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Swiss secrecy bolsters soccer corruption

Bribes, kickbacks part of the game for two generations

FIFA headquarters
FIFA headquarters

Sports and secrecy go together. Hut-hut and hush-hush are almost one and the same. Look at all those disguised traps in the stadium task force’s plan for a Chargers subsidy that could purloin a billion dollars from San Diego County taxpayers.

Shhhh. The public doesn’t know what is going on in closed-door huddles among San Diego’s mayor, the county, and the Chargers. Or among National Football League owners.

But United States teams hardly have a monopoly on secrecy. The real excitement today is in overseas tax and secrecy havens — mainly Switzerland, history’s most notorious hideaway for stashing money, dodging taxes, and concealing secrets. The Swiss-based Fédération Internationale de Football Association, better known as FIFA, regulates and promotes soccer and is in charge of major international soccer tournaments, particularly the World Cup, which crowns the global champion every four years.

James Comey

Scholars and law-enforcement officials have known for years that the association is a thoroughly corrupt enterprise. In late May, the United States Justice Department unsealed a 47-count indictment charging 14 individuals with racketeering, wire fraud, and money laundering, among other offenses that had been going on for 24 years. Charges like racketeering are usually used on the Mafia or drug cartels. “Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at [the soccer federation],” said James Comey, director of the Federal Bureau of Investigation.

Loretta Lynch

Federation corruption is “rampant, systemic, and deep-rooted, both abroad and here in the United States,” said Attorney General Loretta Lynch.

Jack Warner

One of those arrested was Jack Warner, a federation official from Trinidad and Tobago — a Caribbean tax-and-secrecy haven. The New York Times described how in 2004 Warner was shopping the right to host a World Cup. Morocco offered Warner a $1 million bribe. But South Africa offered $10 million to a group that Warner controlled and landed the 2010 World Cup. Warner diverted his millions for personal use.

Jeffrey Webb

Also indicted was Jeffrey Webb, a former banker in the Cayman Islands, the Caribbean pirate cove. According to Tax Justice Network, the Caymans are the world’s fourth-largest tax-and-secrecy haven, behind Switzerland, Luxembourg, and Hong Kong. The Caymans are the world’s fifth-largest money center (or sixth, depending on the source). That is amazing for such a tiny string of islands. Webb had been manager of business development at Fidelity Bank (Cayman) Limited.

Webb is head of the federation branch covering Central and North American soccer. It had been headed by Warner before Webb took it over. Bloomberg News says the organization was corrupt before Webb took the reins. The bribe-taking continued to flourish. The indictment states that Webb and a co-conspirator covered up one bribe by funneling the money through an overseas company that makes soccer uniforms and balls.

Among other things, the indictment charges that Webb was arranging bribes even before he took over the Central and North American branch of the federation. Some $50,000 was plunked into a Cayman Islands account controlled by a Webb associate. On another occasion, a $3 million bribe “was sent through an elaborate maze of companies to disguise that Webb was the ultimate beneficiary,” says Bloomberg. The money ultimately went into Georgia real estate, says Bloomberg.

Union Cycliste Internationale
International Olympic Committee

Switzerland is also home of the International Olympic Committee, which has had its share of money scandals (Salt Lake City 2002, Nagano 1998, for example). And then there’s Union Cycliste Internationale, known for doping scandals. Switzerland is also home to the International Ice Hockey Federation, the International Crossbow Shooting Union, and international federations representing archery, Olympic winter and summer sports, baseball, softball, amateur boxing, canoeing, gymnastics, volleyball, skiing, roller sports, and rowing, plus the Court of Arbitration for Sport, the World Anti-Doping Agency, and the International Federation of Sports Chiropractic.

Why do all these sports organizations choose to locate in Switzerland? Insiders will insist they need the country’s war neutrality. Or claim they want employees who speak several languages, as many people in Switzerland do. These tales are as credible as Wall Streeters telling you they are going to Switzerland to ski and the Caymans to snorkel.

The real reason is that Switzerland has a law applying to associations, or what it calls “charities.” A sports group gets all kinds of tax breaks. But most importantly, the Swiss do not insist on disclosure and transparency. Bank details on financial transactions are hidden from public view.

It’s little wonder that this landlocked European country of only eight million people attracts not only much of the world’s dirty money but also sports organizations that preach wholesomeness while practicing corruption.

Even before the indictments came down, Switzerland was looking into requiring the sports governing bodies to manifest more accountability and transparency. After the United States Justice Department acted, the Swiss launched an investigation of their own. The nation carried out arrests on United States’ request. (Switzerland and the Cayman Islands, among some other tax havens, are now cooperating — sort of — with nations hunting down tax-dodging citizens.)

The United States soccer indictments have spurred law-enforcement action elsewhere. According to Yahoo.com, South African police are looking into bribes that may have been passed as that country maneuvered to get the 2010 World Cup. Police are looking into Australia’s bid for the 2022 World Cup.

Andrew Zimbalist

What do those bribes accomplish? It isn’t a healthy economy for the host countries. There is little evidence that Olympics or World Cups boost long-term tourism, draw investment, or stimulate local economies. Brazil, host to last year’s World Cup and host to the 2016 Summer Olympics, may spend $25 billion on new stadiums, according to the New York Times. Seldom-used stadiums are economic sieves. Nonetheless, Qatar may spend $200 billion for the 2022 World Cup, using near-slave labor to build more stadium seats than there are residents of the country.

Early this year, a book by Smith College economist Andrew Zimbalist hit the shelves. Its name is Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup. The conclusion, according to Brookings Institution Press, the publisher, is, “Zimbalist finds no net economic gains for the countries that have played host to the Olympics or the World Cup. While the wealthy may profit, those in the middle and lower income brackets do not, and Zimbalist predicts more outbursts of political anger like that seen in Brazil surrounding the 2014 World Cup.”

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FIFA headquarters
FIFA headquarters

Sports and secrecy go together. Hut-hut and hush-hush are almost one and the same. Look at all those disguised traps in the stadium task force’s plan for a Chargers subsidy that could purloin a billion dollars from San Diego County taxpayers.

Shhhh. The public doesn’t know what is going on in closed-door huddles among San Diego’s mayor, the county, and the Chargers. Or among National Football League owners.

But United States teams hardly have a monopoly on secrecy. The real excitement today is in overseas tax and secrecy havens — mainly Switzerland, history’s most notorious hideaway for stashing money, dodging taxes, and concealing secrets. The Swiss-based Fédération Internationale de Football Association, better known as FIFA, regulates and promotes soccer and is in charge of major international soccer tournaments, particularly the World Cup, which crowns the global champion every four years.

James Comey

Scholars and law-enforcement officials have known for years that the association is a thoroughly corrupt enterprise. In late May, the United States Justice Department unsealed a 47-count indictment charging 14 individuals with racketeering, wire fraud, and money laundering, among other offenses that had been going on for 24 years. Charges like racketeering are usually used on the Mafia or drug cartels. “Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at [the soccer federation],” said James Comey, director of the Federal Bureau of Investigation.

Loretta Lynch

Federation corruption is “rampant, systemic, and deep-rooted, both abroad and here in the United States,” said Attorney General Loretta Lynch.

Jack Warner

One of those arrested was Jack Warner, a federation official from Trinidad and Tobago — a Caribbean tax-and-secrecy haven. The New York Times described how in 2004 Warner was shopping the right to host a World Cup. Morocco offered Warner a $1 million bribe. But South Africa offered $10 million to a group that Warner controlled and landed the 2010 World Cup. Warner diverted his millions for personal use.

Jeffrey Webb

Also indicted was Jeffrey Webb, a former banker in the Cayman Islands, the Caribbean pirate cove. According to Tax Justice Network, the Caymans are the world’s fourth-largest tax-and-secrecy haven, behind Switzerland, Luxembourg, and Hong Kong. The Caymans are the world’s fifth-largest money center (or sixth, depending on the source). That is amazing for such a tiny string of islands. Webb had been manager of business development at Fidelity Bank (Cayman) Limited.

Webb is head of the federation branch covering Central and North American soccer. It had been headed by Warner before Webb took it over. Bloomberg News says the organization was corrupt before Webb took the reins. The bribe-taking continued to flourish. The indictment states that Webb and a co-conspirator covered up one bribe by funneling the money through an overseas company that makes soccer uniforms and balls.

Among other things, the indictment charges that Webb was arranging bribes even before he took over the Central and North American branch of the federation. Some $50,000 was plunked into a Cayman Islands account controlled by a Webb associate. On another occasion, a $3 million bribe “was sent through an elaborate maze of companies to disguise that Webb was the ultimate beneficiary,” says Bloomberg. The money ultimately went into Georgia real estate, says Bloomberg.

Union Cycliste Internationale
International Olympic Committee

Switzerland is also home of the International Olympic Committee, which has had its share of money scandals (Salt Lake City 2002, Nagano 1998, for example). And then there’s Union Cycliste Internationale, known for doping scandals. Switzerland is also home to the International Ice Hockey Federation, the International Crossbow Shooting Union, and international federations representing archery, Olympic winter and summer sports, baseball, softball, amateur boxing, canoeing, gymnastics, volleyball, skiing, roller sports, and rowing, plus the Court of Arbitration for Sport, the World Anti-Doping Agency, and the International Federation of Sports Chiropractic.

Why do all these sports organizations choose to locate in Switzerland? Insiders will insist they need the country’s war neutrality. Or claim they want employees who speak several languages, as many people in Switzerland do. These tales are as credible as Wall Streeters telling you they are going to Switzerland to ski and the Caymans to snorkel.

The real reason is that Switzerland has a law applying to associations, or what it calls “charities.” A sports group gets all kinds of tax breaks. But most importantly, the Swiss do not insist on disclosure and transparency. Bank details on financial transactions are hidden from public view.

It’s little wonder that this landlocked European country of only eight million people attracts not only much of the world’s dirty money but also sports organizations that preach wholesomeness while practicing corruption.

Even before the indictments came down, Switzerland was looking into requiring the sports governing bodies to manifest more accountability and transparency. After the United States Justice Department acted, the Swiss launched an investigation of their own. The nation carried out arrests on United States’ request. (Switzerland and the Cayman Islands, among some other tax havens, are now cooperating — sort of — with nations hunting down tax-dodging citizens.)

The United States soccer indictments have spurred law-enforcement action elsewhere. According to Yahoo.com, South African police are looking into bribes that may have been passed as that country maneuvered to get the 2010 World Cup. Police are looking into Australia’s bid for the 2022 World Cup.

Andrew Zimbalist

What do those bribes accomplish? It isn’t a healthy economy for the host countries. There is little evidence that Olympics or World Cups boost long-term tourism, draw investment, or stimulate local economies. Brazil, host to last year’s World Cup and host to the 2016 Summer Olympics, may spend $25 billion on new stadiums, according to the New York Times. Seldom-used stadiums are economic sieves. Nonetheless, Qatar may spend $200 billion for the 2022 World Cup, using near-slave labor to build more stadium seats than there are residents of the country.

Early this year, a book by Smith College economist Andrew Zimbalist hit the shelves. Its name is Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup. The conclusion, according to Brookings Institution Press, the publisher, is, “Zimbalist finds no net economic gains for the countries that have played host to the Olympics or the World Cup. While the wealthy may profit, those in the middle and lower income brackets do not, and Zimbalist predicts more outbursts of political anger like that seen in Brazil surrounding the 2014 World Cup.”

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Comments
40

another so called "sport" thats all about generating money

June 24, 2015

Murphyjunk: It's interesting that people for decades have known about corruption in soccer and the Olympics, and doping in bicycling -- all protected by Swiss secrecy.

But Americans refuse to face the fact that the NFL has been financed by big gamblers and organized crime-connected entrepreneurs for decades. The NFL is as secretive as soccer (wake up San Diego!) and might be as corrupt. Best, Don Bauder

June 24, 2015

Zimbalist just wrote a devastating takedown of the proposal to host the Olympics in Boston. I can't imagine what he would say about FIFA.

http://www.bostonglobe.com/opinion/2015/06/23/the-hidden-costs-boston-olympics/cuxiPHIN0Tihwg13QFZFoN/story.html

June 24, 2015

There is absolutely no chance that Boston will be awarded the 2024 Summer Olympics. None. Zero. Zip. Zilch.

June 24, 2015

danfogel: And the odds of the 2024 games being held in Zanzibar: Zero. Zip. Zilch. Best, Don Bauder

June 24, 2015

don bauder That is true. However, one difference is that Zanzibar is not a city, but would be more properly referred to a region in east Africa. But of course the main difference is that Zanzibar, unlike Boston, Rome, Hamburg and now Paris, has not launched a bid to host the 2024 Olympics. That is unless you have a huge scoop that you haven't shared yet.

June 24, 2015

danfogel: I know about Zanzibar, but I couldn't resist the alliteration.

If memory serves me right, one of the Dr. Seuss books refers to the "Zinzabar, Zanzibar trees." I read it to my sons dozens of times, but that was 40 years ago. Best, Don Bauder

June 24, 2015

don bauder Ah, attempted humor.

June 24, 2015

danfogel; Believe me -- I knew Zanzibar was not a city and I certainly never thought it was in the running to host an Olympics. I can't resist some alliteration. Best, Don Bauder

June 24, 2015

Jimgee: Zimbalist has already commented on FIFA. He talked as if he had known about FIFA corruption for some time. Best, Don Bauder

June 24, 2015

What's really funny are the people who say, "We should build a stadium, it isn't just for the Chargers, it can be for soccer, too!" Like we don't have enough corruption and handouts now!

June 24, 2015

jnojr: Good point. The people who say the stadium can be used for soccer, tractor pulls, rock concerts, etc. are rationalizing. That is an excuse for taxpayers picking up the tab. And don't kid yourself: a stadium cannot be built in San Diego without taxpayers picking up the tab for at least 70 percent of the cost, and probably more.

Equally disingenuous are the claims that a domed stadium could be used for NCAA basketball tournament finals, Super Bowls, etc. Yeah, once every 20 years or so. Best, Don Bauder

June 24, 2015

Not to mention, the only ones insisting that a new stadium is a necessity are the Chargers. Everyone else is content with the Q and the rent they pay there as opposed to the rent in a brand-new facility.

June 24, 2015

the environmental study is supposed to show there is gas plume under the stadium, if so that may explain a lot about charger fans that go to the games there.

"sleeping petroleum vapors cause brain damage"

June 24, 2015

According to the Regional Water Quality Control Board, the cleanup of the soil contamination at the Q site is one of the most successful they have seen. I believe the groundwater is still tainted however.

June 24, 2015

aardvark: Kinder Morgan spent a lot of time on the cleanup. But there is still controversy about its efficacy. Best, Don Bauder

June 25, 2015

Murphyjunk: Ha! Never thought of that. There is still controversy about that plume. Best, Don Bauder

June 24, 2015

jnojr: Actually, the Chargers have painted themselves into a corner. For almost 15 years, they have been going down two tracks -- hoping for L.A. but trying to keep San Diego in their pockets. I wrote about that back when I was with the U-T. (I left in '03.)

But to win the votes of NFL owners, they have to alienate San Diegans, so the Chargers can argue that San Diego didn't want the team.. They have completely annoyed local residents, as planned.

Now they face the worst outcome: if they can't get to L.A. (and that is quite possible), they will play in a city that they have alienated, and they will lose a big chunk of their current audience if one or two other teams occupy the L.A. market. Remember that this team has had trouble filling the seats even when its relations were pleasant. Best, Don Bauder

June 24, 2015

Don: Then we are back to the argument of why you would ever have a domed stadium in San Diego. Everyone always talks about the great weather in San Diego, so of course someone wants to build a "multi-purpose" stadium (and aren't they all really "multi-purpose"?) in San Diego with a roof. That would be lunacy.

June 24, 2015

I lived in Seattle for several years and attended games at the Kingdome. It was a strange experience. The field was astroturf and everything was so clean and strangely lighted (and from my nose-bleed seats) it looked like watching a video game. The announcing echoed all over the place.

By the way, Seattle Seahawks did not sell out games in the 90's, until Paul Allen came along and bought the team and invested in it. On the other hand, the Huskies always sell out their 72,000 stadium at UW.

June 24, 2015

Pozi, Something I'm curious about. As I recall, the Seahawks played at Husky Stadium for a couple of years after the Kingdome was demoed. How was Seahawks attendance when they played there? Kind of ironic that the Huskies played at CenturyLink while the renovation was being dome on Husky Stadium a few years ago.

June 24, 2015

After Paul Allen bought the team attendance rose quit a lot. At the Kingdome in 1995 they would average about 40 to 50 thousand, except when the Raiders came to town they would soar to almost sell out. That 40 to 50 thousand trend lasted up until they blew up the Kingdome. Then when they played at Husky, the attendance was between 55 and 60 thousand.

The Huskies used to regularly have more attendance than the Seahawks. But the trend swapped and Husky attendance is declining and even a blacked out game. Maybe the Seahawk have poached a chunk of the fans that used to be loyal to the Huskies. The financing plan that was used for the Seahawks is very interesting. Paul Allen agreed to pay for all cost overruns and the maintenance of the stadium. It pays to have a real billionaire when it comes to stadium deals. Spanos is no where near the Microsoft co-founders league.

June 24, 2015

Ponzi: Good observation. The Seahawks were an expansion team, I believe, so were probably weak in their early years. Winning fills seats. That much we know. Best, Don Bauder

June 24, 2015

Yes, and they played all their games in the Kingdome until some tiles started falling off the ceiling. The owner said he wanted a new stadium and that if he did not get one he would move the team. They held a vote and the Seahawks lost. Then Allen stepped in with a new proposal and said he would buy the team and help with the financing if the voters approved of his plan. It was a state vote, and it barely passed. But Allen has done a spectacular job with the Seahawks. He has spectacular resources as well. And Seattle loves him as an owner, a local boy who has done a lot for Seattle.

June 24, 2015

Ponzi: Allen is one of the richest persons in the U.S. Yet he blackmails Seattle into subsidizing a stadium, and wins. Sickening. Best, Don Bauder

June 24, 2015

don bauder, I agree that Paul Allen could have afforded to completely fund the building of the stadium. But explain to me how he blackmailed Seattle into subsidizing part of the cost? The team was gone, they were going to relocate. Allen said if the state voted to build the stadium, he would buy it and keep it in Seattle. He offered to reimburse the state the cost of the election either way the vote went. They had the vote, the people voted in favor and the Seahawks stayed. Yes, the state payed about 2/3 of the cost and Allen could have footed the entire bill. But again, where's the blackmail? The Seahawks departure was a fait accompli, but Allen gave the voters a chance to keep them. They could have said no, but said yes.
At least he didn't bend them over like the Chargers are trying to do, or more accurately. the city is offering to do. He did throw in about $150 million, pays about a million in rent and pays all operating and maintenance costs, things the Chargers won't do.

June 25, 2015

danfogel: How do you know the team was really "gone" until Allen stepped in? The point I have been trying to make is that in pro sports, particularly the NFL, the decisions are made behind closed doors.

One has to be very wary of scenarios put forth by teams and swallowed by local media. You say that Allen said that he would keep the team in Seattle if the vote went his way. To me, that constitutes blackmail or extortion. Best, Don Bauder

June 25, 2015

danfogel: You say that "Allen said if the state voted to build the stadium, he would buy it and keep it in Seattle."

One definition of blackmail is "the use of threats or manipulation of someone's feelings to force them to do something." If Allen said he would buy the team and keep it in Seattle if the state voted his way, then he was using blackmail under that definition. Best, Don Bauder

June 25, 2015

aardvark: Building a domed stadium in San Diego's climate would not only be lunacy, it would be COMPLETE lunacy. Best, Don Bauder

June 24, 2015

Well sometimes, like with Safeco Field, they'll propose a sliding roof system. Off course that engineering and maintenance is very costly.

June 24, 2015

Ponzi: Seattle has gone nuts over the Seahawks. It lost its pro basketball team. I don't know how its baseball team is doing financially. I suspect the city is ready to be taken to the cleaners again, but I may be wrong on that. Best, Don Bauder

June 24, 2015

Ponzi: Of course. Adding a retractable roof to a stadium tacks on expenses. Best, Don Bauder

June 25, 2015

Corruption in sports? Who knew? I was always told that sports were good. If you were not active in sports you were a lesser person. Our school system spends an inordinate amount of money promoting sports over arts and music. Artists and musicians and singers can preform into their elderly years while jocks last until their bodies break down usually in their early 30's then all they can do is sit around and talk about the good old days.

June 25, 2015

AlexClarke: You are correct that U.S. schools -- particularly in macho states like Texas -- put sports ahead of the arts, including music. The effect has been societally devastating.

I can remember when San Diego schools dropped music education. I believe it was in the 1970s, but it could have been later. The head of San Diego Opera blamed the non-teaching of music in the schools on weakening attendance, and particularly on young peoples' lack of interest in serious music. Best, Don Bauder

June 25, 2015

don bauder I believe the decline in arts education is due largely to the lack of understanding how this part of learning of learning plays into the intellectual and educational development of children. Generally speaking, what children learn in school is what society believes they need to learn. Most people simply don’t view education in the arts as an important part of a student’s education. The performing arts deserve a central role within the school system but instead are now relegated to the back burner and now science and technology occupy the privileged positions. The performing arts are critical to learning process. The discipline, creativity, and empowerment that students gain from the performing arts are equally as important as their mastery of the traditional fields such as literature and science. Music and arts programs have fallen to the periphery in terms of having financial support and the endorsement of schools largely because school administrators and parents alike parents tend to think of these programs as frivolous and expendable, with basics such as English, math, and science as the only "necessary" part of the curriculum.

June 25, 2015

danfogel: Cost-slashers mistakenly (maybe tragically) want cuts in school spending. The schools react by cutting education in music and art. The students lose. Society loses. The point is that schools have dropped arts education for lack of money.

Students are not getting a well-rounded education. Best, Don Bauder

June 25, 2015

When I attended middle school, I had an industrial arts class. It covered how to use hand tools, simple drafting and other stuff. Then in high school I took computer math (where I learned to program), woodworking, electronics, photography, metal shop, auto shop, JROTC and where I was taught to drive in a semester long course. Many of the courses I took during the summer. Those courses have served me well to this day. I know how to fix things, build electronics, program computers, fix cars and I think I am a better driver because I was in that driving class for so long. It is a shame how times have changed and how we expect everyone to finish college (and pay dearly for it these days) and we ignore the need for vocational training.

June 25, 2015

Ponzi: In seventh grade, the boys took shop (I was dreadful) and the girls took home economics. The only D I ever got at any level of school was when I stupidly took shop as a freshman in high school. To this day I can't fix anything -- or cook anything. Best, Don Bauder

June 25, 2015

sports = money is the reason.

sort term thinking is the reason for decline in other programs

June 26, 2015

Murphyjunk: Correct: sports equals money. Players know it. Fans know it but don't want to admit it. Best, Don Bauder

June 26, 2015

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