FIFA’s Faustian Bargain: Corruption for the Cup?

In a Road to Damascus twist, on Tuesday FIFA President Sepp Blatter asked the Swiss government to launch a criminal investigation into corruption related to Qatar being chosen to host the 2022 World Cup. This unprecedented move comes on the heels of a week of backlash to the FIFA Ethics Committee’s final conclusion on the Qatar question: “The potentially problematic facts and circumstances identified by the report concerning the Qatar 2022 bid were, all in all, not suited to compromise the integrity of the 2018/2022 bidding process as a whole.”  These “potentially problematic facts” include a swath of bribes (“improper payments”) paid by Mohamed bin Hamman, a chief supporter of the Qatari bid and former Asian Football Confederation president, which the report concludes were not directly related to securing the Cup, as well as payments by Qatari officials themselves, which made a “negative impression” but did not technically fall afoul of FIFA rules. The Committee’s decision was quickly and repeatedly slammed as a farce, and was followed by strong calls for the investigative report upon which it was based to be made public. Blatter adamantly refused to release the report, which made it all the more surprising when he seemed to go a step further by calling for the Swiss Office of the Attorney General to investigate. Should a criminal investigation proceed, not only would the government’s findings be made public, but corrupt FIFA officials would find themselves facing something entirely new: the pinch of handcuffs rather than a pinch to their finances.

While FIFA lodging the criminal complaint should be applauded, singing halleluiahs over Blatter’s conversion to the church of anticorruption would be a bit premature. In fact, this may be his most strategic move yet.

To understand the moves Blatter may be making, it would be helpful to say a word or two about the environment which has enabled FIFA to avoid accountability for its ethical lapses for so long. Until now, FIFA has been allowed to police itself. In the face of allegations of bribery and human rights abuses, it has been the organization’s own assessment of its actions that has determined whether those actions would be endorsed or punished. Two factors have been crucial to FIFA’s ability to shield itself from external oversight:

  1. FIFA is based in Switzerland, where until last year bribery of private individuals was not a criminal offense unless it resulted in unfair competition. Under the current law, private bribery may be investigated only upon the complaint of an injured party (though the Swiss Conseil Fédéral is calling for an amendment requiring private bribery be investigated ex officio).
  2. FIFA’s mandated relationship with its members (the national soccer associations) allows the organization to bully governments. FIFA regulations state that “each member shall manage its affairs independently and with no influence from third parties,” and FIFA quickly suspends any national soccer association whose government interferes with a national association’s affairs. The rule serves a legitimate purpose (think of how rulers such as StalinFranco and Saddam Hussein have manipulated their soccer teams for political aims), but is also used to keep governments from meddling in FIFA interests. In 2013, for example, the South African government was informed that any investigation into allegations of match-fixing in friendlies leading up to the 2010 World Cup would result in the South African national team being banned from participating in FIFA affiliated matches. This power imbalance created a culture in which FIFA fiats are unassailable and national soccer associations are more concerned with securing FIFA goodwill than adhering to national law. FIFA is of course not all-powerful. The organization is only able to bully countries without the political and economic clout to stand up to it; unfortunately, the majority of its members fall into this category.

FIFA has been able to set itself up as a semi-sovereign entity, bound (or not bound, as the case may be) by its own rules rather than those of the communities and countries in which it operates. Blatter calling for external oversight in the form of a criminal investigation undermines the entire system. Just to be clear, this is overall a very welcome move: it is good for anticorruption, good for FIFA, and good for every kid that dreams of playing the beautiful game on the world’s greatest stage. But, call me a cynic, I doubt Blatter filed the complaint for these reasons. More likely, FIFA’s fourth-term President has read the writing on the wall, and figured out how to use it to his advantage.

Only a week prior to the Ethics Committee releasing its decision on the Qatar question, the New York Daily News ran a front page scoop of an FBI investigation involving Chuck Blazer, former secretary general of CONCACAF, the governing soccer body for North America, Central America, and the Caribbean. The story, which was rife with the type of darkly comic details that beg to be incorporated in a Wes Anderson movie (wiretaps in keychains, a Trump Tower apartment for the exclusive use of unruly cats, a fleet of scooters used to buzz around New York), alleges that the FBI “flipped” Blazer three years ago. (In what was probably not the result of a high-speed chase, agents pulled Blazer over while he was whizzing down 5th Avenue on one of his scooters. When threatened with prosecution for failing to declare income from 1992-1998, during which period he oversaw the US hosting the 1994 World Cup, Blazer quickly agreed to become a cooperating witness in an investigation which allegedly links fraud and money laundering to the upper echelons of FIFA management.) According to the Daily News’ sources, the investigation—undertaken in cooperation with the US Attorney’s Office in the Eastern District of New York—already involves a grand jury.

The US investigation, coupled with the recently changed Swiss law mentioned above (a change which, the Swiss government noted, was motivated in large part by corruption within international sporting associations…cough, cough), indicates that external oversight was coming whether Blatter liked it or not. On Tuesday he embraced the change, which was a strategic move on his part for a few reasons:

  1. Only half of the 24 Executive Committee (Ex-Co) members who voted to award Qatar the tournament are still at FIFA (unsurprisingly, seven of the members who left did so due to allegations of corruption). Calling for the Swiss investigation now does not threaten Blatter’s support base as much as it would have a couple of years ago.
  2. It is unclear what the Swiss investigation will turn up. On one hand, the Swiss government can seize records and subpoena witnesses, whereas the FIFA internal investigation relied upon volunteered information. On the other hand, the bidding process was set up so that potential hosts were jetting around the globe courting Ex-Co members wherever they found them, a process that has been described as “an invitation to corruption and collusion.” To be successful, the Swiss investigation will require a good deal of cooperation from law enforcement in diverse jurisdictions.
  3. The reputational risk to FIFA is minimal. Unless the investigation turns up evidence of murder most foul, it will be pretty hard to make the organization look worse than it already does.

The three points listed above are gambles: Blatter is no doubt hoping they work out in FIFA’s favor, but there is a chance they will not. They are smart bets, however, because just taking the risk guarantees Blatter gets what he really wants.  Throughout this four-year scandal, the one point upon which he has never wavered is insisting that Qatar will host the tournament. By bringing in the Swiss, Blatter shifts the burden of informing the public and taking action to the government, letting FIFA keep its investigative report private. The Swiss investigation will take months or possibly years, which means months or possibly years before a justification for stripping Qatar of the tournament can be put forward. By that time, regardless of what the report says, it will be too late to move the Cup. Perversely, calling for a criminal investigation into corruption tainting how Qatar won the right host only makes it less likely that Qatar will lose that right.

Of course, regardless of any strategic scheming, moves to impose upon FIFA external oversight in the form of criminal investigations and prosecutions are positive developments and long overdue. But we must acknowledge the bargain Blatter is striking: a cleaner FIFA in exchange for a sacrificed Cup.

11 thoughts on “FIFA’s Faustian Bargain: Corruption for the Cup?

  1. Very nice analysis, Mel. Reminds me a bit of the old adage that if they’re running you out of town, you should get out in front and pretend that it’s a parade. A few questions:

    First, am I correct that Swiss (or US) investigators would be able to subpoena FIFA’s investigative reports?

    Second, I’m not sure I quite follow why the criminal investigation would let FIFA keep those reports private. Surely the same people who are trying to put political pressure on FIFA to release them could continue to do so, no? Is the idea that the investigation will give FIFA a convenient excuse — they can say, “Hey, look, we called for a criminal investigation, the authorities can look at the reports and see if there’s any wrongdoing, there’s no reason to air this all in public”? Could the folks pushing for transparency try to flip this on its head and say something like, “Even FIFA has acknowledged grounds for a criminal investigation, that’s all the more reason to know what these reports actually said”?

    Third, if the US authorities are also interested in pursuing FIFA for potential violations of US law, will the Swiss investigation complicate that or complement the US efforts? Is part of what’s going on here FIFA’s desire to have the Swiss, rather than the US, take the lead on the criminal investigation? Or does what happens with the Swiss investigation really have no direct bearing on how the US investigation proceeds?

    Finally, could you say more about the likely legal theories that the US in particular might use in a case like this? I’m curious both as to the crimes that might have been committed, and which individuals in the FIFA organization (current or former) ought to be sweating right now.

    • These are great questions, Matthew. Taking them in order:

      1. Yes, Swiss investigators can subpoena FIFA records, which would include the investigative reports. My assumption though, is that to protect the integrity of their investigation, they’ll keep the information private until they’re ready to bring charges.

      2. My argument is very close to what you’re saying. A little background: when the Ethics Committee (EC) decided to investigate the bidding process, they also decided to keep the results confidential as a means of encouraging people to speak with investigators. Blatter uses this to say that his hands are tied; given the EC promised confidentiality, he can’t after-the-fact make everything public. This is a red herring. FIFA can easily release the information in the report with redactions as necessary to protect confidentiality (which is exactly what Michael Garcia, FIFA’s own investigator, called for). By filing the complaint with the Swiss AG, Blatter’s not only able to make the argument you noted (‘if there’s anything wrong, the Swiss will find it so let’s trust them), he may also be able to go a step further and say, ‘Look, there’s a criminal investigation going on. We’ve given the reports to the government, we want to cooperate to the fullest, so we don’t want to make anything public that may compromise what the Swiss are up to/alert any potential wrongdoers to what’s coming). He won’t just be deflecting questions to the government, he’ll be hiding behind them. Those pushing for transparency can, and should, continue to call for the FIFA report’s release, but I don’t think the Swiss case really gives them much more oomph.

      3. US authorities won’t comment on their investigation, so my comments here are more speculative. That being said, my instinct is that Blatter’s probably not cherry-picking jurisdictions. First, it’s not clear that the Swiss and US are investigating the same things. The FIFA-Swiss complaint relates specifically to the information turned up in the internal investigation into the 2018/2022 bidding process, but we don’t know how broad or narrow the US investigation is. Blatter knows what’s in the report, so it’s possible he’s decided he’d rather have the Swiss get a first swipe, but a) the Swiss and US have incentives to work together, and there have been media calls for them to do so, which could lessen any advantages Blatter’s hoping to get and b) the Swiss investigation doesn’t stop the US from going forward (though, if they’re going after the same person and the Swiss bring a case first, the US would have to wait it’s turn). The really interesting thing is that Blatter’s move–should the Swiss bring a case–exposes himself to higher risk. He’s a Swiss national, and FIFA is based in Switzerland, so he cannot hide (whereas he can refuse to travel through the US, as Liz notes below).

      4. This will be even more speculative. The Daily News report indicated that the US investigation linked money laundering and fraud to high-level officials, but I don’t have much more than that to go on. American FIFA officials may be in trouble (as well as those who frequently travel through the US). I’m in over my head here, but if sponsors or other corporate affiliates are connected (which isn’t out of the realm of possibility, they’re the one’s who make money off of this), the FCPA could do quite a bit of work.

  2. Very interesting (and, for better or worse, entertaining), Melanie. Like Matthew, I am wondering if Blatter is trying to choose his executioner by bringing the Swiss investigators into the fold. Setting the consequences for FIFA aside for a moment, could he be trying to protect himself? It doesn’t sound like he’s been cooperative with the FBI and he hasn’t set foot in the U.S. in years, perhaps in an effort to avoid American authorities. On the other hand, his “voluntary” recourse to the Swiss investigation looks pretty good (well, as you argue, it looks inevitable but still cooperative on its face) and it could factor into a future settlement/plea deal. I suppose, to reiterate Matthew’s final comment, it depends on whether the investigation and potential prosecution reach as high as Blatter.

    I’m also curious about why Blatter is so wedded to Qatar as a venue. Initially, it seemed like he was sticking to his story – moving the event would effectively entail admitting to corruption. But what does he stand to gain from keeping the Cup in Qatar if the details of the tainted bidding process are going to come out anyway? Sure, FIFA will owe Qatar a lot of money if it reneges on its agreement but the organization isn’t short on cash (although the poor cats may have to downgrade apartments). Would simply choosing a different host country have spurred calls for investigations or would it have removed public pressure to launch them?

    • I touched on your first question a bit in my response to Matthew, but to tackle it head on: I don’t know.

      It’s possible he’s hoping to give the Swiss an edge, but there doesn’t seem to be a strong enough incentive. Assuming the Swiss government is taking this seriously (and I’ll give them the benefit of the doubt), they would have more of an incentive to cooperate with the US (sharing the info they discover and getting a peak at US evidence (the US has been investigating for at least three years already)) than in either shielding Blatter or trying to box out the US. Cooperation could lead to stronger evidence and ultimately harsher charges, even if Switzerland rather than the US gets to bring them. Also, the US and Switzerland have an extradition treaty. Assuming each country brings charges relating to separate offenses and that the first does not result in jail time, FIFA officials could conceivably face charges in both countries. A Senate Executive Report on the US-Swiss extradition treaty (link below), however, indicates that Switzerland is a bit hesitant to extradite, so if Blatter is really afraid, this could be a way of ensuring if the worst happens it happens in the land of neutrality and chocolate. The bigger question though, as you note, is whether any of this will actually reach Blatter specifically.

      Blatter’s commitment to Qatar is striking. Part of it is no doubt due to reasons you note (changing would be tantamount to admitting gross failure of the bidding process, FIFA would probably have to pay out a hefty fee, stadium construction has already begun, etc.) but, you’re right, that doesn’t seem to be enough. There is the ‘elephant in the room’ answer: someone is paying him to keep it in Qatar, but [disclaimer] I have no proof of that. At this point, though, I think ego is playing a pretty big role. Moving the Cup would have signaled the end of his reign. He’d see out his term, but wouldn’t get re-elected Blatter built up FIFA as we know it; it’s his life, and he’s fighting for it. ( also, his successor may not have any qualms with making public what went on during his reign, which could be a terrifying thought).

      I think switching the venue earlier would actually have quieted a lot of the scandal. Unfortunately, as I argued in an earlier post, this is getting so much press not because of the gross human rights violations, because Qatar is a bad choice from a sporting perspective, or because corruption was involved (FIFA and corruption have been bedfellows for decades), but because Qatar 2022 will lose a lot of money for a lot of people. It’s their interests that keep the scandal on the front pages, corruption happens to be their point of attack. If Blatter had agreed to move the Cup six months ago, the fallout would still be newsworthy, but it would be on human rights blogs and on the sports page rather than the front page.

  3. Great post, Mel! Informative, compelling, and (as Liz said) entertaining.

    I’ve been thinking a bit more about Garcia since your last FIFA post. If FIFA was going to spin his investigative report in such a way that it so diverged from the actual report that he felt the need to speak out, why did they hire him in the first place? Did they just expect him to stay silent/not be so hard-hitting? Is being able to cite to a report no one can read, even if that report’s creator says it is far harsher than FIFA says, sufficient cover that his criticisms don’t really matter to them?

    I’d also be curious to hear your answer to Liz’s question about why Blatter is still sticking to Qatar. Is it just a matter of pride/saving face at this point?

    • I’m with you on the Garcia question, Katie. He’s a former SDNY US Attorney with a strong reputation. It’s possible that they took a gamble which backfired. FIFA launched the investigation in response to concerns from their sponsors and the fact that their reputation was hovering somewhere between ‘the worst imaginable’ and ‘somewhere worse than that.’ Putting on my FIFA cap, if I wanted to placate sponsors (so need to seem like I’m taking this seriously) but want to be sure nothing comes out that I want to remain private, I’d get a strong lead, someone to be the face and voice of the report, and would then tie their hands as much as possible. This (sort of) lines up with what FIFA did (the restrictions would be the report’s confidentiality requirement, the fact that Garcia had to rely upon voluntary testimony and, due to an unrelated matter was not allowed into Russia). But I’ll admit this is an unsatisfactory explanation.

      Perhaps FIFA just didn’t think he would uncover whatever he did? Or maybe they figured regardless of what he learned he wouldn’t actually jump ship, especially in such a dramatic way. Garcia swung first. He gave Eckert the report and then, before Eckert had read through it all, Garcia called a press conference and made it very clear that despite the confidentiality requirement he thought the report should be made public. For a lawyer (bless us one and all), this is a pretty drastic move and perhaps just wasn’t within FIFA’s calculations.

      Here’s another option. FIFA officials could have been correct in their assessment of what Garcia would uncover, and perhaps–just as Eckert claimed–what he uncovered was evidence of ‘improper payments’ which made a ‘negative impression’ but which, by FIFA standards, were not technically out of bounds. FIFA could have wanted this all on paper as a means of due diligence. Maybe Garcia went rogue because he determined that 1) FIFA would read his report and conclude that everything was a-okay; 2) challenging this conclusion within the EC structure was pointless because, according to FIFA’s rules, nothing Garcia discovered technically did cross the FIFA line; 3) something in the report hints at something that would be sanctionable under a different set of rules (say, US or Swiss law). FIFA and Garcia would have been on the same page for points 1 and 2; it would not have been per-se crazy for FIFA to assume that its own investigator would adhere to it’s rules.

  4. Mel, as you probably remember, I’m a huge fan of your FIFA posts! This was delightful.

    And overall, I think your analysis is spot on — Blatter saw the writing on the wall and decided it was best to get out in front of things. It looks as if we’re finally seeing the perfect storm: widespread allegations of corruption at the core of FIFA operations, a turnover in leadership to new executive committee members who hopefully want to distance themselves from corruption, the emergence of the new Swiss anti-bribery law, and the initiation of a criminal investigation in the U.S. Of course, I think we’re missing the thing that would seal the deal on transforming FIFA — a truly disastrous Qatar World Cup — but hopefully these factors start a chain reaction.

    To really get things going, though, I think the U.S. and Swiss authorities will have to team up. I have a feeling, as both you and the commentators have suggested, that Blatter’s decision to alert Swiss authorities is self-interested. After all, if you’re going to have to get out in front of things, why not turn to the local prosecutor who is new to this type of case and who has never been all that cooperative with the foreign enforcement body that you’re most worried about?

    • Jordan, I think you’ve hit upon the biggest question in terms of the Swiss criminal complaint: that this is new. As you note, Switzerland has not historically been terribly cooperative with US enforcement authorities. The change in Swiss law, the fact that the Conseil Federal is agitating to make the law even stronger, and most especially the fact that these changes are in direct response to corruption within international sporting associations, implies that if there were ever a time to make a point, this is it. If we assume the Swiss government is serious (I do; despite the relish with which I discuss the muck and mire surrounding FIFA, I’m a pretty optimistic person), cooperation will be imperative. A huge part of the bidding and campaigning took place outside of Switzerland. Bidders flew around the world for months, stopping down wherever Ex-Co members happened to be working, playing, or taking advantage of their fleets of scooters. The only way an investigation into such a global process can be legitimate and also successful is through a team effort.

      That Blatter may be courting the Swiss authorities, is worrisome though, even if the Swiss turn out to be more willing to cooperate with other jurisdictions than usual. FIFA is a very wealthy body (it is a non-profit, so doesn’t pay taxes, but being located in Switzerland is still a financial gain for the country), and there are definite incentives that cut against coming down hard against the organization.

  5. Really great post Mel. I think you’re absolutely right that one of the reasons why FIFA has thus far been able to shield itself from external oversight is the fact that it is quite difficult for outside parties to put pressure on it to clean up its act (due in part to FIFA’s relationship with its members). While it’s clear that the US investigation seems to have created some impetus for change, it appears that all of the recent press about FIFA’s actions have also spurred some investors to begin to drop their sponsorship of this organization. (http://www.newsweek.com/sony-drops-fifa-sponsorship-amid-corruption-scandal-288443). Do you believe that there’s a chance that pressure from sponsors may also serve as a viable means of encouraging FIFA to change its ways or is it likely that, unless we see many more sponsors withdraw their support, that this will have little impact on FIFA’s actions?

    • That’s a tricky, but great point Lauren. I think that FIFA cares about the bottom line more than anything else (despite their non-profit status) so losing sponsors does hit them where it hurts. I think Sony (and earlier the Emirates Airline) dropping out definitely made FIFA take notice, and couldn’t have come at a worse time for them. The problem, though, is that being a FIFA sponsor is highly lucrative. Companies that can afford it, clamor for it. Sony and the Emirates have clearly decided that it’s not worth it, but as long as other large sponsors stick around (McDonalds, Addidas, Coca-Cola, etc.), FIFA can probably find another organization to replace those who drop out, because there’s clearly a shared confidence that it’s worth it. Having sponsors drop out may weaken FIFA’s bargaining position with new/potential sponsors, and so may nudge FIFA in the right direction, but until it really hits the organization’s pocketbook (perhaps through half of the sponsors dropping out, and poisoning the experience for others by making clear they did so for corruption or human rights reasons), I think it will be more of a thorn in their side, or a very delayed tool letting the organization know when it’s gone too far.

  6. Pingback: Gouvernance de la FIFA et obligation de rendre compte (1) - Blog éthique des affaires

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