FIFA in crisis: Blatter stands firm as executives get nabbed
A chain is only as strong as its weakest link, or so the saying goes but this doesn't seem to hold any truth at the football governing body FIFA. And as the FBI arrests 14 officials, the man at the helm, Sepp Blatter, wins his fifth term as president. There is a lot to be said for someone who can walk out of this situation without any scratches and this biography is bound to be a leadership best seller. – SL
By Malcolm Moore and Kara Scannell, Source: Newspaper (30 May)
It is 9pm on a balmy Thursday night in Zurich and several of the most important men in world football are relaxing on the candlelit terrace of the Baur au Lac hotel.
There are smiles and nods as they acknowledge each other. There is no hint of concern over the dawn raid, a day earlier, that tumbled seven of their colleagues, all senior FIFA officials, out of bed and into detention for their alleged role in a sprawling bribery and corruption scandal.
Sitting in a corner is one of FIFA's most important power brokers in Asia: Sheikh Ahmad al-Fahad Al-Sabah, the pony-tailed Kuwaiti who used to head Opec, the oil cartel. Sheikh Ahmadis a strong supporter of Sepp Blatter, the embattled 79-year old Fifa president.
Beneath the terrace's giant parasol is Michel Platini, head of the European football federation, UEFA, dipping french fries into a small pot of ketchup. Earlier, he had publicly called for Mr Blatter to step down after an emergency meeting of top football officials. "After what happened recently, I think enough is enough," Mr Platini said.
Despite his loyalty to Mr Blatter, Sheikh Ahmad wanders over to say hello to Mr Platini and his dining companions, Şenes Erzik from Turkey and Marios Lefkaritis of Cyprus. At football's top table, politics is paramount.
But behind the smiles lay the fault lines that threaten FIFA, the money machine that runs world football. On one side are the countries seeking to preserve the status quo, many of them fromAsia, Africa and the Caribbean. They believe Mr Blatter – who has not been accused of any wrongdoing – can weather the latest scandal, just as he has weathered others over the years.
On the other are the Europeans and the US, who believe the corruption that runs through FIFA threatens its credibility and, more importantly, its future profitability. Not represented under the shade of the Baur au Lac's giant ginkgo tree are perhaps the most important voices: the sponsors and broadcasters. The likes of Coca-Cola, Adidas and McDonald's have poured billions into football and some are now worried that their investment is being tarnished by the allegations of corruption.
"We would not be here today without Coca-Cola," Mr Blatter said yesterday ahead of the vote that would determine whether he would win a sixth term as president. He added that it was football's "wedding" with television that had turned FIFA into a "major industrial and commercial activity".
For now, at least, the status quo is holding. Mr Blatter was re-elected yesterday as FIFA president after a challenge by Prince Ali bin al-Hussein of Jordan.
The 171-year-old Baur au Lac, a stately five-star hotel by the lake, is accustomed to hosting football's top brass. Its corridors have seen decades of FIFA lobbying and politics. Some say the controversial bids for the Russia and Qatar World Cups were decided in its suites. This week FIFA's top brass gathered here once again ahead of the congress – making it the perfect setting for the authorities to stage a raid.
On Wednesday at 6am, Swiss plainclothes police officers arrived at the front desk and proceeded to arrest seven of Fifa's most senior figures. Half an hour later, Jérôme Valcke, FIFA's general secretary, stood in the Baur au Lac's wood-panelled lobby with an ashen face. Other FIFA dignitaries were descending for breakfast, unaware of the drama.
The seven officials were split up by the police so they could not collude and were taken to different detention centres across Zurich. Hours after sleeping in the Baur au Lac's king-size beds, they found themselves in ordinary cells. One of the targets, Jeffrey Webb, a FIFA vice-president from the Cayman Islands, had chatted with the media just the day before about transparency in football.
As the men were being escorted into detention, a dozen or so representatives of the Office of the Attorney-general and Swiss police were arriving at FIFA headquarters in Sunny Hill, just outside Zurich, to carry out Operation Darwin. Two teams of computer experts followed. They spent all day at the offices, leaving in the late evening with a "substantial" haul of computer data.
The events shocked Fifa to its core. Even the Swiss newspapers, reliable supporters of the Zurich-based FIFA, attacked Mr Blatter on their front pages.
Just hours after the arrests, Loretta Lynch, the US attorney-general, announced the charges at a packed press conference in Brooklyn. Corruption within FIFA, she said, was "rampant, systemic and deep-rooted". And she made it clear that the investigation into corruption at FIFA was far from over.
The charges against 14 FIFA officials and sports marketing executives were sweeping: prosecutors allege that over two decades more than $150m in bribes were paid to FIFA officials to influence nine sports marketing contracts, the 2010 World Cup designation to South Africa and the 2011 Fifa presidential election.
The US investigation began in late December 2010, when FBI agents working on a New York-based joint Eurasian organised crime task force received information that shifted their attention to FIFA. Earlier that month, FIFA officials cast the vote to award the hosting of the 2018 World Cup tournament to Russia and the 2022 tournament to Qatar, decisions that drew worldwide protest. The precise link, if any, between the votes and the lead that piqued the FBI's interest is not yet known.
The next year, US investigators homed in on Chuck Blazer, the general secretary of CONCACAF until 2011 and America's representative on the FIFA board until he resigned in 2013. A trap was laid by Steven Berryman, an investigator with over 25 years of experience with the Internal Revenue Service's criminal investigation unit – and avid football fan. Mr Berryman opened a file on Mr Blazer, who was known for living an extravagant lifestyle that included private jets and an apartment in New York's Trump Tower which he kept largely for his cats.
"Based on his understanding of the sport and his experiences, [the agent] had enough reasonable suspicion that he should be looking closer at Blazer," Richard Weber, chief of the IRS's criminal investigation division, said.
The IRS's interest initially was whether Mr Blazer filed accurate tax returns from 2005 until 2010 – but then Mr Berryman learnt about the FBI investigation. The teams, one based in Los Angeles and the other in New York, joined up with prosecutors at the US attorney's office in the Eastern District of New York. At the time, Ms Lynch was the US attorney overseeing the Fifa inquiry.
At some point, Mr Blazer began co-operating with the US authorities, people familiar with the matter say. His lawyer did not return a call for comment. Mr Blazer stepped down from FIFA in 2013 and in November of that year secretly pleaded guilty to 10 criminal charges – including tax evasion and racketeering. Mr Blazer forfeited over $1.9m and agreed to pay a second amount to be determined when he is sentenced. The FBI-IRS team was also winning the co-operation of others inside the FIFA organisation. Daryl and Daryan Warner, the sons of Jack Warner, a former FIFA vice-president and ex-chief of Concacaf, also secretly pleaded guilty that year.
A turning point came in 2014. On May 1, Mr Webb, the FIFA executive committee member, and Eugenio Figueredo, the then head of the South American football governing organisation, sat in a press conference in Miami to announce a special Copa America tournament commemorating the South American football championship's 100th anniversary. "We will build 100 years of immortality," Mr Figueredo pledged.
Afterwards, the FBI secretly recorded three sports marketing officials discussing bribes allegedly paid to FIFA officials for the commercial rights.
Alejandro Burzaco, the head of a sports marketing business who was later charged in the scheme, was recorded saying: "All can get hurt because of this subject… All of us go to prison," according to the indictment.
The FBI agents who listened to the recordings could not believe what they were hearing. They had captured real-time conversations about a huge bribe taking place right then on US soil, a key link for their investigation and an invaluable piece of evidence, one of the people said. It would breathe life into a case looking into past bribes based heavily on informants and a paper trail.
In total, $110m in bribes were paid – nearly one-third of the $352.5m Copa America commercial contract – to FIFA officials, authorities allege.
A year later – and after months of debate – US authorities were ready to strike. The FIFA congress in Zurich was the perfect moment, they decided.
In the wake of the arrests, Mr Blatter warned that this may not be the end. "The next few months will not be easy. I am sure more bad news may follow," he told FIFA delegates.
And after five years of secret recordings and forensic financial investigation, some FIFA officials fear the FBI has enough material, and now enough people in custody, to start going after an even bigger target: Mr Blatter himself.
Copyright The Financial Times Limited 2015
(c) 2015 The Financial Times Limited