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FIFA Inquiry Yields Indictments; U.S. Officials Vow to Pursue More FIFA Inquiry Yields Indictments; U.S. Officials Vow to Pursue More
(about 5 hours later)
United States law enforcement officials declared in forceful terms on Wednesday that their broad investigation of FIFA had only begun and pledged to rid the international soccer organization of systemic corruption. With billions of dollars at stake, Morocco, Egypt and South Africa jockeyed in 2004 for the privilege of hosting soccer’s most prestigious tournament, the World Cup. The outcome hinged on a decision by the executive committee of FIFA, soccer’s governing body, and a single vote could tip the decision.
The Justice Department, F.B.I. and I.R.S. described soccer’s governing body in terms normally reserved for Mafia families and drug cartels, saying that top officials treated FIFA business decisions as chits to be traded for personal wealth. One soccer official took in more than $10 million in bribes, Attorney General Loretta E. Lynch said. And at least one vote, prosecutors said Wednesday, was for sale.
The schemes involving the fraud included the selection of South Africa as the host of the 2010 World Cup; the 2011 FIFA presidential elections; and several sports-marketing deals. Jack Warner, a committee member from Trinidad and Tobago, shopped his ballot to the highest bidder, federal prosecutors said. In early 2004, he flew to Morocco, where a member of that country’s bid committee offered him $1 million. But South Africa had a sweeter deal, offering $10 million to a group that Mr. Warner controlled, prosecutors said. He voted for South Africa. South Africa got the World Cup. And Mr. Warner got his $10 million payout, much of which prosecutors said he diverted for his personal use.
“These individuals and organizations engaged in bribery to decide who would televise games, where the games would be held, and who would run the organization overseeing organized soccer worldwide,” said Ms. Lynch, who supervised the investigation from its earliest stages. For decades, that was how business was done in international soccer, American officials said Wednesday as they announced a sweeping indictment against 14 soccer officials and marketing executives that they said corrupted the sport through two decades of shadowy dealing and $150 million in bribes. Authorities described international soccer in terms normally reserved for Mafia families or drug cartels, and brought charges under racketeering laws usually applied to such criminal organizations.
The Department of Justice indictment names 14 people on charges including racketeering, wire fraud and money laundering conspiracy. In addition to senior soccer officials, the indictment also named sports-marketing executives from the United States and South America who are accused of paying more than $150 million in bribes and kickbacks in exchange for media deals associated with major soccer tournaments. Hours after Swiss authorities arrived unannounced at a Zurich hotel and arrested top FIFA officials early Wednesday morning, the Justice Department and prosecutors for the Eastern District of New York forcefully declared that their investigation had only just begun and pledged to rid the international soccer organization of systemic corruption.
The soccer officials charged are Eduardo Li, Jeffrey Webb, Eugenio Figueredo, Jack Warner, Julio Rocha, Costas Takkas, Rafael Esquivel, José Maria Marin and Nicolás Leoz. “These individuals and organizations engaged in bribery to decide who would televise games, where the games would be held, and who would run the organization overseeing organized soccer worldwide,” said Attorney General Loretta E. Lynch, who supervised the investigation from its earliest stages, when she was the United States attorney for the Eastern District of New York. “They did this over and over, year after year, tournament after tournament.”
The promise that the investigation would continue raised the specter of more arrests, but officials would not comment on whether they were investigating Sepp Blatter, the FIFA president and the man widely regarded as the most powerful person in sports. One federal law enforcement official said Mr. Blatter’s fate would “depend on where the investigation goes from here.” Soccer officials treated FIFA business decisions as chits to be traded for personal wealth, United States officials said.  Whether through convoluted financial deals or old-fashioned briefcases full of cash, people were expected to pay for access to FIFA’s river of money and publicity. The federal indictment lists 47 counts including bribery, fraud and money laundering.
“This is the beginning of our effort, not the end,” said Kelly T. Currie, acting United States attorney for the Eastern District of New York. Indeed, the indictment refers to 25 unnamed co-conspirators, from FIFA officials to a South Africa World Cup bid committee official. “We are looking into individuals and entities in a variety of countries,” said Mr. Currie, who noted that the investigation would also look at financial institutions that handled the tainted money to see if they knew of the fraud. Despite the broad nature of the charges, the case itself arrived at the Justice Department as something of a surprise. The four-year F.B.I. investigation grew out of an unrelated inquiry into aspects of Russian organized crime by the Eurasian Joint Organized Crime Task Force in the F.B.I.’s New York office, according to people with knowledge of the case’s origins. Authorities soon realized the potential scope of an investigation into the sporting world’s most powerful, secretive organization.
The government is pursuing a “very aggressive prosecutorial response in order to change behavior,” James B. Comey, director of the FBI, said. “Once we really began to peel back the layers of the investigation,” it became clear that corruption had been rampant for years, Ms. Lynch, who was the top federal prosecutor in Brooklyn at the time, recalled in a telephone interview. “We always knew it was going to be a very large case.”
Some of the payments were funneled through intricate schemes. After committing fraud, bribery and money laundering, prosecutors wrote, defendants covered up those payments in various ways: 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.” Though many of the charges revolve around activities that occurred abroad, Ms. Lynch said she never had qualms about bringing charges in the United States. United States law allows for extradition and prosecution of foreign nationals under a number of statutes, and court documents say that the activity affected interstate and foreign commerce, and took place in part in New York’s Eastern District.
And some payments were old-fashioned bribes, like one involving South Africa’s bid for the 2010 World Cup. Mr. Warner, then a member of the FIFA executive committee, directed an associate to fly to Paris, accept a briefcase full of cash in $10,000 stacks from a South African bid committee member in a hotel room, and return the briefcase to Mr. Warner in Trinidad. Ms. Lynch compared the FIFA investigation to cases involving Mafia members in Rome or Sicily. In this case, she said, FIFA officials used the American banking system as part of their scheme. “They clearly thought the U.S. was a safe financial haven for them,” she said.
Later, a Moroccan bid committee member offered Mr. Warner $1 million in exchange for his vote, but that person was outmaneuvered: the South African bid committee had arranged a $10 million bribe in exchange for the votes of Mr. Warner and two co-conspirators on South Africa’s behalf. All three ultimately voted for South Africa, the indictment says. FIFA has been dogged by accusations of corruption for years, but the organization and its top officials typically avoided any punishment. That has been especially true for Sepp Blatter, the organization’s longtime president who is widely regarded as the most powerful man in sports. Mr. Blatter was not named in the federal indictment, and after FIFA provisionally suspended the officials who were named, he issued a statement saying the investigations would make the sport stronger.
The plan involving the 2011 FIFA election also involved Mr. Warner. An unnamed co-conspirator, identified as “a high-ranking official at FIFA and AFC” who was running for FIFA president, reached out to Mr. Warner. The co-conspirator said he wanted to address soccer officials about his candidacy, and asked Mr. Warner to assemble those officials. The co-conspirator wired Mr. Warner $363,537.98. But American authorities were adamant that they were not finished. The indictment represented “the beginning of our effort, not the end,” said Kelly T. Currie, acting United States attorney for the Eastern District of New York. Neither he nor Ms. Lynch would comment on whether they were investigating Mr. Blatter. But one federal law enforcement official said Mr. Blatter’s fate would “depend on where the investigation goes from here.”
At a May 2011 meeting that Mr. Warner called with Caribbean Football Union officials at the Hyatt Regency in Trinidad, the co-conspirator addressed the officials, then Mr. Warner told officials to pick up a “gift” in a certain conference room. The gift was $40,000 in cash, delivered in envelopes. Some of the means used to hide the payments were intricate, the indictment says: using fake consulting contracts; sending money through associates working in the financial industry; creating shell companies in tax havens; hiding foreign bank accounts; using safe-deposit boxes; and “bulk cash smuggling,” prosecutors wrote.
The next morning, Mr. Warner called the C.F.U. officials to another meeting, angered that one of the C.F.U. officials had alerted Concacaf to the payments. “There are some people here who think they are more pious than thou,” he said. “If you’re pious, open a church, friends. Our business is our business.” Others were more straightforward. When FIFA was considering which country would host the 2006 World Cup, Mr. Warner sent a relative to a Paris hotel room to collect a briefcase filled with cash in $10,000 stacks from a South African bid-committee official, according to the indictment.
Even facilitating the bribes was lucrative: José Margulies, who ran two soccer broadcasting companies, helped funnel money between officials and those seeking officials’ favor. He covered up his payments, shredding papers, telling soccer officials to use accounts that were not in their own name, and using currency dealers to hide the payments. His was apparently a lucrative job: in 2014, he offered to handle a bribe for a sports-marketing company he had not worked with before. His charge for his services: $150,000 annual fee and a 2 percent commission per payment. In 2011, after an associate running for FIFA president paid Mr. Warner about $360,000, Mr. Warner arranged for the associate to give a stump speech to Caribbean soccer officials at a Hyatt Regency in Trinidad. When the speech concluded, Mr. Warner told the officials that a “gift” awaited them in a Hyatt conference room. The gift: envelopes containing $40,000 in cash from the associate, one for each of the member organizations.
Swiss authorities, working in conjunction with United States officials, conducted an extraordinary early-morning operation in Zurich on Wednesday to arrest several top soccer officials and extradite them to the United States on federal corruption charges. The day after the cash payments were distributed, Mr. Warner called the Caribbean officials to a meeting, angered that one of them had alerted a higher-up to the payments. “There are some people here who think they are more pious than thou. If you’re pious, open a church, friends. Our business is our business,” he said, according to the indictment. Even facilitating the bribes was lucrative: one man who helped funnel money between officials and those seeking officials’ favor said in 2014 that the charge for such services was a $150,000 annual fee and a 2 percent commission per payment.
As leaders of FIFA gathered for their annual meeting, more than a dozen plainclothes Swiss law enforcement officials arrived unannounced at the Baur au Lac hotel, an elegant five-star property with views of the Alps and Lake Zurich. They went to the front desk to get room numbers and then proceeded upstairs. Prosecutors built their case with help from a former FIFA executive and New York resident, Chuck Blazer, who secretly pleaded guilty in federal court in 2013. Mr. Blazer, who was close to Mr. Warner, forfeited $1.9 million when he entered his guilty plea and agreed to make a second payment at sentencing. Mr. Blazer’s lawyer, Eric Corngold, declined to comment.
The arrests were carried out peacefully. One FIFA official, Mr. Li, 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. Prosecutors also went after Mr. Warner’s sons, Daryan and Daryll , filing a case against them in 2012. In 2013, each son pled guilty: Daryll to wire fraud and illegally structuring financial transactions, and Daryan to the same structuring charge along with wire fraud and money laundering. Daryan forfeited $1.1 million and, like Mr. Blazer, agreed to make another payment at sentencing.
The charges, backed by an F.B.I. investigation, allege widespread corruption in FIFA over the past two decades, involving bids for World Cups as well as marketing and broadcast deals. José Hawilla, who owned an influential Brazilian sports-marketing group, pleaded guilty to racketeering conspiracy and other charges late last year, and agreed to pay $151 million. Each of those related cases was sealed until Wednesday.
Several hours after the soccer officials were apprehended at the hotel, Swiss authorities said that they had opened criminal cases related to the bids for the 2018 and 2022 World Cups — incidents that, more than any others, encapsulated FIFA’s unusual power dynamic. “In the course of said proceedings,” the Swiss officials said, “electronic data and documents were seized today at FIFA’s head office in Zurich.” In New York and Washington, it had been clear for many months that indictments were inevitable, two law enforcement officials said. The annual meeting in Zurich provided the perfect setting. Rather than seek warrants and extradition hearings in several countries, authorities could wait until most of the suspects were in one place. Federal investigators and career prosecutors proposed the time and location and, after international lawyers at the Justice Department worked out the details with the Swiss authorities, Ms. Lynch gave final approval, the officials said.
The arrests were a startling blow to FIFA, a multibillion-dollar organization that governs the world’s most popular sport but has been plagued by accusations of bribery for decades. The soccer officials charged are Jeffrey Webb, Eduardo Li, Eugenio Figueredo, Jack Warner, Julio Rocha, Costas Takkas, Rafael Esquivel, José Maria Marin and Nicolás Leoz.
The inquiry is also a major threat to Mr. Blatter, who has for years acted as a de facto head of state. Politicians, star players, national soccer officials and global corporations that want their brands attached to the sport have long genuflected before him.
An election, seemingly preordained to give Mr. Blatter a fifth term as president, is scheduled for Friday. A FIFA spokesman insisted at the news conference that Mr. Blatter was not involved in any alleged wrongdoing and that the election would go ahead as planned.
“FIFA welcomes actions that can help contribute to rooting out any wrongdoing in football,” the organization said in a statement.“FIFA welcomes actions that can help contribute to rooting out any wrongdoing in football,” the organization said in a statement.
Charges were also made against the sports-marketing executives Alejandro Burzaco, Aaron Davidson, Hugo Jinkis and Mariano Jinkis. Authorities also charged Margulies as an intermediary who facilitated illegal payments. Charges were also made against the sports-marketing executives Alejandro Burzaco, Aaron Davidson, Hugo Jinkis and Mariano Jinkis. Authorities also charged José Margulies as an intermediary who facilitated illegal payments.
The Justice Department built its case with help from a former FIFA executive, Chuck Blazer, who secretly pleaded guilty in federal court in 2013. Mr. Blazer forfeited $1.9 million when he entered his guilty plea and agreed to make a second payment at sentencing. It will most likely be months before the people arrested overseas will appear in Brooklyn federal court, given the length of normal extradition proceedings.
With more than $1.5 billion in reserves, FIFA is as much a global financial conglomerate as a sports organization. With countries around the world competing aggressively to win the bid to host the World Cup, Mr. Blatter has commanded the fealty of anyone who wanted a piece of that revenue stream. He and FIFA have weathered corruption controversies in the past, but none involved charges of federal crimes in United States court. While the 2018 World Cup in Russia and the 2022 World Cup in Qatar were not mentioned in the American charges, the Office of the Attorney General of Switzerland said Wednesday that it had opened a criminal investigation into how those hosts were selected.
United States law gives the Justice Department wide authority to bring cases against foreign nationals living abroad, an authority that prosecutors have used repeatedly in international terrorism cases. Those cases can hinge on the slightest connection to the United States, like the use of an American bank or Internet service provider. For Ms. Lynch, the announcement of the charges capping the long investigation was bittersweet. She was traveling in South Africa in 2010 when the country learned it would host the World Cup. Citizens were ecstatic with the hope that the world’s most famous soccer tournament would put South Africa back on the sporting map and bring the fractured nation together.
Switzerland’s treaty with the United States is unusual in that it gives Swiss authorities the power to refuse extradition for tax crimes, but on matters of general criminal law, the Swiss have agreed to turn people over for prosecution in American courts. “I remember that vividly,” she said. “To learn that was engendered by corruption was truly saddening.”
Critics of FIFA point to the lack of transparency regarding executive salaries and resource allocations for an organization that, by its own admission, had revenue of $5.7 billion from 2011 to 2014. Policy decisions are also often taken without debate or explanation, and a small group of officials — known as the executive committee — operates with outsize power. FIFA has for years functioned with little oversight and even less transparency. Alexandra Wrage, a governance consultant who once unsuccessfully attempted to help overhaul FIFA’s methods, labeled the organization “byzantine and impenetrable.”
Law enforcement officials said much of the inquiry involves Concacaf, one of the six regional confederations that compose FIFA. Concacaf — which stands for Confederation of North, Central America and Caribbean Association Football — includes major countries like the United States and Mexico, and also tiny ones like Barbados and Montserrat.
According to the indictment, several international soccer events were tainted by bribes and kickbacks involving media and marketing rights: World Cup qualifiers in the Concacaf region; the Gold Cup, a regional championship tournament; the Concacaf Champions League; the Copa América; and the South American club championship, the Copa Libertadores. The indictment also claims that bribes and kickbacks were found in connection with the selection of the host country for the 2010 World Cup.
Concacaf was led from 1990 to 2011 by Mr. Warner, the longtime head of Trinidad and Tobago’s federation. A key power broker in FIFA’s governing executive committee, Mr. Warner had been dogged by accusations of corruption. He was accused of illegally profiting from the resale of tickets to the 2006 World Cup and of withholding the bonuses of the Trinidad players who participated in that tournament.
Mr. Warner resigned his positions in FIFA, Concacaf and his national association in 2011 amid mounting evidence that he had been part of an attempt to buy the votes of Caribbean federation officials in the 2011 FIFA presidential election. A 2013 Concacaf report also found that he had received tens of millions of dollars in misappropriated funds.
But according to the rules of FIFA at the time, Mr. Warner’s resignation led to the immediate closure of all ethics committee cases against him. “The presumption of innocence is maintained,” FIFA said in a short statement announcing his departure.
Many critics found the bid process for the 2018 and 2022 World Cups to be flawed from the start: The decision to award two tournaments at once, they said, would invite vote-trading and other inducements. Since only the 24 members of the executive committee would decide on the hosts, persuading even a few of them might be enough to swing the vote.
Even before the vote took place, two committee members — Amos Adamu of Nigeria and Reynald Temarii of Tahiti — were suspended after an investigation by The Sunday Times caught both men on tape asking for payments in exchange for their support. It was later revealed by England’s bid chief that four ExCo members had solicited bribes from him for their votes; one asked for $2.5 million, while another, Nicolas Leoz of Paraguay, requested a knighthood.
As new accounts of bribery continued to emerge — a whistle-blower who worked for the Qatar bid team claimed that several African officials were paid $1.5 million each to support Qatar — FIFA in 2012 started an investigation of the bid process. It was led by a former United States attorney, Michael J. Garcia, who spent nearly two years compiling a report. That report, however, has never been made public; instead, the top judge on the ethics committee, the German Hans-Joachim Eckert, released a summary of the report. In it, he declared that while violations of the code of ethics had occurred, they had not affected the integrity of the vote.
Within hours, Mr. Garcia had criticized Mr. Eckert’s summary as incorrect and incomplete, charging that it contained “numerous materially incomplete and erroneous representations of the facts.” Nonetheless, FIFA moved quickly to embrace the report’s absolution of the bid process. Qatar World Cup officials said the review had upheld “the integrity and quality of our bid,” and Russia’s sports minister, Vitaly Mutko, told reporters, “I hope we will not have talk about this again.”
The issue was, in fact, raised again Wednesday. When pressed by reporters at the news conference, Walter de Gregorio, a FIFA spokesman, repeatedly said that FIFA would not consider reopening the bid process for the 2018 and 2022 World Cups.