Swiss police descended on a quiet luxury hotel in Zurich this morning and arrested seven officials from world soccer governing body FIFA. The men had gathered at the tony Baur au Lac — an establishment that features an in-house florist, its own exclusive brand of chocolates, and a mysterious but intriguing amenity called an "IT butler" — in preparation for Friday's vote for FIFA president. But instead they found themselves under arrest on US federal charges, including racketeering, wire fraud, money laundering, and other charges relating to bribery and corruption.
As the arrested officials were hustled into waiting cars, police held up sheets of fabric to shield them from the press cameras that swarmed around the hotel exits. But even though there were no "perp walks" at the Baur au Lac, the world greeted the charges with gleeful schadenfreude — and hunger for more. FIFA is charged with promoting a sport that is beloved the world over, so its officials' apparent callous exploitation of the world's love for soccer has long been a subject of global outrage. Many commentators' happiness at the indictment was tempered only by disappointment that hated FIFA president Sepp Blatter was not among those arrested.
But Blatter may not be off the hook. US Attorney General Loretta Lynch announced that the current charges are "only the beginning," and are part of much broader global efforts to combat FIFA's corruption. Indeed, today Switzerland also announced a parallel investigation that will focus on the bidding process for the 2018 Russia and 2022 Qatar World Cup Finals, which have long been rumored to have been awarded as the result of a corrupt bidding process. Although that decision has not been proven to be the result of corruption, it has already proven deadly to the countless migrant workers who have died during Qatar's preparation to host the cup.
In other words, today's indictments and arrests are likely the first public steps in a process that could reach much deeper into FIFA. That would not only be a step toward ending FIFA corruption around the world, it would also begin the process of accountability for decisions that have already had serious, even deadly consequences.
The conspiracy: how high does this go?
Today's indictment says a lot about how corruption prosecutions actually work. The charges aren't an overarching summary of all the corruption that may or may not be happening at FIFA. Rather, they're tightly focused on just one subset of alleged corrupt activity — in this case, the distribution of broadcast rights for soccer games.
Likewise, rather than going "straight to the top" to bring charges against the most senior FIFA officials, the indictment focuses on the networks of corrupt activity. Individuals charged include marketing executives from outside FIFA who allegedly paid bribes, as well as FIFA officials who allegedly accepted them. That's a common strategy in cases like this one, because it allows investigators to build cases against more senior officials on a foundation of information obtained from prosecutions of lower-level people.
That's likely why Lynch said that this was "only the beginning": large conspiracy and racketeering cases like this one can expand over time, as information obtained via guilty pleas is then used to charge more defendants. In other words, today's case might not be just an end in itself — it could also be a means toward prosecuting higher-level officials like Blatter.
The conspirators who turned into witnesses
The New York Times reports that today's indictment was built on information obtained from former FIFA executive Chuck Blazer. Blazer, who was the general secretary of CONCACAF, the regional organization governing soccer in North America, Central America, and the Caribbean, secretly pleaded guilty in 2013 to charges including wire fraud, racketeering, money laundering, and tax evasion. Bloomberg reports that Blazer, who is listed as "Co-Conspirator 1" in today's indictment, wore a hidden microphone in meetings with FIFA officials to gather evidence of the bribery scheme.
The second key cooperating witness appears to have been José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate based in Brazil. Hawilla also pleaded guilty, along with two of his companies: Traffic Sports International and US subsidiary Traffic Sports USA. Although it is not yet clear what specific contributions Hawilla made to the investigation, he is listed as "Co-Conspirator 2" in the indictment, and the Traffic Group's efforts to obtain the rights to FIFA games are at the center of the allegations unveiled today.
A conspiracy to obtain valuable contracts, including broadcast rights
Today's charges primarily arise from the way FIFA distributes media and marketing rights to soccer games. They allege that FIFA officials extracted massive bribes from sports marketing companies in exchange for the rights to FIFA games.
Media and marketing rights include TV and radio broadcast rights, sponsorship rights, ticketing rights, licensing rights, and hospitality rights. But FIFA doesn't contract with broadcasters and sponsors directly. Rather, it sells the rights to middlemen — sports marketing companies — which in turn license the individual rights to television networks, radio stations, and other companies, often at a very significant profit.
That means those rights are tremendously valuable. That value should have been flowing to FIFA directly, and then on to the national soccer organizations it supports. But instead, the indictment alleges, a huge percentage of the marketing revenue went to line FIFA officials' pockets. According to the indictment, FIFA officials treated their positions like toll booths, extracting bribes from marketing organizations that needed their signatures or cooperation.
For example, the indictment alleges that Hawilla's Traffic marketing company paid millions of dollars in bribes between 1991 and 2011 to regional and national FIFA officials in order to ensure its continued access to the marketing rights for tournaments like the Copa America.
According to the indictment, the bribery began in 1991, when Nicolás Leoz, then the president of CONMEBOL, FIFA's regional organization for South America, refused to sign a contract until Traffic paid him a six-figure bribe: he allegedly said that Hawilla was going to make a lot of money from the marketing rights, and that he "did not think it was fair" for him not to make money, too. Leoz allegedly then began to demand bribes regularly, in increasing amounts, until they were in "the seven figures" by 2011.
The indictment also includes other charges, such as an allegation that Blazer and another defendant, former FIFA vice president Jack Warner, accepted millions in bribes in exchange for voting for South Africa to be the host of the 2010 World Cup.
Soccer is more important in America than people think
There is some irony in the fact that this case is being brought by US federal prosecutors. The United States is famously uninterested in soccer, which lags behind (American) football, basketball, and baseball in popularity. So what's this case doing in a Brooklyn courthouse?
Part of the explanation is that many US federal laws have a global sweep — especially those that involve financial wrongdoing. As long as there is some "nexus" with the US to provide jurisdiction, such as the involvement of a US financial institution or a US citizen, then US attorneys often can and do prosecute wrongdoing that took place primarily overseas. For instance, in 2014 former Guatemalan president Alfonso Portillo was sentenced to six years in US federal prison for laundering money through US banks. The corruption at the core of the case took place in Guatemala — Portillo was accused of using the office of the president as his "personal ATM" — but the nexus with US banks was enough for him to be prosecuted by US courts.
That's why the indictment focuses so much on what it refers to as the "centrality of the US financial system" to the alleged crimes: the use of US financial institutions gives prosecutors jurisdiction to prosecute the cases.
But the FIFA case actually has much stronger connections to the United States than one might have guessed. One of the key players in the corruption scandal, Blazer, is a US citizen: Bloomberg describes him as a "former Westchester soccer dad." One of the Traffic subsidiaries that already pleaded guilty was a US corporation. CONCACAF's principal administrative office is in Miami. And soccer is growing more popular in the US, which has raised the value of the marketing rights that were obtained through bribes.
In other words, this isn't just a case of a federal prosecutor aggressively targeting conduct overseas. This is a case in which US individuals and a US company conspired to commit crimes with foreign co-conspirators, using US financial institutions, in order to exploit US and foreign markets. Viewed through that lens, it's not surprising that the Justice Department decided this was a good use of US federal resources.
What happens next?
Today's charges were likely only the beginning of FIFA corruption prosecutions. Switzerland also announced an investigation into the vote that awarded the 2018 World Cup to Russia and the 2022 World Cup to Qatar, which is widely believed to have been swayed by improper influence. And in a press conference at the Department of Justice, Attorney General Loretta Lynch promised that today's indictment was "only the beginning" of the process that would bring FIFA wrongdoers to justice, and pointedly refused to answer a question about whether current FIFA president Sepp Blatter had been given a "clean bill of health" in the investigation.
The scope of the prosecutions will matter, because recent FIFA decisions have caused real harm. The 2022 World Cup final in Qatar, for instance, has already cost the lives of many migrant workers who have been killed during the country's efforts to prepare to host the cup in 2022. According to a 2014 Guardian investigation, one Nepalese citizen working on World Cup infrastructure in Qatar dies every two days. And countless others are stuck in near-slavery, laboring in extreme heat and other unsafe conditions.
Qatar also criminalizes homosexuality, making the country an unsafe venue for LGBT World Cup fans. In 2010, FIFA president Blatter said that LGBT people should "refrain from any sexual activities" while attending the tournament — hardly a solution, let alone one that is respectful of LGBT fans' relationships or private lives.
And the heat in Qatar is so extreme that the tournament has had to be moved from its usual June and July period to November and December. While this is certainly not as serious a concern as the abuses or deaths of migrant workers, the altered schedule will interfere with professional soccer seasons around the world, potentially hurting the sport that FIFA is charged with promoting.
It would be bad enough if FIFA's decision to award the World Cup was merely the result of incompetence. But if that decision was the result of corruption — as seems likely, but has not yet been proven — then the people responsible should be brought to justice. Soccer may be just a game, but it's one that is beloved by millions of people all over the world. If today's allegations are true, then FIFA's officials have exploited that love for their own profit, and abused the game for their own benefit. That's an appalling breach of trust.