They have Sepp's back.

Photographer: Alexandre Schneider/Getty Images

FIFA's Corporate Sponsors Abet Soccer's Corruption

Kavitha A. Davidson is a former Bloomberg View columnist.
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The hammer finally came down on FIFA, the world governing body of soccer that has been long been viewed as a morass of corruption. And it came from an unlikely place: the U.S. Department of Justice.

Early Wednesday morning, DOJ indicted 14 defendants on 47 counts including racketeering, wire fraud and money laundering. These include nine high-ranking FIFA officials and five sports-marketing executives accused of engaging in a system of bribery and back-door dealings to secure tournaments and marketing rights. It came as no surprise that the corruption allegedly reached as far as the World Cup bidding process.

According to Attorney General Loretta Lynch, who is leading the investigation, the conspiracy stretches back to 1991 and involves "two generations of soccer officials," including current FIFA vice president Jeffrey Webb, who is also the head of the North American soccer confederation, Concacaf. The most glaring omission? FIFA president Sepp Blatter.

Blatter is the head of the beast, and any real effort to reform FIFA and rid the association of its dirty dealings will be impossible with him around. There's little sign that will happen any time soon. Blatter is still pretty sure to win re-election in a vote scheduled to take place Friday, despite the fact that 80 percent of soccer fans want to see him gone.

But don't fret: Throughout Wednesday's announcements, DOJ has been careful to stress that its investigation is still underway. "I want to be clear: This is the beginning of our effort -- not the end," acting U.S. attorney Kelly Currie said in a press conference.

It's a common tactic in prosecuting white-collar crimes to parlay charges against high-ranking officials into testimony against even higher ones. That's partly how we ended up here; DOJ's investigation used the convictions and guilty pleas, sealed until now, of several officials to gain testimony against the 14 indicted. Perhaps the most important of these was Chuck Blazer, a former Concacaf general secretary who also owed the IRS millions in unpaid taxes. Don't be surprised if some of the 14 defendants start talking to shave some time off the maximum 20-year sentence that racketeering carries.

FIFA's response has been characteristically inert: The election will go on, and the association has stated that the investigation will have no effect on the 2018 World Cup in Russia and the 2022 tournament in Qatar. The association has actually tried to portray itself as the victim in all of this, stating in its media release and press conference that "FIFA is the injured party." It's not exactly news that FIFA is wholly incapable of policing itself; it was, after all, the organization's whitewashing of the report on corruption it commissioned from former U.S. attorney Michael Garcia that inspired the FBI to step up its investigation.

You might be wondering what exactly compelled the U.S., not a soccer powerhouse in itself, to go after FIFA in the first place. My colleague Noah Feldman breaks down the legal arguments, noting that the U.S. is essentially treating it as a criminal enterprise. It also makes some sense that a country with less emotional attachment to soccer would face fewer complications from its public and politicians in cracking down on the sport. (Think about how NFL officials pull on the heartstrings of football-loving citizens to get millions in stadium subsidies and stave off challenges to the league's monopolistic practices.)

And as DOJ officials stated in Wednesday's press conference, the conspiracy partly took place on U.S. soil, involved U.S. soccer officials and used U.S. banks and wire services to facilitate the illegal transactions. (DOJ has said that it will further look into the financial institutions to see "if they were cognizant" of their role in the bribery schemes.) The U.S. is a member of Concacaf, whose Miami headquarters were raided Wednesday as well. Several current and former members of the federation (and its South American sister organization) were indicted, including at least one U.S. citizen and one U.S. sports marketing executive. 

FIFA, an enterprise worth billions, has plenty of legitimate resources to fight off the corruption allegations -- some $400 million a year from sponsorship alone. So, as the U.S. government follows the money allegedly coming in through illegitimate channels, fans should follow the money FIFA gets from the corporate sponsors, which enables its unsavory business as usual. The deaths of thousands of migrant workers building World Cup stadiums and other rampant labor abuse have done little to move soccer's giant marketing partners -- including Visa, Coca-Cola and McDonald's -- so perhaps an international criminal investigation might do the trick. Adidas released a statement to Business Insider that, frankly, could have been written by FIFA itself, encouraging the association to maintain the same "standards of ethics and compliance" the shoe maker expects of itself. (Turns out, those standards might not actually be all that high.)

The silence from the other sponsors says as much as Adidas' statement doesn't: That the business of sponsoring global soccer still outweighs the bad press from FIFA's shenanigans. These companies are making a bet that the global fervor for the Beautiful Game is enough to withstand a legal fight with the American government.

That may be true -- soccer is probably too big to fail -- but FIFA might not be, at least not against its own corrupting power. According to a Transparency International poll of 35,000 people from 30 different countries, 69.2 percent of soccer fans have no faith in FIFA. In the last year, some big-name sponsors have started to take notice, with Emirates, Johnson & Johnson and Sony ending partnerships with Blatter's group. 

Shouldn't Adidas, Budweiser, Coca-Cola, Hyundai-Kia, McDonald's and Visa consider doing the same? Some companies found the gumption the speak up against the NFL, at least when it was politically and economically viable to do so. On the heels of the Ray Rice scandal, Adrian Peterson's child abuse case proved too much for even football-loving Americans to stomach, and forced many corporate sponsors, including Budweiser, McDonald's and Visa, to publicly denounce the NFL.

We should expect the same standard when it comes to FIFA. And it's up to us, the consumers, to make sure that while the government attempts to prevent it from benefiting from dirty money through American channels, it also can't benefit from "clean" money from U.S. companies.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Kavitha A. Davidson at kdavidson19@bloomberg.net

To contact the editor on this story:
Tobin Harshaw at tharshaw@bloomberg.net