Fifa 'misled' detectives on missing £45m
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Fifa 'misled' detectives on trail of missing £45m paid for World Cup TV rights
A Swiss court has ruled that football’s world governing body, Fifa, misled detectives investigating the disappearance of £45 million paid for World Cup television rights.
Questions on the horizon: Sepp Blatter's organisation must pay out £57,000 in court costs
The disturbing revelations highlight the dilemma confronting the Football Association as they seek an honest way to persuade Fifa to award them the right to stage the World Cup in 2018.
In an extraordinary decision, three judges in Zug hearing a fraud trial into the collapse of Fifa’s former marketing partner, ISL, ruled earlier this month that football’s governing body “knew more than they told investigators”, that their behaviour “was not always in good faith”, and some of their claims “were not credible”.
Fifa were even ordered to pay £57,000 in costs, despite claiming they had not misled the authorities. The Daily Telegraph has seen the written submission from Fifa president Sepp Blatter’s lawyer, Peter Nobel, claiming that Fifa did act in good faith. “All the facts show and prove that Fifa did not act frivolously,” he said. The court rejected this, ordering Fifa to pay up.
Fifa have declined to comment on the court’s costs decision, saying only that they have “taken note of the verdict” and adding that they will appeal against the ruling.
During the case earlier this year it was also disclosed that Fifa officials pocketed kickbacks from the agency they employed to sell billion-dollar World Cup television and marketing contracts.
With the FA fine-tuning preparations for the bid company who will run the £15 million 2018 campaign, details from the Zug court case may alarm senior figures at Soho Square who are plotting what is likely to be a fiercely contested World Cup contest.
The latest controversy to rock Fifa is rooted in the collapse of the Swiss-based ISL company, Fifa’s marketing agency of two decades, in the spring of 2001. After a seven-year investigation, six directors came to trial in March this year, accused of embezzling £45 million that should have been paid to Fifa. But the case collapsed on the final day when a defence lawyer flourished a secret memo purporting to reveal that Fifa leaders always knew the money was missing.
The memo, written by Fifa’s former finance director, Urs Linsi, claimed: “It was a higher-level decision within Fifa not to put too much pressure on ISL.” There was only one level higher than Linsi – president Blatter.
The 228-page criminal indictment revealed that ISL paid £9 million in secret kickbacks in the company’s final 18 months. Two in 2000, totalling $130,000 – then worth £89,000 – allegedly went to Nicolas Leoz, the 79-year-old Paraguayan president of South American football and a member of Fifa’s ruling executive, who awarded the contracts to ISL. He denies wrongdoing.
Five of the defendants claimed they had no idea who got bribes. They claimed fellow director Jean-Marie Weber, a close friend of Blatter, organised the payments. He allegedly laundered them through the 'Nunca’ foundation (Spanish for never) in Liechtenstein and onwards to a British Virgin Islands company, which distributed the money to front companies and individuals.
A total of £3 million was diverted to the 'Sicuretta’ account managed by Swiss lawyer Guido Renggli, who allowed Weber to remove large sums in cash to distribute to officials. Weber admitted to investigators the money was for “the acquisition of rights”. Weber refused to identify recipients, repeatedly telling the court “these payments were confidential and I must respect that confidentiality”.
Judge Marc Siegwart appeared irritated by Weber’s stonewalling and in the most electrifying moment of the trial said, out of the blue, there was evidence that between 1991 and 1999 ISL paid an additional, staggering £60 million in bribes. He asked the defendants if that was true. One by one, they admitted it was.
One defendant gave devastating testimony. Former chief executive Christoph Malms said that after joining ISL in the 1990s he was shocked to discover the business was built on bribes. “I was told the company would not have existed if it had not made such payments,” Malms testified. “I was always told they went to well-known decision-makers in the world of sports politics.”
Malms said kickbacks were usual in the sports marketing and sports political business worldwide. It was the style of the business. Former ISL finance head Hans-Juerg Schmid backed Malms, telling the court: “If we hadn’t made the payments, the other parties wouldn’t have signed the contracts. The other side don’t want to be named, that is the very sensitive aspect of this business.”
Two more officials were named. Malms’ lawyer, Werner Wurgler, claimed Blatter had approached his client and told him that if ISL wanted to keep Fifa’s business, Weber had to keep his job at the company. If not, “it would be bad for ISL”. Wurgler also claimed that during the World Cup in France in 1998, then Fifa president Joao Havelange made the same demand.
Anybody at Fifa who knew about the bribes – and who was getting them – could exercise great power over fellow officials, Wurgler said. ISL became a private source of money for Fifa, virtually their private bank.
Weber was fined £41,000 for embezzling cash that he refused to account for. Two others were given small fines for false accounting. Three more men were cleared.
Dangers for bid
Scandals may shape England’s campaign
How did Fifa end up being dragged into the ISL collapse?
ISL were the governing body’s marketing and commercial partners, with exclusive rights to negotiate their multi-million pound, worldwide TV deals. When they went bust in May 2001 liquidators began to investigate what had happened to the money.
How did £45m go missing?
The money was given to ISL by Brazilian TV company Globo in part-payment for future World Cup rights. ISL were supposed to pass it to Fifa but, needing the cash to keep the company afloat, executives withheld it. When ISL went broke, the money was lost.
When did Fifa know about the payment being withheld?
Fifa president Sepp Blatter claims he first knew about it on April 21, 2001, just before ISL collapsed a month later. Confidential letters seen by The Daily Telegraph purport to show that Blatter had known for three years. Michel Zen-Ruffinen, the former Fifa general-secretary, has claimed Blatter was aware of a letter he sent to ISL’s Jean-Marie Weber mentioning the Globo deal and an expected $22m payment for World Cup rights. Two years later Fifa’s lawyers wrote to them calling ISL’s behaviour “totally unacceptable”. Even when they wrote again, in September 2000, flagging up the missing £45m, Fifa’s executives did not act. ISL then went bust.
Why does any of this matter to England’s bid for the 2018 World Cup?
As ISL liquidator Thomas Bauer delved into the company finances, he discovered evidence of kickbacks being paid to senior Fifa executives, including Nicolas Leoz (below), by ISL in return for their exclusive contract to sell TV rights for Fifa. One Zug defendant claimed the payments were so regular they were “like salaries”. In 2003 Bauer went to court to force ISL executives to repay them.
Separate to that inquiry, magistrate Thomas Hildbrand began an investigation to try to unearth who got the ISL bribes. That investigation is ongoing. And should any more powerful Fifa figures be linked to the scandal over the next two years, it will undoubtedly impact on England’s campaign.