The World Cup of Bribery International Soccer Tarnished by Corruption Case

Top sports officials are alleged to have collected more than 18 million Swiss francs in bribes for TV and merchandising deals. The soccer association FIFA is involved, and the case in Switzerland will expose a system of bribes -- and perhaps those who accepted them.

FIFA President Joseph Blatter: "I am not bribable."

FIFA President Joseph Blatter: "I am not bribable."

For Joseph Blatter, the world football association FIFA is an outfit that unites the planet, an organization in which values like decency, morality and mutual respect hold sway. Batter is Swiss, and he's led the association of 208 national clubs (or 260 million soccer players) since 1998. Blatter views FIFA as a complex, ethical work of art -- somewhere between the United Nations and Amnesty International, one that long ago should have won a Nobel Peace Prize.

But there's also another view of the organization, one that paints FIFA as a global money-printing machine, raking in hundreds of million Swiss francs a year, with revenues of more than 3 billion Swiss francs between 2003 and 2006 alone.

Just under a year ago Blatter dedicated FIFA's new headquarters in Zurich, which cost 240 million francs. Now he can spend his time there dreaming of the Nobel Prize. Five of the building's eight floors are underground -- evidence for his adversaries that megalomania and obfuscation are the real principles behind his tenure.

Since his election 10 years ago, Blatter has had to defend himself against the charge that FIFA can be bought. He consistently denies the existence of any corruption. "I am not bribable," he once said in an interview. "Otherwise you can chop off both of my hands."

But now Swiss investigators have found that sports officials, including representatives of FIFA, may have taken bribes numbering in the millions. The district attorney's office in the Canton of Zug in Switzerland has drafted a 228-page complaint, which includes extensive testimony and evidence of a bribery system.

The prosecutors compiled this information for a case against six former managers of ISMM, a holding company dealing in sports media and marketing rights. The case is scheduled to go to trial in Zug on March 11. Apparently the company used secret payments to buy the support of key decision-makers in connection with the awarding of exclusive football rights.

The case also involves the second-largest bankruptcy in Swiss economic history. ISMM had to file for bankruptcy in May 2001, after the company had upgraded its portfolio in previous years to prepare to take itself public, and had overextended itself while attempting to expand. Not only did the company guarantee FIFA a payment of at least 2.2 billion Swiss francs for television and marketing rights to the football World Cup Tournaments in 2002 and 2006; ISMM also used its subsidiary, ISL Worldwide, to secure rights to almost all major sports events, often at inflated prices.

A deal struck with the ATP tennis organization in 1999, which was set to cost the agency $1.2 billion over a 10-year period, got ISMM into a financially precarious situation. According to investigators, ISMM and ISL Worldwide lost more than 860 million francs in the 2000 fiscal year alone.

The court will now have to decide whether executives of the two companies resorted to any crimes to prevent the collapse of their sports-rights empire. The district attorney's office in Zug is charging the defenders with embezzlement, fraud, several counts of preferential treatment of a creditor, harming creditors and fraudulent bankruptcy. It will call for prison sentences of between three and four and a half years. The attorneys for the defense argue that their clients should be acquitted on all counts and demand compensation for their clients' legal fees.

A Worldwide Web

Thomas Hildbrand, the extraordinary investigative judge who, like Blatter, comes from the tiny Swiss town of Visp in Canton Wallis, has spent three years researching the reasons behind the ISMM bankruptcy. He has flown as far as Brazil and Japan to question witnesses.

FIFA profits from selling rights (click to enlarge).

FIFA profits from selling rights (click to enlarge).

Hildbrand's business trips also took him to Liechtenstein, where he discovered transactions that prosecutors believe ISMM used to bribe sports officials.

As in the recent tax-scandal case of Klaus Zumwinkel, a former German postal executive, shady foundations play a key role here. One was called Nunca, established in the Liechtenstein capital Vaduz in 1998. Sunbow, the second foundation, was established more than a year earlier in the British Virgin Islands, until it was acquired by Nunca on Feb. 8, 1999.

Even at ISMM, which went by the name Sporis Holding AG in the late 1990s, only a select few were aware of these connections. The two foundations do not appear on balance sheets or organizational charts of the complex group. Investigators believe, however, that they were clearly "economic business units" of ISMM.

Sunbow became a customer of LGT, the same bank German business executives like Zumwinkel apparently used to dodge German taxes. Sunbow's account No. 193.223.31 soon became a busy place. In late May 1999, the sum of 36,130,220 francs was deposited into the account. The payment had come from Sporis Holding AG's account with Banque Nationale de Paris. The attached memo read: "Rights acquisition costs."

Between June 3, 1999 until Jan. 15, 2001, Sunbow's multi-million-franc fortune sank to a balance of only 2,134.90. Investigators believe 18,198,310 francs were "transferred to the accounts of individuals who were directly or indirectly associated with contracts that the ISMM Group concluded. These amounts were perks or bribes."

That's what it says in the file.


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