Arrests of top Latin American football officials for corruption rocks a sport that is a religion in the region; many say the ‘clean up’ was long overdue

May 30, 2015

By Santiago Perez and Juan Forero

The arrests of current and former FIFA officials in a sweeping U.S. investigation have opened a window on alleged corruption and mismanagement in one of soccer’s more fertile patches, Latin America.

Of 14 people—FIFA officials, former officials and sports-television executives—charged with racketeering, wire fraud and money-laundering conspiracies, 13 were from Latin America and Caribbean organizations. It wasn’t lost on soccer aficionados in the region, in which many professional teams operate at a loss, bribery scandals are commonplace and violence mars games.

Ecuadorian fans at last year's World Cup match against Honduras. Photo credit: Getty

Ecuadorian fans at last year’s World Cup match against Honduras. Photo credit: Getty

“Soccer is one of the world’s biggest corporations, and there has always been suspicion of these kinds of links, that it’s managed by people who don’t have to answer to the justice system,” said Roberto Bermudez, a professor of sports journalism in Buenos Aires and former sports adviser in Argentina’s congress. “We think that the corruption has been killing the game, and the violence, too.”

In Brazil, Sen. Romário Faria, who as a player in 1994 helped lead Brazil to its fourth World Cup championship, said, “I want to congratulate the [Federal Bureau of Investigation] and the Swiss police on their operation,” referring to the teamwork that led to the arrests in Zurich.

A U.S. Justice Department indictment, covering alleged crimes that took place over 24 years, said soccer officials received more than $150 million in bribes and kickbacks from sports-marketing executives in exchange for broadcast and marketing rights. It was in South America, which produces some of the world’s greatest players—including Lionel Messi of Argentina and Neymar of Brazil—where much of the corruption was allegedly centered.

For fans here, the sport is akin to a religion—with stadiums sold out and matches broadcast on prime time across the continent. But soccer, experts and fans say, is in trouble, mired in scandal and mismanagement.

In some countries, games are considered too dangerous for ordinary fans to attend. In Argentina, four players from River Plate were recently hospitalized after fans of an opposing team, Boca Juniors, sprayed them with a tear gas-type irritant.

In Brazil, a country with a huge fan base, the top 20 professional teams saw debt jump 18% in 2014 from the year before, said the sports business consultancy, BDO. Money troubles, in fact, hound local clubs, though the soccer federations that run the sport are considered cash cows.

For many observers who closely follow the sport, the troubles for soccer in Latin America stem from corruption in organizations with inadequate accountability and limited rotation of managers who handle millions of dollars from lucrative broadcasting and sponsorship deals.

Hector Aguilar Camin, a leading Mexican historian and soccer fan, said it wasn’t surprising that most of the suspects in the scandal come from the region.

“When you look at any process in our countries, there are so many conflicts of interest, so many hidden agendas, so much corruption,” he said. “Soccer is one of the most public of activities in the planet, yet one of the most economically opaque.”

The money that soccer generates in countries with weak judicial systems, though, has also been a catalyst for bribery and kickbacks.

The inclusion of Mexican teams since the early 1990s in South American soccer tournaments such as the Libertadores and the América cups, coupled with the growing popularity of the sport in the U.S., fueled various schemes as sports executives tried to retain lucrative media and marketing rights, according to the indictment.

Argentine defendants Alejandro Burzaco, Hugo Jinkis and Mariano Jinkis allegedly agreed with others to pay $110 million in bribes to soccer officials to secure valuable media rights from Conmebol, South America’s soccer confederation, and Concacaf, the confederation for North, Central America and the Caribbean. In separate statements on Wednesday, both Conmebol and Concacaf pledged their support and willingness to cooperate with the investigations. The three defendants couldn’t be reached for comment.

Datisa, a company owned by the Argentine businessmen and another, unnamed defendant, signed a $317.5 million contract in 2013 with Conmebol and another one valued at $35 million with Concacaf to obtain the exclusive world-wide rights to the 2015, 2019 and 2023 editions of the América cup. The contracts also include the 2016 Copa América Centenario, which will be held in cities located through the U.S. and will include the U.S. national team and five other teams from Concacaf.

Datisa agreed to payments to more than five soccer-confederation officials over the life of the contracts. “At least $40 million has been paid to date,” the indictment said.

Attempts to reach Datisa were unsuccessful.

“When I see so much money in play, I’m not surprised that there are people in the middle who are involved,” said a leading executive who has worked with Torneos y Competencias SA, an Argentine sports-broadcasting company named as a defendant in the indictment and controlled by Mr. Burzaco. “It’s hundreds of millions of dollars that we’re talking about.”

The indictment has far-reaching importance in Brazil, where President Dilma Rousseff said that “it will only serve to help Brazilian soccer.”

Perhaps the most significant allegations of possible crimes committed involving Brazilians revolves around the sports-marketing company Traffic. The company brokered international television rights for the qualifying matches for soccer´s 2014 World Cup, held in Brazil, and joined with with a firm called World Sport Group to acquire the international TV rights of Gold Cup and Concacaf Champions League, according to its website.

The company´s owner, the Brazilian businessman Jose Hawilla, is cooperating with the FBI in its investigation of FIFA, a lawyer for Mr. Hawilla said. Under the agreement, Mr. Hawilla has admitted to crimes including money laundering, fraud, extortion, and has agreed to return $151 million in funds.

A former hot dog salesman who became one of soccer’s most powerful businessmen, Mr. Hawilla’s cooperation could have a far-reaching impact on the investigation. His firm owns the rights to the Libertadores South American league team championship.

Allegations of corruption have swirled around the sport for years in Brazil, a country that has played an outsize role in the development of global soccer, both on the field and in FIFA’s boardroom.

Global soccer was run by the Rio de Janeiro-born businessman Joao Havelange for two decades until 1998, when he stepped down from FIFA. He was also a member of the International Olympic Committee, stepping down amid corruption allegations in 2011. An ethics committee later found he had accepted bribes, which Mr. Havelenge, who is 99, denies.

On Wednesday, Brazilians described a range of emotions over a scandal of such large proportions in their favorite pastime.

Ary Veras, 58, who lives in São Paulo and supports a local team called Corinthians, said he was ashamed that it was American justice that snared the suspects. Still, he saw a bright side.

“I’m happy they were caught,” he said. “I think this could mean a new beginning, a new era for Brazilian soccer.”

Credit: The Wall Street Journal, www.wsj.com

 

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