Joseph “Sepp” Blatter is a man whose name seems an adjective as much as a proper noun. Blatter, as you likely know by now, was just elected to a fifth term as President of the Fédération Internationale de Football Association (FIFA), the international umbrella organization for international soccer. The 79-year-old Blatter was his typically arrogant and tone-deaf self after his election victory, but one wonders if privately he is lining up some Ballon d’Or-caliber legal counsel.
Because the Yanks are coming.
On Wednesday, May 27, the U.S. Department of Justice (DOJ) launched a studs-up tackle at FIFA, unleashing a comprehensive 47-count indictment that charged 14 individuals with racketeering, fraud, and money laundering. The indictment outlined 24 years of kickbacks, bribery, and outright corruption detailing how sports marketing firms bought off FIFA officials for lucrative broadcast rights to various FIFA-sanctioned tournaments. Nine of the 14 individuals indicted were FIFA officials. Some of the arrests were carried out in Zurich, Switzerland, with the cooperation of Swiss officials. The DOJ says this is only the beginning of its investigation, and there may be more arrests and indictments to come.
One of the non-FIFA defendants named in the indictment is Aaron Davidson, president of Traffic Sports USA, a sports marketing firm. Davidson is a U.S. citizen. His U.S. citizenship, coupled with the DOJ’s assurance that the investigation is not over, makes one wonder if the government is also going to bring charges under the Foreign Corrupt Practices Act (FCPA).
The FCPA generally prohibits a U.S. citizen or entity from bribing a “foreign official” for the purpose of obtaining business. The definition of “foreign official” includes an officer of a governmental agency, department, “or instrumentality thereof.” According to the indictment, Davidson facilitated bribes to soccer officials from Trinidad & Tobago, Costa Rica, Nicaragua, and the Cayman Islands. The question then is whether the soccer federations of those nations are “instrumentalities” of their national governments.
The recent Esquenazi decision from the Eleventh Circuit appears to permit a broader reading of the statute. In Esquenazi the court defined “instrumentality” as “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.” There is evidence that some national soccer federations are under the control of their national governments. A bribe by a U.S. citizen to such an official could bring the act under the FCPA. Davidson’s legal troubles may not be over. For Traffic Sports employees who helped facilitate the bribes, their legal troubles may just be beginning.
The men arrested last Wednesday are not hardened criminals. Some or all of them might be singing to the feds already. We can only speculate whether the scandal will reach Blatter and truly reform FIFA. But considering the DOJ’s resources, the cooperation of the Swiss government, and the recent announcement by British banks that they will review whether any dirty FIFA money was funneled through their systems, I think it’s appropriate to invoke the chant of U.S. Soccer’s diehard supporters: I believe! I believe that we will win!
Great headline and column, Brian. As you probably know by now, Blatter just announced he is stepping down as FIFA president. Here is an interesting Washington Post article on the behind-the-scenes, pavement-pounding, document-scouring journalism work that brought about this result — http://wapo.st/1QoYgrr
Thanks TK. From an HR perspective, I’m waiting to see if the feds deploy the FCPA. It is a statute that can be troubling for US companies (and their employees) doing business overseas.