Back to the corruption scandal hitting FIFA
Introduction
On 27th May 2015, FIFA officials were preparing to attend the 65th FIFA Congress where the election of the new President was on the agenda. Before the meeting, Swiss police arrested 7 FIFA officials on behalf of the United States Department of Justice who indicted them on wire-fraud and money laundering charges.
The arrests were a culmination of a lengthy investigation spanning for the better part of two decades concerning bribery charges. In 2013, FIFA’s ethics committee commissioned a report to investigate possible rule breaches of Russia winning the bid to host the 2018 World Cup and Qatar’s subsequent successful 2022 bid. The report noted that electronic communication and devices used during the Russian voting round had been destroyed, there was no direct evidence found linking any criminal behaviour or illicit payments made.
More significantly, former Asian Football Confederation chief Qatari Mohamed bin Hammam who was found guilty of bribery during his bid to be FIFA president was not explicitly involved in bribery during the bidding rounds.
Timeline of Events
December 2010 – Russia is awarded the 2018 World Cup and Qatar gets the 2022 hosting rights, days after the BBC broadcasts a Panorama issue exposing the FIFA.
February 2011 – FIFA’s ethics committee upheld three-year and one-year bans imposed respectively upon executive committee members Amos Adamu and Reynald Temarii for violating FIFA’s code of ethics.
May 2011 – FIFA suspends presidential candidate Mohamed Bin Hammam and vice-president Jack Warner pending an investigation into a possible offer of financial incentives to members of the Caribbean Football Union.
June 2011 – Bin Hammam is found guilty of bribery and banned from all international and national football activity for life. Warner escapes investigation after resigning from his position.
July 2012 – FIFA commissions a report into allegations of corruption in world football which is led by former US attorney and newly appointed head of FIFA’S ethics committee Michael Garcia.
September 2014 – Garcia completes his 430-page report into corruption allegations and sends it to FIFA.
November 2014 – Hans-Joachim Eckert, chairman of the adjudicatory chamber of FIFA’s independent ethics committee, publishes a 42-page summary of Garcia’s investigation, effectively confirming Russia and Qatar as World Cup hosts after finding that violations were “of very limited scope“.
FIFA lodges a criminal complaint to the Swiss attorney general over “possible misconduct” by individuals but insists the investigation into the bidding process for the two World Cups is concluded. Garcia calls the summary “incomplete and erroneous” and launches an appeal against it.
May 2015 – Seven FIFA officials are arrested in dawn raids at a hotel in Zurich. They are later charged by US authorities along with two other FIFA officials and five corporate executives over allegations of racketeering, wire fraud and money laundering conspiracies spanning 24 years. They are accused of breeding decades of “rampant, systemic, and deep-rooted” corruption within FIFA by the US justice department.
The Swiss authorities raid FIFA headquarters, gathering data and documents for their separate investigation into allegations of criminal mismanagement and money laundering in connection with the allocation of the 2018 and 2022 World Cup bids.
The Serious Fraud Office says it is actively assessing “material in its possession” relating to the FIFA corruption allegations revealed by the FBI.
Sepp Blatter is re-elected as FIFA president for a fifth term after his challenger, Prince Ali Bin Al Hussein, withdraws during a second round of voting. Blatter resigns as president almost a week later.
June 2, 2015 – A letter revealed the South African FA asked FIFA secretary general Jerome Valcke to authorise a $10m dollar payment to Warner to support football in the Caribbean.
FIFA and the Olympics
Countries looking to break into the big time are willing to overpay for the “privilege” of hosting an Olympics or World Cup. The small group of largely unelected sports bureaucrats who decide which bid wins quickly realize their votes are valuable.
Victor Matheson, an economist, said “When you’re a Brazil or a Qatar or a Russia, this is much less about the actual event itself than using the event to either advertise yourself or to use the event as an excuse to build all sorts of general infrastructure for the country. The actual World Cup is more than a three-week event, but it’s more like a ten-year building process where you use the World Cup as an excuse to build billions of dollars in general infrastructure.”
Money scandals are nothing new to international sporting events. Mitt Romney, Republican candidate for the 2008 U.S Presidential Election, was famously called in to rescue the troubled Salt Lake City Winter Olympics in 2002 after revelations surfaced of extensive bribes by members of the organizing committee to win the rights to the games. Even in ancient Greece, judges at the original Olympic Games were often accused of taking bribes and entering their own horses in equestrian events.
Implications
Aside from the arrests, the global nature of the indictments and the fact that the FBI and the US Justice Department were so fervent in hunting down wrongdoings involving FIFA has further implications. Halfway across the globe, the Qatari Stock Exchange (QSE) fell by 1.45% while the Qatar Real Estate Index was down 2.14%. Moreover, the reputation of the sport, on the worldwide stage, has been severely tarnished.
Economic motivation for world cup: infrastructure spending, tourism, and culture. But despite the benefits of long-term infrastructure improvements, the upfront cost in hosting a global event like the World Cup or the Olympics vastly outweighs the potential payoffs. Stadiums often cost a lot to build, while costs are not covered by the world cup revenues. In some cases, stadiums are often empty when rival nations play as these games lead to conflicts. Qatar is spending $200 billion on the 2022 tournament, nearly five times more than Germany, Brazil, South Africa and Russia’s costs combined.
Countries offering bribes wasted millions of dollars that should have been spent on social services or infrastructure development for their own citizens. The hosting decisions were not based on merit, but rather on greed — and at a great cost to social welfare.
What’s Next for Football
The consequence of the scandal’s eruption and the botched elections is that football finds itself without a leader that can guide it in these dark times. But perhaps what is most damning is the damage to FIFA’s credibility, as every action now has come under intense scrutiny.
Bribery charges dating as far back as 1990s, when FIFA elected France to host the 1998 FIFA World Cup. Most of the $150 million bribery allegations stem from how FIFA’s sub-committee awarded hosting rights to World Cups from 1998-2022.
Football has become a game about money. Player salaries, ticket prices, player transfer fees, football equipment, have all been steadily increasing in prices. The point of course is that football is incredibly and increasingly profitable. The sheer of amount of corruption in FIFA points to how much money can be made in the game, and hosting a tournament can lead to an big amount of money from tourism, investment and marketing. During the 2014 World Cup Final, over a billion people watched the match.
But the sport’s governing bodies need to weed out corruption if it wants to progress on a moral level, and avoid any further tension between football associations. Although many will still associate FIFA to the fun game of football that it brings; either a live game or one on its EA version FIFA 16. In the back of our mind we still face the question if the next World Cup will be attributed fairly or bought out.
WRITTEN BY FELIX LIM & PHILIPP MARTYS FOR BESA
PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT
