The massive business machine that is soccer has been roiled by controversy with bribery allegations. Officials of the sport’s governing body FIFA (Fédération Internationale de Football Association—in English, the International Association of Federation Football) are accused of accepting bribes, and various international officials are accused of offering them—in the form of money, influence, and even arms deals.
Now the world is asking whether the scandal could result in the overturn of World Cup hosting awards to Russia, which is scheduled to host the event in 2018, and Qatar, which is scheduled for 2022..
The event is extremely important to both countries, not just financially but politically, with Russia likely in more immediate need of the financial shot in the arm the 2018 World Cup could provide. However, Qatar is looking far beyond the 2022 World Cup to a greater presence on the world stage. Naturally, neither country wants to lose its hosting, but as the investigation continues the odds grow that Qatar stands a greater likelihood of being stripped of the event.
While the jury is still out on the final outcome, here are six things that investors in host countries and related sectors should know about the investigation and what could be affected if awards should be canceled.
1. The accusations:
Russia and Qatar won hosting honors in December 2010, amid corruption allegations. In 2011 Jack Warner, FIFA’s former vice president, quit amid talk of bribery, and the Sunday Times reported that another former FIFA vice president, Mohamed bin Hammam, forked over millions to ensure Qatar won. Other bids were also questioned, and in 2012 FIFA commissioned a two-year-long investigation.
Lawyer and former U.S. prosecutor Michael Garcia delivered investigation results last September; in November, FIFA released a summary of his report that it said cleared both Russia and Qatar of any wrongdoing in the bids. Within hours, Garcia repudiated the summary, saying it did not reflect what he’d found. After FIFA rejected Garcia’s criticisms of the summary in December, he resigned as independent chairman of the FIFA Ethics Committee’s Investigatory Chamber.
Swiss authorities and the FBI, meanwhile, have been investigating allegations, from bribery to money laundering. On May 27, as Swiss authorities moved in on soccer officials in Zurich, arresting 14, the U.S. Justice Department unsealed a 47-count indictment surrounding $150 million in bribes related to earlier bids. Swiss prosecutors are pursuing their own criminal proceedings relating to the Russian and Qatari bids.
Since then, FIFA’s president, Sepp Blatter, resigned just days after being reelected—but may have changed his mind.
2. The competition for 2018:
The countries who lost out to Russia on the 2018 World Cup bid are England; Belgium and the Netherlands in a combined bid; and Spain and Portugal in another combined bid.
While Russia insists it ran a “clean bid,” it certainly isn’t in the clear yet. According to Michael Lauber, Switzerland’s attorney general, the country’s banks have identified 53 potential money laundering incidents in connection with the 2018 and 2022 bids that are being investigated.
In his investigation, FIFA’s Garcia ran into difficulties collecting evidence and compelling testimony, since his position did not provide him with the means to make officials comply. Russian officials reportedly said computers used by staff working on its bid were leased and were destroyed subsequent to use, and they did not provide much information to Garcia’s team.
Swiss authorities may have more success despite Russian protestations of innocence. In reports, Lauber characterized the case as “huge and complex,” and has also indicated that he intends to pursue “criminal mismanagement and money laundering” regardless of whether it leads to a country’s loss of its bid.
3. The competition for 2022:
Countries losing to Qatar are Australia, Japan, South Korea and the U.S. Australia faces its own investigation into a questionable payment, but has said it could step in to host in 2022 if Qatar is disqualified. England has also offered to host it, but since at present Russia is still scheduled to host in 2018 and FIFA rules decree that the event cannot be held on the same continent twice in a row, that’s not likely.