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On May 27, Swiss authorities arrested seven high ranking officials of the International Federation of Association Football (FIFA), the world’s governing body for soccer. The arrests were due to a United States investigation into bribery and corruption within the organization that federal prosecutors allege played a role in the awarding of television, licensing, and hosting rights to soccer competitions, notably the World Cup. In addition to the United States investigation, Swiss officials are also examining how corruption may have influenced FIFA’s decision in 2010 to grant future World Cup competitions to Russia and Qatar. Longtime FIFA President Sepp Blatter has already been forced to resign over the investigations and observers are likening the scandal to what the International Olympic Committee (IOC) dealt with in the late 1990s. The ongoing investigation into FIFA should produce some momentum to reform the organization, while potentially producing geopolitical fallout if the organization revokes Russia and Qatar’s World Cup hosting rights. The investigation will also be a test of how far the U.S. Justice Department can apply American law abroad.
This topic brief will summarize the ongoing investigations into FIFA, discuss what changes may take place within the organization in light of these investigations, and then analyze the geopolitical factors associated with the scandal.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
The Ongoing Investigations
It is important for extempers to realize that there are several ongoing investigations into FIFA. These investigations are being led by authorities from the United States, Switzerland, and Australia and as evidence of wrongdoing continues more countries could begin their own inquiries into the organization. CNN reports on June 3 that the Justice Department’s current investigation spans twenty-four years and is primarily concerned with illicit activities that have taken place in the Caribbean and South America. The New York Times has alleged that there is a connection between FIFA Secretary General Jerome Valcke – the top assistant to FIFA President Sepp Blatter – and $10 million in alleged bribes that were sent to Caribbean nations and the Confederation of North, Central American, and Caribbean Association Football (CONCACAF) in return for their support of South Africa’s bid to host the 2010 World Cup. According to The Guardian on June 6, a key U.S. witness is former FIFA executive committee member Chuck Blazer who has already testified that he took bribes to try to enhance South Africa’s chances of hosting the tournament. Reports are also circulating that former FIFA Vice President Jack Warner has documents that link FIFA, its funds, and the buying of votes for hosting the 2010 World Cup from officials in Trinidad and Tobago. CNN explains on June 5 that the U.S. indictments of fourteen FIFA officials allege that more than $150 million in bribes were passed around to grant the “lucrative media and marketing rights” of some soccer competitions to certain broadcasting outlets. It is somewhat curious that the United States is the primary actor in taking on FIFA considering the fact that it is not a global soccer powerhouse. However, some observers think that the United States low profile in the international soccer community may be an asset as they have less to lose in challenging the organization. Corruption within FIFA has been discussed for years, but some countries were hesitant to challenge FIFA’s executive committee for fear of being denied the right to host future World Cup tournaments, having their teams banned from future competitions, and/or denied FIFA funds to enhance their national soccer teams. Those indicted by the Justice Department stand accused of bribery, fraud, and money laundering, with American legal officials asserting that they have prosecutorial authority because the indicted figures used American banks to conduct their illegal actions. Thus far, American officials have yet to indict Blatter, but some believe that an indictment could be looming as U.S. Attorney Kelly Currie told reporters last week that the May indictments were not the end of the American investigation into FIFA.
Swiss officials are also investigating FIFA, paying more attention to how Russia and Qatar won their bids in 2010. The selection of both nations was controversial and after FIFA made its decision several nations argued that the selection process was heavily tainted. Of the two bids, Qatar’s drew the loudest criticisms as Slate explains on June 4 that the country has no soccer culture, was too hot in the summer to host the competition (FIFA has said that the 2022 World Cup will be moved into the fall to accommodate for this), and that it has some of the worst labor conditions in the world. In fact, more than 1,000 migrant workers have reportedly perished building facilities for the World Cup in Qatar thus far. Under Blatter, World Cup hosting rights have been made more democratic with countries such as South Korea, Japan, and South Africa hosting World Cups instead of European or South American nations. However, the awarding of a World Cup to Qatar, which would be the first nation in the Middle East to host the tournament, was deemed as a very poor choice when other countries such as Turkey or Morocco might be better sites from a public relations perspective. The Swiss investigation follows in the steps of a report conducted into the awarding of the 2018 and 2022 World Cups to Russia and Qatar by American lawyer Michael Garcia, who was appointed by FIFA several years ago to look into the matter. Reuters explains on June 5 that after an eighteen-month investigation, Garcia gave FIFA officials his report, but FIFA ethics judge Hans-Joachim Eckert said this past November that although the report showed some improprieties in the awarding of both tournaments that there was not enough evidence to reopen the bidding process. Garcia challenged this summation of his findings, but his appeal was denied by other FIFA officials and he resigned in December. Although the Swiss investigation has yet to indict anyone, it has the potential to create headaches for FIFA if it uncovers large-scale corruption in the awarding of the 2018 and/or 2022 bids. Such evidence would justify the calls by some soccer officials in Europe and elsewhere to move one or both of those competitions.
Aside from the American and Swiss investigations, FIFA faced other embarrassing accusations last week. The CNN article from June 5 that was previously cited argues that the head of the Irish Football Association says that FIFA gave it a confidential payout more than five years ago to avoid the group taking legal action after it lost a 2009 World Cup playoff to France due to a handball in the final minutes. This payout was allegedly $5 million. FIFA argues that this was not a bribe but was instead intended for new soccer stadium construction and was actually a loan as Ireland was obligated to pay it back if they qualified for the 2014 World Cup (they did not). Following in the tradition of sarcastic British journalism, The UK Telegraph provided another amazing revelation on June 5 by reporting that Germany allegedly sent Saudi Arabia grenade launchers in exchange for the kingdom’s support of its bid for the 2006 World Cup. The assertion that military equipment supplemented bribes to acquire hosting rights definitely makes ongoing investigations of FIFA more serious. Furthermore, Blazer’s testimony reveals that he not only accepted bribes to shift votes to help South Africa win the 2010 World Cup, but he also took bribes to help France secure the right to host the 1998 World Cup. The Guardian noted on June 4 that U.S. officials are also examining how corruption played a role in organizing last year’s World Cup in Brazil with the U.S. investigating if a $150 million deal between the Brazilian football federation and Nike was then used to pay bribes to further the nation’s soccer interests. In addition to Switzerland, Australia, a nation that lost its proposed 2022 hosting bid, is investigating FIFA’s bidding process. Thus, FIFA’s existing problems look to get worse as more revelations come out about the internal workings of the organization.
Reforming FIFA
The first domino to fall after the arrests of FIFA officials in Switzerland was Blatter, who has served as FIFA’s president for seventeen years. In fact, the arrests took place two days before the organization decided whether Blatter warranted a fifth term. Despite the ongoing scandal, Bloomberg reports on June 5 that Blatter was still re-elected, although his support from 133 of 209 countries was his worst showing since winning his first term in 1998. Blatter was also forced into a second round vote against Jordan’s Ali bin al-Hussein after he did not win two-thirds of the vote in the first round (al-Hussein dropped out after the first round when it became apparent that he would lose a majority vote in the second round). However, Blatter was convinced to step down after there was a growing chorus of pressure from FIFA’s corporate sponsors and some of its Western European and American clubs. Bloomberg explains how sponsorships are FIFA’s second-largest source of income after broadcasting rights and premier sponsor Coca-Cola warned that without reform it may have to reconsider its sponsorship of the organization’s tournaments. The Economist writes on June 2 that prior to Blatter’s resignation the Union of European Football Association (UEFA) was considering a boycott of the 2018 World Cup and potentially severing its relationship with FIFA. There was even an idea of UEFA working with South American countries to host a rival tournament to the World Cup, something that might scuttle the World Cup’s legitimacy if soccer powers such as Brazil, Spain, and Italy did not participate in the tournament.
Blatter’s exit will not be immediate as he will remain acting president until a successor is elected. This will not occur until December at the earliest. It is very important that FIFA select someone who is ready to handle the difficult task of reforming the association to allay concerns about corruption and transparency, as well as someone that is able to tackle the public firestorm over the ongoing investigations. The Washington Post writes on June 5 that a new executive will also need to do more to tackle racism at soccer matches and be more supportive of women’s soccer (Blatter once suggested that women should play in tighter uniforms in order to attract more male soccer fans). As of right now there is not a clear list of candidates that are expected to compete for the position, but possible candidates, according to The Wall Street Journal on June 5, include former Brazilian football legend Zico and former FIFA Vice President and Hyundai billionaire Chung Moon-joon of South Korea. CNN explains that other candidates might include Michael Platini, a former French football star and FIFA vice president who is now the head of UEFA and who was once designated as Blatter’s successor before a falling out less than two years ago; Jordan’s Prince Ali, who recently lost to Blatter; FIFA executive committee member Sheikh Ahmad Al-Fahad al-Sabah of Kuwait; and UEFA executive committee member Michael van Praag of the Netherlands. Candidates will have to take stances on issue ranging from executive committee changes to whether the 2018 and 2022 World Cups should remain where they are, something that could create complications in the voting. Blatter’s success was owed to cultivating votes among football federations in the developing world and these helped him overcome European objections to his leadership. Another factor hanging over the election of a new FIFA executive, as The Wall Street Journal notes, is Blatter himself. Blatter still carries weight with African football federations and their fifty-four votes tend to take place as a block. A failure to win Blatter’s blessing behind the scenes may doom a candidate, but that may also scuttle the presidential hopes of a truly reformist candidate.
There are several strategies on the table to fix FIFA, but many of the current ones center on reforming the group’s executive committee that has concentrated more and more power within itself over the last several decades at the expense of regional football federations. Indeed, one of Blatter’s reform ideas – announced during his resignation speech last week – was to have integrity checks of executive members done directly by FIFA, but this would just enhance the powers of the committee. Michael von Praag, a possible successor to Blatter, campaigned for the FIFA presidency this past year on a platform of imposing a term limit on FIFA’s president (Praag’s idea is to only let a president serve two terms). The idea behind a term limit is that it would prevent a single figure within FIFA from becoming too powerful as Blatter became a kingmaker by the end of his presidency, dispensing favors on those nations and officials that he liked and punishing those who refused to bow to his antics. Additionally, there will be greater demands for transparency of the executive committee’s decisions, especially with regards to how voting takes place for future World Cup competitions. One of the puzzling things about the latest scandal, according to The New York Times on June 5, is that FIFA has been audited by KPMG, one of the world’s top auditing firms, for the last sixteen years and these audits – conducted over four-year cycles – do not reveal any wrongdoing within the organization. However, it is possible that KPMG missed corruption within FIFA because it was not provided adequate records. Former FIFA Secretary General Michael Zen-Ruffinen wrote in 2002 that FIFA destroyed its financial documents prior to 1998 which was a year before KPMG being given a contract to audit the organization. There are additional questions about a conflict of interest as KPMG’s contract to audit FIFA also gives it business from forty FIFA member associations. Future reforms will need to ensure that KPMG is given accurate financial data to render a proper picture of FIFA and may necessitate the use of another auditor.
Another reform idea that is the favorite of some European nations is to reconsider how voting rights are handled within FIFA. The Washington Post article previously cited reveals that since the election of former Brazilian Olympian Joao Havelange as FIFA president in 1974 the organization has been democratized with each nation being given one vote regardless of the strength of their national soccer programs or the length of their time as a FIFA member. Extempers that have taken a course in world history will remember that the decades following the Second World War saw the decolonization of Europe’s colonial empires. Newly independent nations in Africa and Asia thereby acquired equal voting rights in relation to their former European controllers and now serve as a dominating force in FIFA decision-making. European nations argue that this democratic structure hurts the organization since it puts countries such as Jamaica on par with England. This same criticism has been leveled against other global groups such as the UN General Assembly and Slate goes as far as to say that “FIFA is just a microcosm of the world order in its default state – anarchic and unjust.” Scaling voting privileges in theory may reduce corruption from governments that tend be infested by it, but rescaling voting rights does not work as well in practice. First, revelations from the latest scandals are showing that European officials also paid bribes to host the World Cup, notably France and Germany, so this destroys the theory that corrupt governments in the developing world are solely to blame. Second, soccer prides itself on being the world’s largest and most accessible sport, but taking FIFA back to its days as a European club would scuttle this image. And third, a reactionary voting policy would create significant geopolitical problems for the organization as developing nations would allege that they are once again victims of European imperialism. Some of these nations could work to boycott future World Cup competitions and further tar FIFA’s credibility. This has happened before as The Washington Post writes that in 1966 many African nations boycotted that year’s World Cup in England, alleging that FIFA was “unfair and undemocratic.” FIFA rules at the time mandated that the best African and Asian teams had to play a low-ranked European team in a play-in game, but after the 1966 boycott the organization moved to change the rules to where these regions received automatic berths. Thus, altering the democratic structure of FIFA is unlikely to take place, but advocates for retaining the existing voting structure would be wise to also advocate greater transparency in voting to scuttle corruption.
As previously noted, the problems that FIFA faces are not that different from those that the International Olympic Committee (IOC) dealt with in December 1998. The New York Daily News explains on June 3 that like FIFA the IOC came under fire for its top officials accepting cash, scholarships, medical care, and other gifts in return for their votes for Salt Lake City, Utah hosting the 2002 Winter Olympics (an Olympics that former Massachusetts Governor Mitt Romney was credited with saving which made him a rising star in the Republican Party). Canadian lawyer Dick Pound was tasked with investigating the IOC at that time and he has recently stated that FIFA is “a complete and utter mess.” In 1999, a reform committee recommended that the IOC expel several members implicated in the Salt Lake City scandal and its most radical reform took the decision of which city would host future Olympics out of the hands of rank-and-file IOC members. Instead, an independent committee composed of IOC officials, athletes, and others were tasked with making a selection. FIFA may want to go down a similar route. The good news, though, is that the IOC is in much better shape today and although some say that the 1999 reforms did not go far enough, it has been free of the negative press and backdoor criticism FIFA has had to weather in recent years. The Women’s World Cup also gives FIFA the opportunity to bolster its image as the tournament began last Saturday and will run through July 5. USA Today writes on June 5 that FIFA relying on the Women’s World Cup – the largest female sporting competition in the world – to bolster its image is somewhat ironic considering the fact that it is forcing female players to compete on turf, something that has never been done before, which produced a lawsuit and allegations of sexism by some of the world’s top female players. Nevertheless, an effective tournament that garners some positive headlines may help FIFA begin the process of rehabilitating its image, but much of this image change will have to be manifested in who is tasked with taking over the organization.
The Geopolitical Impacts of the FIFA Scandal
The reason that extempers may run into questions about FIFA is that the politics and influence of the sport transcends national borders. Just like the Olympics, the World Cup is an event that brings together different peoples from all parts of the globe. As previously noted, criticisms by Africa and Asia of FIFA’s Eurocentric structure produced reforms in the late 1960s and similarly, the latest scandal is sending shockwaves through the international body politic, touching on some of the most sensitive international topics that include development aid, Russian distance from the West, and Middle Eastern politics.
With regards to development, British Prime Minister David Cameron has singled out the FIFA scandal as emblematic of a lax global attitude toward corruption in recent years. The Guardian writes on June 5 that Cameron planned to talk about corruption with French, Italian, German, American, Canadian, and Japanese officials at the recent G7 meeting in Germany. Positing corruption as a threat to democracy, development, and security, Cameron used FIFA as an example of how a powerful international institution could be turned to aid the interests of a select few. In some ways, FIFA is a development organization that is no different than humanitarian relief provided by international groups such as the United Nations as it provides funding for soccer stadiums, national soccer teams, and programs to grow the appeal of the sport, so it has turned into the poster child for how international development targets need to feature anti-corruption components.
One of the most notable geopolitical impacts of the FIFA scandal is its potential to further raise tensions between the West and Russia and the West and the Middle East. The Associated Press reveals on June 5 that FIFA does have the power to strip Russia and Qatar of their World Cups if they were to find evidence of gross impropriety, something that may not be difficult to establish given the fact that the current scandal is arguably the worst in FIFA history. Although FIFA has stated that the findings of Michael Garcia’s report were not enough to revoke the competitions, the Associated Press notes that several members of the twenty-four man committee that chose Russia and Qatar have been discredited, which includes Qatar’s Mohammed Bin Hammam, who has been banned from the sport for life. World Cups have changed venue before as Colombia’s 1986 bid was scuttled due to economic problems and China lost the 2003 Women’s World Cup due the SARS virus. However, taking away the competitions from Russia and Qatar would be problematic. In Russia’s case, the country has spent nearly $12.4 billion on the World Cup, having already completed three stadiums. Revoking the World Cup would be seen internationally as another attempt to sanction Russian President Vladimir Putin’s government, even though the decision would not be directly linked to Russia’s continued involvement in Ukraine, and this could bolster Putin’s stature within Russia as he could paint himself and the Russian nation as the continued victim of Western aggression. This perception would be reinforced by Britain, Germany, or the United States likely getting the 2018 or 2022 World Cups if they were revoked from Russia and Qatar. Taking away Qatar’s World Cup may be easier as one only has to point to how the country was arguably ill-suited to be granted the competition in the first place due to its lack of a national soccer program, its climate, and questionable human rights record when it comes to homosexuals (creating the same social tensions that surrounded the 2014 Winter Olympics in Sochi). The number of projected migrant deaths also create the unsettling picture of soccer teams and fans enjoying the amenities of stadiums built at the expense of thousands of dead laborers. Still, revoking Qatar’s bid is problematic because its competition would the first in the history of the Middle East. Soccer officials and politicians hope that the World Cup can reduce tension between various world regions and the Middle East, while possibly providing an impetus for social reform in the area. These aims would encounter a setback if the competition was taken away. Qatar, like Russia, has significant costs allocated for its hosting of the tournament, projected to be over $200 billion, so there are also economic issues in taking the competition away. Furthermore, it is notable that although the IOC recognized that corruption influenced the decision to award Sydney, Australia the 2000 Summer Olympics and Salt Lake City, Utah the 2002 Winter Olympics that it chose to keep those competitions where they were so there is an international sports precedent for FIFA staying the course. Ultimately, FIFA is in a difficult place of having to stick by its decision to award tournaments to these nations and reinforcing its image as a corrupt body or taking the competitions away and exacerbating geopolitical tensions.
Finally, the FIFA scandal is a test of how far American law extends in an international context. The tool being used by the Justice Department to target FIFA officials is the Racketeer Influenced and Corrupt Organizations (RICO) Act, which has been used in the past by federal prosecutors to target the mafia, politicians, and corporate criminals. The RICO Act helps the Justice Department get around normal statute of limitations requirements for corruption, which typically go back five years, as The New York Times writes on June 1 that under the RICO Act the government merely has to show how an “enterprise” – which in this case would be FIFA – has participated in a pattern of illegal acts that stretch back over an extended period of time. This pattern is available for prosecution so long as one of the alleged illegal acts took place within the last ten years. The Justice Department argues that RICO should apply to the members of FIFA that it has indicted because the alleged offenses involved the transferring of funds through American banks. However, the legal grounds of the Justice Department’s indictments are murky. In 2010, the Supreme Court ruled in Morrison v. National Australia Bank that an American securities fraud statute could not apply to a case where a foreign company bought stock outside of the American stock market. The Court found that American laws “should not be presumed to apply abroad unless Congress [made] that intention clear when drafting the law.” Still, The New York Times explains that in 2014 the U.S. Court of Appeals for the Second Circuit in Manhattan found that RICO could apply abroad in the case of European Community v. RJR Nabisco if a financial transaction went through an American bank. The Court of Appeals saw significant dissent in its decision, with those judges arguing that the majority were going against the precedent established in Morrison. The setting for European Community matters because the Second Circuit is the site of the indictments against FIFA officials and The Guardian explains on June 6 that the judge overseeing the case – Raymond Dearie – has a history of overseeing trials involving organized crime figures over the last three decades so he is quite familiar with RICO. FIFA defendants are likely to allege that RICO should not apply in their cases, arguing that the Justice Department is expanding U.S. law too far. These cases have the potential to go to the Supreme Court in the future, with the Court weighing whether the Justice Department’s justification for its actions as found in the European Commission case violates Morrison or whether Morrison should be disregarded for another precedent. If the Justice Department’s argument succeeds, The New York Times writes that it would work to enhance the power of the Department abroad and constitute a sizable international victory for the reach of American law.
With the Justice Department signaling that its investigation of FIFA is not yet over and with the geopolitical factors at stake in future reforms to the organization, I would encourage extempers to continue following this story into next season. One does not have to be a fan of international soccer to appreciate the legal and international dimensions of this issue, so please do not disregard stories about FIFA as you file articles for the national tournament or local tournaments next year as you may find the organization as a useful tool for discussing the problems of international institutions and global corruption.