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Why US law enforcers are so keen to fight global corruption: US – 1, Fifa – 0

US – 1, Fifa – 0: why American law enforcers are so keen to fight global corruption
The investigation of world soccer’s governing body highlights the determination of America to fight corruption beyond its own borders

Fifa

The Federation Internationale de Football Association is the international governing body for football, founded in 1904. Now comprising 209 nations, the organisation generates huge revenues, mainly because it controls the World Cup. In 2013, it had revenues of over US$1.3 billion and cash reserves of over US$1.4 billion. It has been widely accused by journalists of corruption, bribery and vote rigging, most recently over the decisions to award the 2018 and 2022 World Cups to Russia and Qatar respectively.

Lana Lam and Agencies

With US$150 million in alleged kickbacks at the centre of one of the biggest scandals to hit the soccer world, many are wondering why the United States – where the sport is more often relegated to the sidelines – is leading the corruption investigation of the game’s governing body.

fifa

As more details emerge about the FBI’s explosive case against 14 Fifa officials and corporate executives, the long and powerful arm of the US authorities is being felt by one of the world’s most powerful sporting bodies.

And just because most sports fans in the US would prefer watching a touchdown in American football than a goal on the soccer pitch, the decades-long allegedly corrupt activities of Fifa officials have not gone unnoticed by US law enforcement agencies.

“If you touch our shores with your corrupt enterprise – whether that is through meetings or through using our world-class financial system – you will be held accountable for that corruption,” FBI director James Comey said shortly after the Fifa officials were arrested at an expensive hotel in Zurich, Switzerland, on Wednesday.

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US federal law grants law enforcement agencies broad authority to pursue criminal investigations as long as there is some connection to the United States, even a tangential one such as the involvement of a bank, internet service provider or mobile phone company.

And whether they are targeting Olympic corruption or doping scandals like the Lance Armstrong case, US justice authorities rarely miss an opportunity to shine a light into the darkest corners of the sports world.

The full beam of US justice is now illuminating financial skullduggery in world soccer after charges were filed against the 14 people in New York on Wednesday.

“It all comes down to a connection to the United States,” said Jessica Tillipman, assistant dean and lecturer at the George Washington University Law School.

“It can be minimal – we’ve seen instances of jurisdiction alleged where an email has passed through a US server even though it was an email between two foreign individuals using two foreign email accounts.

“It depends again on the particular statute, but if there is a touch point in the United States, then the US has not hesitated to assert jurisdiction.”

The 47-count indictment unveiled by US Attorney General Loretta Lynch outlined racketeering, wire fraud and money laundering conspiracies that span 24 years beginning in 1991.

“The defendants relied heavily on the United States financial system in connection with their activities,” the indictment said.

Lynch said the suspects had “abused the US financial system and violated US law, and we intend to hold them accountable”.

More than a dozen banks – including HSBC in Hong Kong and Standard Chartered in the US – were named in the indictment of nine officials at Fifa and five sports media and promotion executives.

Those banks could face tough questions in the US crackdown on alleged corruption in global soccer as prosecutors review how much they knew about millions of dollars in bribes flowing through the US banking system to accounts around the world.

“Part of our investigation will look at the conduct of the financial institutions to see whether they were cognisant of the fact they were helping launder these bribe payments,” Kelly Currie, acting US Attorney for the Eastern District of New York, said on Wednesday.

“It’s too early to say if there is any problematic behaviour, but it will be part of our investigation.”

Prosecutors have also noted that one entity at the heart of the case is headquartered in Miami – the offices of Concacaf, the soccer federation under Fifa that governs the game in North and Central America and the Caribbean.

A recent study by international law firm Freshfields Bruckhaus Deringer found that US regulators were increasingly pursuing overseas companies under the Foreign Corrupt Practices Act (FCPA), with companies in Asia being a major target.

At least 115 pending FCPA investigations were under way in Asia, more than twice as many as any other region, according to the study published last month. Africa had at least 44 FCPA investigations, while the European Union faced only 19.

Peter Gallo, a veteran money laundering investigator who was based in Hong Kong for 19 years and most recently worked for the United Nations’ internal affairs bureau, said few people would be surprised to see the word “corruption” in a headline about Fifa.

“The organisation has had a reputation as being tainted by corruption for as long as I can remember, so any financial accounts connected to senior Fifa officials should have been flagged as higher risk from the outset,” he said from New York.

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Bryane Michael
Bryane Michael, a senior fellow at the University of Hong Kong’s Asian Institute of International Financial Law and an expert on corruption, said the US government’s leadership in investigating and prosecuting graft harked back to the administration of president Richard Nixon.

“The Watergate scandal involved bribery abroad paying for corruption at home,” Michael said, referring to the political scandal that led to the resignation of Nixon and involved abuse of power, bribery and obstruction of justice.

“As such, the US has taken a very proactive stance on fighting corruption beyond its borders – on the theory that by fighting corruption abroad, it is fighting it at home.”

Michael, who has designed and drafted legislation to help governments tackle graft, said corruption involving Fifa had been well-documented by academics for at least a decade.

“So, in some ways, this scandal involves some much-needed ‘house-cleaning’,” he told the South China Morning Post.

“This scandal is in no way the largest FCPA enforcement action. It’s just another in a long chain.”

But the high profile of the soccer body means this case will be unlike others.

“It might be more visible as most of the cases involve settlements before the case even reaches the newspapers and courts,” Michael said.

“The US launches numerous investigations of corruption beyond its borders, and usually when people pay bribes now, they fear the US far more than their own local police”.

The US consulate in Hong Kong declined to comment on the Fifa investigation.

Agence France-Presse, Reuters

This article appeared in the South China Morning Post print edition as The graft cup scoreline: US 1 – Fifa 0

PUBLISHED : Friday, 29 May, 2015, 5:40am
UPDATED : Friday, 29 May, 2015, 8:39am

#SoccerKickbacks    #WatergateScandal

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