Ripples of FIFA case will test jurisdiction, sponsor cooperation

31 January 2017 9:55am

28 May 2015. By Juliane von Reppert-Bismarck.

One day after the US conducted dawn raids and placed seven FIFA
officials under arrest for their alleged role in vast international bribery schemes, the question in the legal community is how much further the net of investigations and arrests can spread.

So far, the FIFA probe is relatively narrow, focusing on members of
FIFA’s Americas and Caribbean confederation. Eyes are turning to action the US may be readying against the entire FIFA structure and senior leadership and those governments and sponsors paying bribes, and — beyond the US — to what other jurisdictions may be ready to take up the fight to root out corruption in soccer.

The UK stands out among the countries most likely to take action against FIFA alongside the US. Thwarted in its bid to host the 2018 World Cup, the UK has been a vocal critic of FIFA. Some countries’ anti-corruption enforcement agencies may still be interested in a good relationship with FIFA. But just like the US, which doesn’t have a global soccer brand, the UK, since its failed bid to host the 2018 World Cup, has little to lose from picking a fight with FIFA. On the contrary: the UK’s Serious Fraud Office has been long ridiculed for lacking the muscle and political will to enforce the UK Anti-bribery Act — a legislative bulldog compared to the US Foreign Corrupt Practices Act, but so far chained up by what critics say is
a blind spot regarding players in the City of London.

Last year, senior government lawyer Robert Buckland called for “any wrongdoing” by FIFA to be investigated; on Thursday, Secretary of State for Culture Media and Sport John Whittingdale called FIFA a “deeply flawed and corrupt organisation,” and UK Prime Minister David Cameron backed calls for FIFA president Sepp Blatter to quit.

The question is whether the US has started handing the UK incriminating evidence either involving individuals with UK passports or illegal acts taking place on UK soil — a question that the SFO has declined to comment on. The same question applies to jurisdictions such as Germany and Italy, which are generally active on the anti-corruption side but will need to be able to prove jurisdiction.

Acting as a potential brake on the investigation is the fact that the US is currently alleging violations not of the FCPA but of wire fraud. Under the FCPA, corrupt and so-called rogue elements in any organization pass on a portion of liability to that organization’s corporate structure and counsel. The question is whether the same is true for wire fraud, and if not, then whether the allegations can be brought under the umbrella of the FCPA in the US and equivalent legislation in other countries.

FIFA’s corporate sponsors — whose combined over-the-counter payments for FIFA marketing partnerships amounted to $177 million last year — are also weighing next steps. Visa, Adidas, Coca-Cola, McDonalds and Hyundai Motors are reportedly reassessing their relationships with the soccer federation. While there is no common legal standard for sponsorship contracts, such deals usually
include exit clauses for firms to abandon contracts in extreme situations causing sponsors reputational risk.

More importantly, firms with any sense that they or their agents may have been paying bribes in return for lucrative marketing deals will be weighing the merits of coming clean in the US and other states. Nike is the first named company to have come forward to cooperate with US authorities. Dozens of others may now be weighing approaching US authorities while they are still in the mood to offer lenient treatment, such as deferred prosecution agreements or reduced fines.

DOJ crime chief Leslie Caldwell this month spelled out the conditions under which companies can spare themselves heavy fines if they are caught cheating: by coming clean fast; by gathering incriminating paperwork around the world, and by handing over their most senior executives.

As FIFA President Sepp Blatter announced during Thursday’s live-streamed annual FIFA Congress — a quixotically-timed exercise in evoking the romance of soccer — “soon more bad news may follow.”

	Eliot Gao