FIFA top brass: likely guilty, but conviction is a different issue

All intelligent observers who knew the case were convinced that O.J. Simpson did it – that is, he brutally murdered his wife and her partner. The same goes for Oscar Pistorius – it was premeditated murder and he knew it was Reeva inside the bathroom. But this isn’t the same as a successful conviction, which depends on the whims of judges and juries, the public relations skills of the accused and his defence team, and finally the lofty legal threshold of “beyond reasonable doubt”. So both O.J. and Oscar were acquitted of the murders they committed, even if being convicted of lesser charges in the latter’s case, and having to shell out big-time bucks in the former’s civil case.

So too it might be with Sepp Blatter and his senior cronies like Jerome Valcke and Jack Warner. It seems inconceivable that Blatter didn’t know of the corrupt payments going on under his nose. Most likely he himself and his family have been major beneficiaries of them. The intelligent and informed in society know this already. But that doesn’t mean it will be possible for US and Swiss prosecutors to achieve convictions. Proof is difficult to show, the world is full of conceivable room for uncertainty, and the accused and to-be-accused’s PR machines are already whirring. Hence the recent photos posted online of Sepp and Jack hard at work at their desks, respectively “working on needed FIFA reforms” and “representing my Trinidadian constituents”.

FIFA has been an ideal structure for enabling the theft of millions of dollars by its key insiders. In its 2011-14 financial report – audited and happily signed off by KPMG, it’s worth noting – FIFA reported revenues of $5.7bn, 43% of which were from TV rights, 29% from marketing, and the remaining 28% from licensing and other activities. The majority of these revenues in each four year cycle apply to the World Cup itself. Such forms of revenue are a perfect target for corrupt practices: no tangible costs of sales, no tangible goods, no tangible breakdown of sales. It helps all the more when the insider who heads the audit and compliance committee, Domenico Scala, lists (in the same 2011-14 report) compensation policy, a transparent presidential election, and proper control of expenditures as his three job priorities – neglecting to mention anything about controls over the revenue process.

Spending by FIFA over the same 2011-14 period was $5.4bn, 72% of which was invested directly in football – $2.2bn for the recent Cup in Brazil, but the majority of $3.2bn in smaller-scale programmes all over the world. In 2014 itself there were $509m of “development related expenses”, of which unspecified “extraordinary” items were $261m (page 113, same report). Such a large spending component – the $3.2bn – in small-scale projects, most in the developing world, is again an ideal tableau for corruption to flourish within.

We already know about Jack Warner’s presumably spoiled sons crisscrossing the US, clumsily depositing euros in multiple bank accounts that sometimes exceeded the $10,000 reporting threshold, and Chuck Blazer’s deposition to the US authorities. More salacious details will emerge. Whether it is enough to successfully convict, time will tell. Sepp should probably hunker down, keep working the PR, and take stay-at-home holidays.

To reform itself, FIFA should follow the template provided by the International Olympic Committee’s reforms following that body’s 2002 Salt Lake City scandal. The most important of these reforms would be: (a) strict term limits for top FIFA executives; (b) a fully independent, wide-ranging audit and ethics committee, staffed by respected titans: the IOC had Kissinger, perhaps from January 2017 FIFA can have Obama (unlikely, but that’s the level to aim at); and (c) sensible rules prohibiting ad hoc contact between national World Cup bidding teams and the FIFA executive board.

Cleaning up FIFA now is very much in tune with the times. There is further global progress afoot in combating money laundering and tax evasion, following much enhanced “know your client” disciplines practiced by banks over the past five years. The OECD and G20 – together consisting of some 42 leading nations – have spearheaded the adoption of a new global standard called the Automatic Exchange of Information (AEOI). 126 tax jurisdictions have signed up to this, which will, starting in 2017/18, provide for the automatic exchange of non-resident financial account information with the tax authorities of the person’s country of residence. Its reporting format is similar to FATCA, the US system already set up concerning US citizens’ overseas accounts. The Americans are central to all this – as in the FIFA example – because most cross-border corruption involves the use of US dollars, any bank transaction in which has to be cleared through the US banking system. By including 42 leading nations and ultimately 126+ nations into this clampdown, the net is becoming a formidable one for those in search of safe money trails for illicit funds.

And where is Vietnam in all this?

Vietnam is in the minority that is not one of the members of AEOI. Presumably it would be too unpalatable for the names of influential Vietnamese politicians with foreign bank accounts to accidentally find their way into the public sphere of knowledge, or even into loyal swordbearing Vietnamese tax officials’ knowledge. All the more so, given the continued inability of ordinary Vietnamese to even have a dollar bank account at home, let alone abroad. By way of comparison, big neighbour China is an AEOI member, as are most Asian countries; other nearby non-members are Myanmar, Laos, Cambodia, and Bangladesh. The relevance of Vietnam’s non-membership is very much to powerful Vietnamese citizens’ accounts held abroad, rather than any foreigners’ interest in Vietnamese accounts, given the complexity of opening accounts in Vietnam and the capital controls in place there.

We urge Vietnam to join AEOI. It would represent an important move in a drive to try to eradicate corruption in the country, an admirable goal should the government ever wish to take it on, rather than just mumbling predictable and ineffectual platitudes on the subject, which has been its form to date.

The next step, yet to be seriously addressed, would be a global effort to make underlying beneficial ownership of all accounts, assets, and businesses held under company or front names freely and automatically available for viewing by all people on earth with an internet connection. At first this might sound hopelessly idealistic, but is it really? Surely it represents simply the next logical measure beyond AEOI. Shining the bright lights and taking away the shadows is by far the best means of reducing tax evasion and money laundering – much more, say, than raising the allocated department budgets of national tax authorities. Happily for the global majority, the options for protecting corruptly obtained money are becoming fewer and fewer. The global banking system is becoming very transparent indeed. There are ever fewer places to hide.

Mekong Man

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