U.S. Alleges ‘Rampant’ Corruption in Sweeping FIFA Probe

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Inside FIFA's Pervasive Corruption Charges

Read the full FIFA indictment here.

U.S. prosecutors plunged the World Cup’s governing body into crisis, charging nine officials with corruption as Europe’s largest soccer federation called for postponing this week’s FIFA election for president.

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See also: Text of Department of Justice press release

Earlier today, Swiss police entered the luxury Baur au Lac hotel in Zurich and arrested seven FIFA officials. Switzerland is probing whether anyone broke laws in awarding upcoming tournaments to Russia and Qatar. Two former soccer executives were also charged in New York, as were four sports marketing officials.

The Justice Department vowed more arrests in a widening probe of racketeering, wire fraud and money laundering.

“They were expected to uphold the rules that keep soccer honest, and protect the integrity of the game,” U.S. Attorney General Loretta Lynch said in a news conference. “Instead, they corrupted the business of worldwide soccer to serve their interests and enrich themselves.”

Related: A League of His Own - Sepp Blatter Profile

The probe casts a shadow on the leadership of the world’s most watched sporting event, with more than $1 billion in annual revenue and sponsors ranging from Coca-Cola Co. to Adidas AG. While the charges stop short of FIFA President Joseph “Sepp” Blatter, his future is suddenly unclear. Prosecutors are also looking into the role of the banking industry, and its handling of FIFA funds.

Blatter’s Response

Blatter said FIFA welcomes the investigations by the U.S. and Swiss authorities. He said FIFA triggered today’s action by Swiss authorities when it submitted a dossier late last year.

“Such misconduct has no place in football, and we will ensure that those who engage in it are put out of the game,” he said in the statement.

UEFA, European soccer’s governing body, called on FIFA to delay its election and congress scheduled for Friday. The executive committee said a vote could be held within the next six months. UEFA members are meeting Thursday and will decide on further steps, the group said in an e-mailed statement.

Blatter, 79, who has run FIFA since 1998, is seeking a fifth term in a vote scheduled for Friday.

“It would be absolutely the wrong signal if the agenda of the FIFA Congress were to be executed as planned,” said Reinhard Rauball, the president of Germany’s Bundesliga. “They can’t simply continue with business as usual. If these allegations turn out to be true, they would rock FIFA and the entire soccer world to the core.”

Corporate sponsors are increasingly wary as well.

“This lengthy controversy has tarnished the mission and ideals of the FIFA World Cup and we have repeatedly expressed our concerns about these serious allegations,” Atlanta-based Coca-Cola Co. said in a statement.

Guilty Pleas

U.S. prosecutors unsealed an indictment charging 14 people, as well as guilty pleas by four others that detail “rampant” corruption dating to 1991. Hours earlier, Swiss authorities arrested FIFA executives and searched the organization’s headquarters in a series of dawn raids in Zurich.

Swiss authorities later seized documents at FIFA’s nearby offices, saying they were examining possible crimes related to selecting Russia to host the 2018 World Cup and Qatar for 2022.

The defendants come from 11 nations. They include U.S. and South American executives who are alleged to have paid more than $150 million in bribes and kickbacks to obtain media and marketing rights to soccer tournaments.

The 162-page indictment spells out dozens of instances in which contracts were awarded in exchange for illicit payments. Corrupt payments from around the world sluiced through the U.S. banking system, according to prosecutors. As a result, prosecutors are examining banks as well, acting U.S. Attorney Kelly Currie told reporters in Brooklyn, New York.

The four-year investigation stemmed from an unrelated probe into Russian organized crime by a task force in the Federal Bureau of Investigation’s New York office, according to the New York Times, citing people familiar with the case.

Banking Institutions

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“Our investigation is going to look at a broad area of conduct,” Currie said. “A lot of the banking institutions and the ways these moneys were funneled passed through the U.S.”

FIFA generates more than 90 percent of its income from the quadrennial World Cup. The tournament brought in $4.15 billion of revenue in the four years culminating with the 2014 edition in Brazil.

The bribes and kickbacks were meant to influence the host of the 2010 World Cup, which was held in South Africa, the indictment said. Swiss authorities are investigating a criminal conspiracy related to the next two tournaments, awarded in a controversial vote in 2010.

Those charged include the current and former president of the confederation that oversees North and Central American soccer, Jeffrey Webb of the Cayman Islands, and Jack Warner of Trinidad and Tobago. The organization said it would cooperate with authorities and continue host upcoming tournaments, including the Gold Cup this summer in the U.S.

Cash Payments

They also include FIFA executive member Eugenio Figueredo of Uruguay and Jose Maria Marin, who led Brazil’s soccer federation during last year’s World Cup. Webb has been mentioned as an heir apparent by Blatter himself.

The indictment included details of cash payments to influence the outcome of the 2011 election for president of FIFA. Warner directed Caribbean Football Union officials to collect their “gift” -- each got an envelope with $40,000 in cash, according to the indictment.

When someone exposed the payments to soccer authorities, Warner grew angry.

“There are some people here who think they are more pious than thou,” Warner said. “If you’re pious, open a church, friends. Our business is our business.”

Scandal After Scandal

The investigations by the U.S. and Swiss promise to upend an organization that has endured one scandal after another under Blatter. FIFA said the presidential election, as well as the World Cups in Russia and Qatar, would take place as planned.

“This is not good in terms of image or reputation but in terms of cleaning up everything we did over the past four years, this is good,” FIFA’s chief spokesman, Walter De Gregorio, told reporters. He said the World Cups in Russia and Qatar would go ahead as planned.

Aside from nine current and former FIFA officials, four sports marketing executives also were indicted, along with an intermediary accused of facilitating illicit payments.

Prosecutors began collecting guilty pleas in sealed courtrooms in 2013, including two sons of Jack Warner and Charles “Chuck” Blazer, a former FIFA executive committee member. Blazer secretly recorded conversations while cooperating with prosecutors, the New York Daily News reported last year. Brazilian Jose Havilla, founder of sports marketing company Traffic Group, agreed to forfeit more than $151 million as part of a guilty plea, the Justice Department said.

Soccer and marketing firm officials took steps to hide their illegal activities by using sham consulting agreements, shell companies and intermediaries such as bankers, financial advisers and currency dealers, according to prosecutors.

The defendants also used bulk cash smuggling, safe deposit boxes, and real estate purchases to hide assets, the U.S. said.

Money Laundering

Investigators “exposed complex money laundering schemes” which included tens of millions of dollars in places like Hong Kong and the Cayman Islands, said Richard Weber, chief of criminal investigation for the Internal Revenue Service.

Six FIFA officials arrested in Zurich on Wednesday are contesting their extradition to the U.S., setting the stage for a legal battle.

For those contesting extradition the Swiss will ask the U.S. to submit a formal extradition requests within 40 days as provided by treaty. A seventh soccer official has indicated willingness to be extradited and may be handed over “immediately,” according to the statement.

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