The World Cup of Fraud

The Fédération Internationale de Football Association, better known as FIFA, is the world governing body for international soccer (or “football,” as it is referred outside of the U.S.). Soccer is the most popular sport in the world and is frequently described as “the beautiful game.” Unfortunately, behind the beautiful façade, there is an ugly foundation. The stench from this ugly foundation was exposed on May 27, 2015, when the U.S. Department of Justice (DOJ) announced the indictment of 14 high-ranking officials and corporate executives affiliated with FIFA. These individuals were charged for their roles in a decades-long scheme that corrupted the sport through bribes, kickbacks and other criminal activity aimed at controlling lucrative marketing rights to international tournaments, such as the World Cup. Related guilty pleas of an additional four individuals and two corporate defendants were unsealed as well on that same date. In coordination with the announced indictment and plea agreements, at the request of the DOJ, Switzerland arrested seven of the indicted FIFA officials at the Baur au Lac hotel in Zurich, Switzerland, on May 27, 2015. Those officials were in Zurich to attend the 65th FIFA Congress, which was scheduled to include the election of the president of FIFA.

FIFA is responsible for the organization of major international soccer tournaments. The World Cup—which takes place once every four years—is the most popular and lucrative sporting event held. During the run-up to each World Cup, there are regional qualifying tournaments to select the 32 nations whose national teams will compete in the tournament. At the May 27, 2015 DOJ news conference where the indictments were announced, Richard Weber, Chief of Internal Revenue Service Criminal Investigations, stated, “This is really the World Cup of fraud, and today we are issuing FIFA a red card.” Weber’s analogy of issuing FIFA a red card is interesting and symbolic. In the game of soccer, the issuance of a red card by the referee to a player results in the dismissal of the player from the match. It is the consequence for serious misconduct. Thus far, the criminal investigation being conducted by U.S. law enforcement has resulted in 20 red cards. It is likely that many more will follow.

Aftermath of the Indictment

Immediately following the announcement of the indictment, FIFA sent troubling mixed signals about the pervasive corruption allegations and the ongoing U.S. criminal investigation. On one hand, during a press conference, FIFA welcomed the investigation. On the other hand, FIFA President Sepp Blatter was highly critical of the DOJ for overstepping its bounds. Despite the seriousness, (the indictment covered more than a 20-year period of bribes taking place and the pervasiveness of the corruption), FIFA’s Congress reelected Blatter as president on May 29, 2015. Blatter’s reelection demonstrated FIFA’s culture of arrogance and indifference to corruption.

As a consequence of the U.S. investigation, many countries were assessing the situation and considering initiating their own investigations. Switzerland has initiated an investigation regarding allegations that bribes were paid for the awarding of the 2018 and 2022 World Cups to Russia and Qatar, respectively. As of July 13, 2015, the office of the Swiss attorney general announced it has received 81 suspicious activity reports (SARs) from the Money Laundering Reporting Office of Switzerland. The SARs were originated by Swiss banks and relate to the ongoing investigation into the awarding of the 2018 and 2022 World Cups. In addition, FIFA provided the Swiss attorney general with a report regarding allegations of bribery involving the awarding of the 2018 and 2022 World Cups. FIFA hired Michael Garcia, former U.S. attorney for the Southern District of New York, to investigate the allegations regarding the awarding of the 2018 and 2022 World Cups. FIFA had suppressed the Garcia report until turning it over to the Swiss attorney general.

In June 2015, the Financial Action Task Force (FATF) issued a statement about the alleged corruption and money laundering involving FIFA. FATF commented that it did not appear that financial institutions gave a sufficient amount of scrutiny to the financial activities of the officials involved. FATF also stated that financial institutions are required to take the necessary steps to determine, on a case-by-case basis, whether a customer is a high-risk customer.

Background Regarding FIFA

In order to understand the magnitude of the corruption problem, you must have a basic understanding about FIFA’s organizational structure and their serious ethical shortcomings. This is especially true for financial institutions in their efforts to accurately assess risk for customers—both individual and business—who are affiliated with FIFA.

FIFA was formed in 1904 and it is headquartered in Zurich, Switzerland. FIFA’s membership is now comprised of 203 national associations and six regional confederations. Member countries must each be members of one of the six regional confederations. Geographically, the confederations across the world cover Africa, Asia, Europe, North and Central America and the Caribbean, Oceania, and South America. FIFA’s supreme body is the FIFA Congress. It has 209 members, comprised of one member each from the 203 national associations and one member each from the six regional organizations. FIFA’s congress elects FIFA’s president and makes decisions on governance.

The president and general secretary are the main office holders of FIFA. They are responsible for the day-to-day operations of FIFA. They have a staff of approximately 280 members. FIFA also has committees, which include an executive committee, a finance committee, a disciplinary committee and a referees committee. The executive committee selects the World Cup host country and it is chaired by the president. The executive committee members include the president, eight vice presidents and 15 members.

Each of the six regional organizations select sites for their regional tournaments. FIFA and the regional confederations each award contracts to sports marketing companies to commercialize the media and marketing rights to various soccer events. These contracts are very lucrative and serve as the source for the bribes, kickbacks and money laundering. Compliance and ethical oversight of the contracting process was lacking. This resulted in the evolution of a culture rife in arrogance and corruption.

Assessment of the U.S. Indictment

What has not been specifically reported in media stories about the U.S. indictment is the fact that although all six regional confederations are named as part of a criminal enterprise, the U.S. indictment primarily focuses on only two of the six regional confederations. Those two confederations are the Confederation of North, Central American and Caribbean Association Football (CONCACAF), which covers North and Central America and the Caribbean; and the Confederación Sudamericana de Fútbol (CONMEBOL), which covers South America. It should be noted that these two confederations have direct connectivity with the U.S. The U.S. Soccer Association is a member of CONCACAF. The U.S. has a close relationship with CONMEBOL. In 2016, CONMEBOL and CONCACAF will participate together in a special edition of CONMEBOL’s annual Copa America Tournament; it will be the 100th anniversary tournament and will take place in the U.S. Both CONMEBOL and CONCACAF develop strategies about taking advantage of the U.S. economic marketplace. There have been those such as Blatter and Russian President Vladimir Putin who have criticized the U.S. for overstepping its authority. In assessing the indictment, the U.S. was focused, contained and justified in their actions.

The pattern of corrupt activity detailed in the indictment dates back to at least 1991. This clearly demonstrates both a lack of ethics and lack of a culture of compliance along with a disgraceful tone at the top within FIFA and its regional confederations. The indictment details the longevity of the corrupt activity. What was compelling is the fact that the patterns of corrupt activity that applied to CONCACAF officials and sports marketing companies was identical to the corrupt activity that was detailed involving CONMEBOL. Although the sports marketing companies were the same, the officials from CONCACAF and CONMEBOL were different. One would assume such officials would compartmentalize their bribe taking. Yet the patterns of requesting or demanding bribes were identical. Therefore, it is reasonable to assume that the other four FIFA regional confederations likely engaged in similar corrupt activities. This assertion is especially reasonable in consideration of the lack of ethical standards practiced by FIFA and regional confederation executives responsible for awarding contracts.

Bribery and Money Laundering Schemes

Typically, the sports marketing companies named in the indictment would negotiate with officials from CONCACAF and separately with officials from CONMEBOL for the rights to broadcast and market tournaments run by those associations. For example, one of CONCACAF’s major tournaments is the Gold Cup. One of CONMEBOL’s showcase tournaments is the Copa America. Invariably, the CONCACAF and CONMEBOL officials engaged in the negotiations would request or demand bribes in exchange for awarding singular or multiple events.

The money laundering aspects of the bribery schemes were consistently designed to avoid detection. During the layering stage of the money laundering process, intermediaries were used to insulate the soccer official receiving the bribe. The bribe payments flowed through legitimate front companies, which were usually associated with the sports marketing company paying the bribe. In some instances, shell companies were used. Ultimately, the funds were transferred to accounts controlled by the soccer officials. Money was routinely transferred by wire and many of the transactions flowed through correspondent banks.

The bribery schemes taking place through CONCACAF were not related to the schemes involving CONMEBOL. However, the identical pattern of activity took place in most bribe schemes involving the two regional confederations. Although the schemes were designed to avoid detection, the activity was blatant. Many of the bribe payments were made in round dollar amounts. In addition, there was open discussion about the bribes among individuals close to each bribery situation.

Ramifications to Financial Institutions

The criminal enterprise that was identified in the U.S. indictment relied on financial institutions to facilitate their criminal activity, to include laundering money. The indictment named at least 27 financial institutions that held conspirator accounts, had correspondent relationships and/or were used to wire funds in furtherance of illicit activity. The indictment did not name any of the financial institutions as being criminally culpable in the corruption scheme. However, during the press conference held on May 27, 2015, announcing the indictment, acting U.S. attorney for the Eastern District of New York, Kelly T. Currie, stated that the investigation would look at financial institutions that facilitated bribe payments, and money laundering would be assessed to see if the institutions were cognizant of the fraud. Subsequent to that, FATF commented that it did not appear that financial institutions gave a sufficient amount of scrutiny to the financial activities of the officials involved.

Financial institutions will inevitably be questioned about being complicit or failing to identify suspicious activity regarding the widespread FIFA corruption enterprise. The most compelling issue in this regard is: Were financial institutions or their employees complicit by wittingly laundering money in furtherance of the corruption scheme? In most instances, it will be found that financial institutions were unwitting participants.

This scandal is not going away. It will only escalate as the U.S. investigation expands and as investigations in other jurisdictions involving the other four FIFA confederations evolve and as the Swiss investigation in the awarding of the 2018 and 2022 World Cups gains momentum. As this process plays out, greater scrutiny will be placed on financial institutions. They will be assessed in regard to what they did, and more importantly, in what they are doing going forward.

Tone at the Top

Regarding ethics and tone at the top, FIFA leadership has been an absolute failure. Considering the long-standing allegations of corruption, FIFA has failed to take meaningful action because their leadership is either complicit, willfully blind or oblivious. Each conclusion is unacceptable and demonstrates a lack of accountability. In any case, FIFA’s leadership has consistently been arrogant and accommodating.

Until there is accountability and transparency regarding FIFA, the culture of noncompliance will be hard to overcome

Tone at the top sets the culture of ethics and compliance for an organization. FIFA has repeatedly disregarded or minimized ethics and compliance. That sends a terrible message to their constituency and explains why the culture of corruption was allowed to germinate and grow without interdiction at all levels within the FIFA structure. FIFA also lacks true transparency. Until there is accountability and transparency regarding FIFA, the culture of noncompliance will be hard to overcome.

FIFA superficially attempted to address corruption allegations about the awarding of the 2018 and 2022 World Cup competitions when they hired Garcia, a former and well-respected prosecutor, to investigate allegations of corruption in the awarding of those games. Garcia conducted a 19-month investigation. The investigation resulted in Garcia providing FIFA with a 350-page report articulating his findings. FIFA refused to release the Garcia report and reduced it to a statement stating that although there were ethics issues, there were no indications that the integrity of the vote selecting Russia and Qatar for the 2018 and 2022 World Cups, respectively, were affected. As a result, Garcia resigned and disavowed FIFA’s announced findings.

Blatter’s defiance, coupled with the FIFA Congress’ acceptance of poor ethics and indifference make their representations about dealing with the corruption problems absolutely disingenuous. For a minimum of 20 years—and probably many more years—corruption has been an accepted practice within FIFA. That type of culture will not change overnight or from within. It will be an incremental process that will require outside forces to truly influence change.

Factors to Cause Change Within FIFA

There are five outside forces that can push FIFA to make the cultural changes necessary to diminish the corrupt culture that has dominated FIFA for many years. Ultimately, it will take a combination of the five forces to effect meaningful change. The five pressure points are:

  1. The fan base
    • Soccer fans are extremely passionate and loyal to the game. The integrity of the game is incredibly important to them. If they send a grassroots message to FIFA that they will not tolerate activity like corruption that diminishes the integrity of the game, FIFA might notice and respond.
  2. Soccer officials and players
    • If officials within FIFA, regional organizations, national organizations and ultimately the players take a stand and state they will not tolerate corruption, FIFA might notice and respond.
  3. Sponsors
    • If sponsors truly demonstrate that they will not tolerate corruption and exit sponsorship relationships, FIFA will be more inclined to listen and respond. Money talks.
  4. Law enforcement
    • There are at least two substantive investigations ongoing involving FIFA. One is in the U.S. and the other is in Switzerland. It is extremely likely that investigations have been or will be initiated in various other countries. Indictments, convictions and more likely, asset forfeiture will serve as a deterrent going forward that will diminish corruption.
  5. Financial institutions
    • If financial institutions rate individuals or entities affiliated with FIFA as high-risk customers and as such, hold them to higher due diligence standards and more frequently question or deny transactional activity and/or exit customer relationships, such activity will serve as a deterrent.

One or all of the above outside factors will definitely affect the evolution of a real code of ethics and compliance within FIFA. At the end of the day, despite the fan base or player protestation, the potential loss of sponsorship money and the prospect of criminal action will be potential deterrents. However, the true deterrent will be financial institution relationships. Should financial institutions question, report or exit relationships, the outcome would not be favorable.


The pattern of bribery and money laundering activity was pervasive and carried out over many years. It is reasonable to assume that the rampant nature of this illicit activity was not limited to two regions but more likely took place in all six FIFA-related confederations. If FIFA and the bad guys who have used FIFA for corrupt purposes lose their ability to use financial institutions as a facilitation tool, they lose their ability to perpetuate their activity. Because of the propensity of corruption within the FIFA family, many FIFA affiliated executives and business partners deserve to be considered high risk, require much closer scrutiny and consequently be treated accordingly.

Dennis M. Lormel, CAMS, internationally recognized CTF expert, president & CEO, DML Associates LLC, Lansdowne, VA, USA,

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