Scandals will be cloud over FIFA -- and soccer -- for years

By Paul Kennedy

As if the current FIFA scandals weren't bad enough, they aren't the first time soccer's house on the hills of Zurich has been awash with scandal.

The ISL scandal should have served as a warning that corruption at the highest level of the game was pervasive and growing as big money poured into the game from increased rights fees media companies were willing to pay for events like FIFA's World Cup.

Brazilian Joao Havelange, FIFA president from 1974 to 1998, wasn't the founder of ISL -- International Sport & Leisure -- but he introduced the fancy dance that has been used to lock up power in soccer and pocket millions of dollars for personal gain. Indeed, Havelange came to power in 1974, edging incumbent Stanley Rous of England, 68-52, on the strength of his support from the third world, where his promise of development support was delivered by companies like adidas and Coca-Cola whom he turned around and gave exclusive sponsorship contracts to.

ISL, started by adidas boss Horst Dassler, entered the picture as an intermediary, buying up media and sponsorship rights from FIFA and the IOC and turning around and selling them around the world. Dassler had been dead for many years when ISL went bankrupt in 2001. During the bankruptcy proceedings, it was discovered that tens of millions of dollars were paid to sports officials via dozens of bank accounts in offshore tax havens. The payments were labeled as “contributions to personalities and decision-makers in world sport, and also for the new acquisition or the extension of worldwide marketing rights." Bribes for short.

There are similarities between the two scandals.

The origins of the FIFA-ISL scandal were in South America, where ISL paid out millions of dollars in bribes to facilitate the sale of media rights in the territories. Among those found to have taken money were Havelange, his then-son-in-law, Ricardo Teixeira, the president of the Brazilian federation, and Paraguayan Nicolas Leoz, the president of Conmebol for many years.

Likewise, the center of the current FIFA scandals was in South America. Beginning in the early 1990s, Conmebol began selling the rights for regional events like the Copa America and Copa Libertadores to Traffic. U.S. authorities charge the same Nicolas Leoz of being a shakedown artist, demanding kickbacks that Traffic's founder, Jose Hawilla, gladly paid in increasing amounts through the years. Everything went along swimmingly until Hawilla flipped and pleaded guilty, agreeing to forfeit more than $150 million.

That underlines the one big difference between the two scandals. No criminal charges were filed against Havelange, Teixeira and Leoz because accepting bribes was not a criminal offense at the time in Switzerland. Fourteen FIFA officials and sports executives have been indicted, in addition to the four who have pleaded guilty --  Hawilla, Chuck Blazer and former Concacaf president Jack Warner's two sons -- and that may be the top of the iceberg.

On Monday, U.S. Attorney General Loretta E. Lynch, who was in Zurich for an international prosecutors conference, and Switzerland Attorney General Michael Lauber addressed the media on their parallel investigations into soccer corruption. "Our investigation remains active and ongoing, and has in fact expanded since May," said Lynch, referring the indictments handed down on May 27. Lauber said the investigation is "not even at halftime" and 121 different bank accounts have been brought to the attention of Swiss investigators as having possibly been used for money laundering.

The Swiss investigation into the ISL bribes dragged on for years. It wasn't until 2012 that court documents  were released showing that the Havelange, Teixeira and Leoz, all FIFA executives, received millions of dollars. FIFA -- with Blatter now in charge -- stonewalled. It wasn't until 2014 -- 13 years after ISL's bankruptcy filing -- that FIFA closed the book on the affair with the release of its own investigation. Havelange resigned his position as "honorary president," while all that could be said of Blatter was that he was "clumsy" and he probably should have known "or should have known over the years before the bankruptcy of ISL that ISL had made bribes to other FIFA officials."

Blatter's position, though, was the report confirmed that his "conduct could not be classified in any way as misconduct with regard to any ethics rules." He has taken the same tact with the current scandals -- that he has been in no way implicated -- though how long he can hold out remains to be seen.

Speaking at the same international prosecutors conference that Lynch and Lauber attended, former FIFA ethics advisor Mark Pieth said Blatter should face a criminal investigation as there was “prima facie” evidence of embezzlement for FIFA's sale, under Blatter's signature, of World Cup television rights to the Caribbean Football Union for a fraction of the money that disgraced former Concacaf president Jack Warner turned around and sold them for, pocketing millions of dollars.

What the current investigations Lynch and Lauber are leading have in common with the ISL case closed in 2014 is that they will go on for years. Lauber said 11 terabytes of data have been seized and have to be analyzed. That's 11,000 gigabytes for those keeping scoring at home. Blatter decided it was in his and FIFA's interest to stonewall and let the ISL case quietly run its course. His successor won't have the same luxury.

Monday's press conference brought together Blatter's two worst enemies for the first time: Lynch and the British media. In his own backyard no less. The British media flew in for the day. It's a short hop from London to Zurich. Martyn Ziegler of the Press Association tweeted how his wallet was lost and found in all of 20 minutes thanks to Twitter. Ziegler and his British colleagues will return to Zurich every time more revelations are forthcoming. Just as over in Brooklyn, every new indictment or court hearing will put the FIFA scandals back on the front pages of the New York dailies.

Havelange, who will be 100 next May, outlived the ISL scandal, as did Leoz, who just turned 87 and is fighting extradition to the United States on the grounds of poor health, and Teixeira, who fled Brazil to South Florida in 2012, in the middle of preparations for the 2014 World Cup he was supposed to oversee, but has since decided it was unsafe to reside in Florida and had his mansion sold for $9 million.

Unfortunately, FIFA -- the institution -- won't be so lucky. The current scandals will be a cloud over the sport for years to come.

4 comments about "Scandals will be cloud over FIFA -- and soccer -- for years".
  1. Nate Nelson, September 14, 2015 at 10:26 p.m.

    Please don't over look the existence of the Chuck Blazer - Gulati/Flynn relationship. No one believed Flynn's sense of being "uncomfortable" and that Gulati didn't show in the first place. The three are as thick as thieves and Flynn took a page from Hillary Clinton and when pressed Flynn will have to tell the truth or risk it being put in evidence against them. Want to bet the two are hoping Blazer is too sick to speak.

  2. Soccer Madness replied, September 15, 2015 at 10:20 a.m.

    Lets focus on what should be also be called scandals within our own federation in USA. We have our own clouds to clear before we go looking for more.

  3. Santiago 1314, September 16, 2015 at 10:32 a.m.

    121 New Bank Accounts under Lynch Investigation...Hummm.???...I wonder who's Names are on those???

  4. Santiago 1314, September 16, 2015 at 3:37 p.m.

    "Those that Forget History, are DOOMed to Repeat IT"...Kinda like Klinsmann playing Bradley at Lo-Forward in World Cup and then Last game versus Brazil...

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