Ex-Julius Baer Banker Said to Help U.S. in FIFA Laundering Probeby , , and
Jorge Arzuaga advised sports marketer who pleaded guilty
U.S. probing what bankers knew about movement of bribe money
U.S. authorities investigating corruption in world soccer have gained the cooperation of a Swiss banker, according to people familiar with the matter, leading their probe closer to financial institutions that prosecutors have said were used to move bribe money.
Helping prosecutors is Jorge Arzuaga, a former private banker to a sports marketing executive who admitted to bribing soccer officials, five people familiar with the matter said. Although the U.S. has already received assistance from soccer officials and sports marketers caught up in the scandal, Arzuaga is the first banker to emerge as a cooperator in the investigation into a decades-long scheme of bribery and kickbacks to influence the awarding of media and marketing rights to tournaments in the Americas.
Arzuaga worked for Julius Baer Group Ltd. and Credit Suisse Group AG. His clients included Alejandro Burzaco, a onetime Citigroup Inc. employee who later became one of the most powerful sports marketing executives in South America, according to the people. Burzaco pleaded guilty to money laundering, racketeering and wire fraud conspiracies, admitting he used several banks over almost a decade to launder bribes to soccer officials.
Investigations by U.S. and Swiss authorities have shaken the organizers of the quadrennial World Cup, the most-watched sporting event on the planet, and led to the ouster of longtime world soccer chief Sepp Blatter and other top soccer officials. Senior officers at Zurich-based FIFA, world soccer’s governing body, also took bribes for their votes on sites for the World Cup, prosecutors have found.
It’s unclear what information Arzuaga can provide to prosecutors. Attorneys for Arzuaga and Burzaco, as well as representatives of Julius Baer and Credit Suisse, declined to comment. Both banks have struck recent deals with prosecutors investigating other cases that require their cooperation on certain matters. FIFA has said it is cooperating with investigators.
U.S. authorities said in December that they had traced bribe money through bank accounts in at least 40 nations, and that they were expanding investigations of soccer officials, sports marketing companies and financial institutions that may have facilitated money laundering.
At least eight banks have said they received requests for information from authorities or began internal investigations about soccer payments, including Citigroup, UBS Group AG, HSBC Holdings Plc, Julius Baer and Credit Suisse. No banks have been accused of wrongdoing.
The actions of an individual banker could be held against a bank, or prosecutors could opt against charges if they conclude that the bank cooperated fully and has a strong compliance program, said Jennifer Arlen, a law professor at New York University.
“Every enormous financial institution is vulnerable to having employees violate the law in an isolated way,” Arlen said, speaking generally about legal compliance at banks. “By contrast, if prosecutors were to determine that multiple employees were engaged in this conduct and actively promoting criminal activity, prosecutors would take a much different approach.”
Regulators may also penalize banks for failing to adhere to required anti-money laundering controls, such as investigating and reporting suspicious transactions. Banks are supposed to know a customer’s source of funds, ask about the origin of money being wired, and inquire into the reason for transactions.
Arzuaga joined Julius Baer in 2013 and left last summer after an internal investigation into the bank’s role in the soccer bribes, according to two people familiar with the matter. He worked before that at Credit Suisse, where he also handled accounts for Burzaco, three people familiar with the matter said.
The authorities’ questioning of Arzuaga is one way they are exploring what bankers knew about how their clients may have been laundering money, these people said. Despite Arzuaga’s cooperation, prosecutors are considering criminal charges against him, the people said.
$200 Million in Bribes
Even though several former officials of FIFA have been implicated in the bribery schemes, U.S. prosecutors have depicted the group as the victim of the corruption scandal that removed most of its leadership. Prosecutors say soccer officials took nearly $200 million in bribes from sports marketing executives in the Americas seeking media and marketing rights to tournaments.
In the latest stage of the case, investigators are collecting banking records from around the world, a slow process involving mutual legal assistance treaties with countries like Switzerland. They are also pressing bankers like Arzuaga for information, along with many of the people who pleaded guilty, including Jose Margulies, a Brazilian middleman and former sports broadcasting executive, according to three other people familiar with the matter. Margulies admitted paying bribes for almost a quarter century.
In pleading guilty last November, Burzaco said he spent 15 years at Citigroup before becoming a sports marketing executive. In 2005, he bought a minority stake in Torneos y Competencias, a sports marketing company, where he continued the company’s pattern of bribing soccer officials, he admitted in court last November.
He became chief executive officer in October 2006, and he said his illicit payments continued until 2015. With his plea, Burzaco agreed to forfeit funds in 11 accounts, including at Julius Baer, Credit Suisse and three other banks.
Burzaco said he joined members of two other sports marketing companies in agreeing to pay tens of millions of dollars in bribes to soccer officials for the media rights to four tournaments, including the Copa America Centenario, a 32-game tournament to take place in 10 U.S. cities in June. The tournament was arranged after the payment of bribes to officials of the South American soccer organization Conmebol and the Confederation of North, Central American and Caribbean Association Football, known as Concacaf, he said. Both groups have said they are cooperating with prosecutors.
The U.S. indictment of Burzaco and others describes how the conspirators used an array of deceptions to conceal their movement of money, including “trusted intermediaries, bankers, financial advisers and currency dealers.” They used shell companies and numbered bank accounts in tax havens. They also structured financial transactions to avoid currency reporting requirements and engaged in bulk cash smuggling, according to the indictment.
The bank investigation is being handled jointly by the business and securities fraud unit in the Brooklyn U.S. attorney’s office and the Justice Department’s asset forfeiture and money laundering section. Nellin McIntosh, a spokeswoman for Brooklyn U.S. Attorney Robert Capers, declined to comment.
Julius Baer and Credit Suisse have separately settled U.S. criminal investigations into how they used Swiss accounts to help thousands of American clients hide billions of dollars in assets from tax authorities. In agreeing this year to pay $547 million, Julius Baer said it would disclose any violations of U.S. law to the Justice Department. Credit Suisse’s main banking subsidiary pleaded guilty to conspiring to help Americans evade taxes. It agreed to cooperate on tax matters and pay $2.6 billion.
Julius Baer, Switzerland’s third-largest wealth manager, made detailed admissions of wrongdoing, and prosecutors filed a conspiracy charge that they will drop in three years if the bank abides by the terms of the deal filed in federal court in Manhattan. Two of its client advisers, Daniela Casadei and Fabio Frazzetto, also pleaded guilty to conspiracy charges.