Is this the biggest sporting scandal ever?

US charges officials with corruption and Switzerland probes upcoming World Cup tournaments.

The future of the World Cup has been called into question and soccer’s governing body plunged into crisis after U.S. prosecutors charged nine officials with corruption and Switzerland probed upcoming tournaments awarded to Russia and Qatar.

In what may be the biggest sporting scandal ever, Swiss police raided the luxury Baur au Lac hotel in Zurich at dawn Wednesday and arrested seven FIFA officials. Two former soccer executives were also charged. In New York, the Justice Department vowed more arrests and to widen its investigation into racketeering, wire fraud and money laundering.

The probe calls into question the leadership of the world’s most watched sporting event, with more than $1 billion in annual revenue and sponsors ranging from Coca-Cola Co. to Adidas AG. While the charges stop short of FIFA President Joseph “Sepp” Blatter, his future has also been suddenly thrown into question.

Blatter, 79, who has run FIFA since 1998, is seeking a fifth term in a vote scheduled for Friday. As international soccer executives gathered in Zurich, his all-but-certain re- election was put in doubt.

“It would be absolutely the wrong signal if the agenda of the FIFA Congress were to be executed as planned,” said Reinhard Rauball, the president of Germany’s Bundesliga. “They can’t simply continue with business as usual. If these allegations turn out to be true, they would rock FIFA and the entire soccer world to the core.”

U.S. prosecutors unveiled charges detailing “rampant” corruption dating to 1991, hours after Swiss authorities arrested FIFA executives and searched the organization’s headquarters in a series of dawn raids in Zurich.

Swiss authorities later seized documents at FIFA’s nearby offices, saying they were examining possible crimes related to selecting Russia to host the 2018 World Cup and Qatar for 2022.

Defendants include U.S. and South American executives who are alleged to have paid more than $150 million in bribes and kickbacks to obtain media and marketing rights to soccer tournaments.

FIFA generates more than 90 percent of its income from the quadrennial World Cup. The tournament brought in $4.15 billion of revenue in the four years culminating with the 2014 edition in Brazil.

The bribes and kickbacks were meant to influence the host of the 2010 World Cup, which was held in South Africa, the U.S. statement said. Swiss authorities are investigating a criminal conspiracy related to the next two editions, awarded in a controversial vote in 2010.

Scandal after scandal

The investigations by the U.S. and Swiss promise to upend an organization that has endured one scandal after another during Blatter’s tenure, which began in 1998. FIFA said the presidential election, as well as the World Cups in Russia and Qatar would take place as planned.

“This is not good in terms of image or reputation but in terms of cleaning up everything we did over the past four years, this is good,” FIFA’s chief spokesman, Walter De Gregorio, told reporters at the House of Football in the hills above Zurich. He said the World Cups in Russia and Qatar would go ahead as planned.

Those charged include the current and former president of the confederation that oversees North and Central American soccer, Jeffrey Webb of the Cayman Islands, and Jack Warner of Trinidad and Tobago. They also include FIFA executive member Eugenio Figueredo of Uruguay and Jose Maria Marin, who led Brazil’s soccer federation during last year’s World Cup. Webb has been mentioned as an heir apparent by Blatter himself.

Aside from nine current and former FIFA officials, four sports marketing executives also were indicted, along with an intermediary accused of facilitating illicit payments.

Sealed courtrooms

Prosecutors began collecting guilty pleas in sealed courtrooms in 2013, including two sons of Jack Warner and Charles “Chuck” Blazer, a former FIFA executive committee member. Blazer secretly recorded conversations while cooperating with prosecutors, the New York Daily News reported last year. Brazilian Jose Havilla, founder of sports marketing company Traffic Group, agreed to forfeit more than $151 million as part of a guilty plea, the justice department statement said.

Swiss judicial authorities initially said six soccer officials were arrested pending extradition to the U.S., suspected of receiving or paying more than $100 million in bribes. A seventh arrest was disclosed hours later.

The suspects from sports marketing companies “are alleged to have been involved in schemes to make payments” to officials from FIFA and other soccer groups, the Federal Office of Justice said in a statement on its website. The payments date back to the early 1990s.

“According to the U.S. request, these crimes were agreed and prepared in the U.S., and payments were carried out via U.S. banks,” the statement said.

©2015 Bloomberg News


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