The U.S. Indictments of FIFA’s Corrupt Officials Are Legally, Morally, and Politically Justified

For avid soccer fans and students of anticorruption, last week’s announcement that top FIFA officials had been indicted by U.S. authorities was not all that shocking. Commentators on this blog have been documenting FIFA’s collision course with the criminal justice system for some time now (see here, here, and here). But as American law comes to bear on the world’s most powerful sporting organization, it has caught the attention of millions. The reaction of many has been a wry “How fitting? The Americans going after soccer, and relying on tenuous legal reasoning to boot.”

Harvard Law School Professor Noah Feldman articulated the critique in a recent Bloomberg article, entitled “The U.S. is Treating FIFA Like the Mafia.” Feldman’s overarching point is that, while FIFA may be a problematic organization, the U.S. enforcement action reflects dubious politics more than genuine legal interest. Professor Feldman raises three main objections to the DOJ’s indictments–focused, respectively, on the law, policy, and politics of the indictments. First, with respect to the law, he casts doubt on the legal basis for prosecuting FIFA officials under the U.S. Racketeering Influenced and Corrupt Organizations Act (RICO), given that the alleged offenses occurred on foreign soil, and suggests more generally that the entire case is absurd because RICO is designed to go after organized criminal enterprises, not sporting organizations like FIFA (or groups within FIFA). Second, Professor Feldman contends that, as a matter of policy, even if the U.S. has a sound legal basis for prosecution, exercising its jurisdiction in this case is inappropriate due to the lack of a strong U.S. interest in misconduct within FIFA, given that the U.S. cares much less about soccer than most other countries do. Third, and related to the preceding point, Professor Feldman suggests that the political fallout from the indictments is likely to be damaging to the U.S. He argues that the underlying premise of the RICO action–that FIFA (or a group within FIFA) is a criminal enterprise–is “incendiary,” and will be viewed as an imperialistic power play by the United States against soccer’s true fan-base (a.k.a, the rest of the world).

In my view, Professor Feldman is wrong on the law, shortsighted about the scope of U.S. interests in the alleged criminal conduct, and overly pessimistic about the political repercussions of the U.S. action. If the facts alleged can be proven, the U.S. is legally, morally, and politically justified in treating the indicted FIFA officials as RICO offenders.

First, regarding the law: Contrary to Professor Feldman’s assertion, the primary issue in these cases is not whether RICO applies extraterritorially, but rather whether the criminal conduct was sufficiently domestic. With respect to the predicate acts in question – wire fraud and money laundering–it is pretty clear that RICO does not apply extraterritorially. In European Community v. RJR Nabisco, the case cited by Professor Feldman, the Second Circuit (the jurisdiction in which any future trials will occur) held that the law criminalizing wire fraud does not apply beyond U.S. borders, and anti-money laundering laws only do so if the perpetrator is an American citizen. However, as Professor Feldman acknowledges in passing, U.S. authorities may also have jurisdiction over extraterritorial acts if the illegal activity has an adequate nexus with the U.S. Indeed, RJR Nabisco ultimately held that U.S. authorities could pursue RICO claims for wire fraud and money laundering that occurred substantially abroad if the conduct had enough of an effect on the United States. Reich v. Lopez, a case in the Southern District of New York, elaborated on RJR Nabisco to find that domestic conduct sufficient to support a RICO claim for extraterritorial wire fraud and money laundering includes: transmitting messages and money transfers on U.S. communication networks, traveling from the U.S. to perpetrate a crime, plotting illegal activity from U.S. locations, sheltering ill-gotten gains in American banks and real-estate markets, and directing harm to American entities. If FIFA officials did indeed rig the 2022 World Cup bidding process, the U.S. wasted millions on a bid that was doomed from the start (bids cost roughly $45 million). The indictments indicate that such effects occurred.

As for Professor Feldman’s more general legal objection that RICO was not intended to go after organizations like FIFA, the argument appears to amount to little more than the assertion that FIFA officials cannot be prosecuted as members of a criminal enterprise because FIFA is almost certainly not a criminal enterprise. Moreover, Congress passed the RICO Act in the 1970s in order to counter the infiltration of legitimate enterprises by organized criminal elements, and organizations qualifying under RICO can have both licit and illicit purposes. The U.S. Attorneys’ Manual provides that “the Criminal Division will not approve ‘imaginative’ prosecutions under RICO which are far afield from the congressional purpose of the RICO statute.” The RICO indictments in the FIFA case are not gratuitous. They allow the DOJ to tackle alleged FIFA misconduct that has spanned decades, crossed continents, and tainted a global regulatory institution.

Second, Professor Feldman’s contention–shared by others–that the prosecutions are a case of the U.S. overreaching, intervening in matters where no significant U.S. interests are at stake, reflects an overly crabbed view of legitimate U.S. interests. Professor Feldman’s argument on this point seems to boil down to the fact that soccer (and FIFA) matter less to U.S. sports fans than to most of the rest of the world. But so what? The fact that soccer is less popular in the United States than it is elsewhere in the world has no bearing whatsoever on whether the U.S. has a legitimate interest in going after flagrant, ongoing criminal conduct by an enormous enterprise which, in furtherance of that criminal conduct, availed itself of U.S. territory and financial institutions. (Also, though it’s not really necessary to refute Professor Feldman’s point, perhaps it’s worth noting that soccer is in fact hugely popular in the U.S. these days: American fans purchased more tickets than any other non-Brazilian nation for the 2014 World Cup and contributed directly to FIFA’s war chest in the process).

Finally, in addition to asserting that the U.S. has no reasonable interest in going after FIFA because Americans aren’t rabid soccer fans, Professor Feldman also makes a related but more instrumental argument that the prosecutions are politically unwise: He claims that the U.S. action will be viewed by most of the rest of the world as overreaching and illegitimate (whether or not it actually is). But here too Professor Feldman’s pessimism seems unfounded. After all, love of soccer is not synonymous with support for FIFA. As Melanie has described on this blog, the organization practically extorts member state governments, compelling changes in laws, forbidding enforcement of others, and reaping the lion’s share of the profits throughout. Remember the protests lighting up Brazil in response to the World Cup? They weren’t in celebration of FIFA. The governing body’s impact is worst in underdeveloped jurisdictions that lack the capacity to prosecute wrongdoing of this scale. On the other end of the development spectrum, it is notable that Switzerland’s cooperation has thus far been essential to the case against the FIFA officials. The arrests, conducted by Swiss agents, do not necessarily mean that the FIFA executives will be sent to the U.S. for trial, but Swiss officials have said they anticipate speedy extradition proceedings. And the reaction to the arrests in Europe more generally has not been condemnation, or even grumbling, but rather–for the most part–admiration for the U.S. initiative.

The bottom line is that if an organization’s executives have been using the U.S. as a haven to systematically perpetrate a fraudulent scheme, American prosecutors are entirely justified in shutting them down.

6 thoughts on “The U.S. Indictments of FIFA’s Corrupt Officials Are Legally, Morally, and Politically Justified

  1. Great post. The story in today’s Washington Post suggests that, contrary to the view that other nations and their citizens will resent the U.S. action, they welcome it.

    “Latin American news Web sites were running banner headlines of the news, and much of the tone was exultant, as players and officials celebrated his departure and expressed hope of cleaning up the sport.”

    “Brazilian soccer legend and current senator Romario de Souza Faria, known simply as Romario, wrote on Facebook that Blatter’s resignation was the ‘best news in ages’ and that it ‘begins a new era for world football.'”

    “Argentine soccer god Diego Maradona told an Argentine radio station that “
    ‘today the truth is out and I am enjoying it.’”

    Story at: http://www.washingtonpost.com/sports/dcunited/sepp-blatter-resigns-as-fifa-president-corruption-investigation-continues/2015/06/02/554ae134-095a-11e5-a7ad-b430fc1d3f5c_story.html

    As for RICO being used against an organization for which it was not intended, I remember in 1977 explaining to the owner of a closely-held company why a private suit for damages under RICO against him and his firm was permitted by the statute and his astonishment that his company was being treated like “biker gangs” and the “mafia.” I would assume he is not the only business person shocked at being in RICO’s line of fire and that like him many have sought legislative relief without success.

    • Anyone doubting either how corrupt FIFA’s soon to be ex-leaders are or how much non-Americans welcome the U.S. investigation should watch one or more of the excerpts below from British soccer fanatic John Oliver’s HBO show, Last Week Tonight —

  2. A good explanation of the sound legal basis in this case. I’m sure Congress has no problem using RICO to not only counter the infiltration of legitimate enterprises by organized criminal elements, but to counter the devolution of legitimate enterprises into organized criminal operations enriching the leaders through systemic and pervasive corruption.

  3. Pingback: Corruption Currents: Vatican to Comply with FATCA - FinancialRegulation

  4. Global Witness on the banks’ role in the FIFA scandal —

    “The headlines generated by the U.S. investigation into FIFA reveal allegations of serious corruption at football’s governing body. Beneath the headlines, details are emerging of the crucial role banks played by processing the related payments. This has two elements:
    Key mechanism for bribe payments. It would have been almost impossible for the alleged bribery involving FIFA officials to have occurred without access to the financial system. Indeed, the U.S. Department of Justice has claimed that the accused relied on the use of “trusted intermediaries, bankers, financial advisors and currency dealers, to make and facilitate the making of illicit payments”.The U.S. authorities have listed over 20 banks which processed payments relating to the scandal.

    “Did banks fail to do key checks? In almost every country, anti-money laundering laws require banks to do a range of checks on their customers, to detect whether the money they handle might be the proceeds of crime, or intended for terrorist groups. At the very least, the allegations involving FIFA officials raise serious questions about whether the banks named in the indictment carried out the checks they are supposed to, and if so, whether they were adequate. At least three banks, HSBC, Standard Chartered and Barclays have already announced internal probes into the payments.

    “The wider corruption scandal involving banks

    “The involvement of the financial system in the FIFA bribery allegations is symptomatic of a much bigger problem and a largely hidden truth. Banks play an integral role in enabling large scale theft from state budgets, by providing a place for unscrupulous government officials to hide their ill-gotten gains, with devestating human rights implications. In the words of a Nigerian anti-corruption investigator “if you know there’s no landing space to land your plane, you don’t take off in the first place. It’s the same with money: if there is nowhere to land it once you’ve stolen it, you can’t steal it”.”

    Full details here: https://www.globalwitness.org/campaigns/corruption-and-money-laundering/banks/tip-iceberg-role-banks-fifa-story/

  5. FIFA also happens to be one of the world’s largest unregulated monopolies. And we all know what unregulated monopolies do when immune from control of their conduct.

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