working hard on reforms’.

He is also still expecting to make a trip to the Fifa Women’s World Cup in Canada, though Valcke has cancelled a planned visit.

The Blatter era has been pockmarked by reports of corruption. Two executive committee members – Amos Adamu and Reynald Temarii – were suspended ahead of the vote on the 2018 and 2022 World Cups. Presidential rival Mohammed Bin Hammam was expelled from Fifa and given a life ban in 2011. The 2001 collapse of marketing partner International Sport and Leisure (ISL) brought Fifa to its knees; the later discovery that it had been SD\LQJ EULEHV WR )LID RIÀFLDOV LQFOXGLQJ then-president João Havelange, during Blatter’s time as general secretary but without his apparent knowledge, led the authors of an internal 2013 report to describe Blatter as ‘clumsy’.

Yet such has been Blatter’s resilience that Scala and Fifa were both moved to dismiss the suggestion of Zurichbased communications consultant Klaus Stöhlker – who advised Blatter on his Fifa presidential campaign – that his resignation could be overturned due to support from Africa and Asia.

Though he has made his decision to step down, support for Blatter lingers in pockets throughout the world of soccer.

This is largely the result of a reputation for delivering development funds that has grown almost in parallel with innuendo about high-level corruption. %ODWWHU ZDV ÀUVW HOHFWHG WR WKH )LID presidency in 1998 when he defeated Lennart Johansson, the Uefa president of the day, to succeed João Havelange.

Before then, he served as the body’s general secretary, a role he took on in 1981 having joined as technical director in 1975. Havelange succeeded England’s Sir Stanley Rous as president after courting the support of emerging soccer nations that had been neglected in previous years, and despite enduring his own allegations of serious corruption, he and Blatter are credited by supporters with turning Fifa into a truly global organisation.

It is unclear, as yet, whether Blatter will have the time and the clout remaining to allow a preferred successor to emerge from the pack ahead of the election. Nonetheless,

The arrests

Jack Warner, Eugenio Figueredo and Jeffrey Webb have all been implicated in the scandal

ARRESTED AT BAUR AU LAC

OTHER ARRESTS

Jeffrey Webb – president of Concacaf, Fifa vice president

Jack Warner, the former Concacaf president and Fifa vice president, surrendered himself to police in Trinidad and Tobago.

Eduardo Li – president of Costa Rica Football Federation (Fedefut), memberelect of Fifa executive committee Eugenio Figueredo – Fifa vice president and executive committee member, former president of South American confederation Conmebol Julio Rocha – Fifa development officer Rafael Esquivel – president of the Venezuelan Football Federation José Maria Marin – former president of the Brazilian Football Confederation (CBF) Costas Takkas – attaché to Jeffrey Webb Alejandro Burzaco – controlling principal of Argentinian sports marketing firm Torneos y Competencias SA Aaron Davidson – president of Traffic Sports USA, chairman of the board of governors of the North American Soccer League (NASL) Hugo and Mariano Jinkis – controlling principals of Argentinian sports marketing firm Full Play Group SA

it is likely that any debate over the future of Fifa will once again be characterised, however accurately, as being between the Eurocentric and globally minded.

Nicolas Leoz, the president of Conmebol until 2013 and a former member of the Fifa executive committee, was placed under house arrest in Paraguay.

Former Concacaf general secretary Chuck Blazer, who was arrested and pleaded guilty to a ten-count indictment in 2013, entered into a plea bargain with the American authorities. This included acting as an informant to the FBI and agreeing to pay a fine of at least US$2.5 million, in addition to back taxes he owed, with penalties.

Jose Hawila, the founder of Traffic Sports, also pleaded guilty after a prior arrest and agreed to forfeit US$151 million.

Brazil’s Federal Police have asked prosecutors to indict Ricardo Teixeira, the former CBF president and Fifa executive committee member, on charges of money laundering and tax evasion, alongside former FC Barcelona president Sandro Rosell.

Job titles current as of time of arrest. Several individuals have since been replaced in their roles.

Before that happens, however, there may be more to come in this crisis that plenty had foreseen but that still caught so many unprepared.

SportsPro Magazine | 41