- Company not named in indictment but involved in 1996 contract
- 1996 soccer deal part of case against ex-Brazil Soccer head
Nike Inc. is once again defending a 1996 sports marketing contract in Brazil following new allegations by the U.S. Department of Justice that corrupt Brazilian soccer officials were paid bribes.
Nike said in a statement late Thursday that no company officials were aware of any kickbacks and that the sporting goods maker is cooperating with authorities. The statement was in response to an indictment unsealed Thursday where the Justice Department, led by Attorney General Loretta E. Lynch, has accused the former leader of the World Cup’s most winning national soccer program of getting kickbacks from an entity referred to as “Sportswear Company A” after signing a $160 million agreement.
Nike is the company that signed with Brazil’s national squad at the time of the agreement. The indictment says Sportswear Company A paid an additional $40 million to an affiliate of the firm that helped broker the deal, and half of that was transferred in kickbacks and bribes to former Brazil soccer president Ricardo Teixeira. He’s one of 16 new individuals named by U.S. prosecutors in an indictment Thursday that supersedes one issued in May against 14 others.
“There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme,” Nike said in the statement. “Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery.”
The details are part of a sprawling 236-page indictment that has once again shaken global soccer. Almost every national soccer federation in the Americas has now been directly affected, while global governing body FIFA is struggling to recover from the biggest crisis in its 111-year history. Nike had also sought to distance itself from allegations when they first surfaced in May.
The indictment renews focus on Nike’s sponsorship agreements following an inquiry in Kenya over a deal with the African country’s track and field federation. Three senior officials there were this week suspended by the sport’s global governing body over claims they subverted anti-doping procedures and allegedly embezzled funds from the endorsement deal with Nike.
“Nike’s expectation and understanding of our sponsorship agreement with Athletics Kenya has always been that funds are to be used to support and service the teams and athletes,” the company said. It’s cooperating with an investigation by Kenyan authorities.
Still, Nike’s global battle with Adidas AG for supremacy in the global soccer market is key to the fortunes of both companies. Winning the Brazilian sponsorship put Nike on the global soccer map. In 1994, its sales from soccer totaled $40 million. More than two decades later, it’s closing on soccer sector leader Adidas after earning $2.27 billion in fiscal year 2014.
The fallout from the U.S. investigation has now implicated the last three Brazilian soccer leaders. Jose Marin, who was president of soccer in the country during last year’s World Cup, was among the seven soccer leaders arrested in dawn raids on a posh Zurich hotel in May. Teixeira and Marin’s replacement Marco Polo del Nero were named in Thursday’s indictment. Del Nero, who hasn’t left Brazil since hurriedly returning to the country a day after the Zurich raid that nabbed Marin, announced he was taking a leave of absence shortly after the indictment was unsealed.