Wednesday, January 17, 2018

FIFA’s house of lies

Part XI of a Special Investigation

FIFA president Sepp Blatter was less than truthful when he claimed that the world governing body for football was unaware that the Jack Warner-created and controlled Caribbean Football Union (CFU) had sub-licensed valuable TV rights to World Cup finals to Warner’s private Cayman Islands corporation, JD International.

Trading insults and public accusations about rigged elections, gift-giving and who could be trusted to tell the truth in the dramatic post-2011 shift of friendships and loyalties, Warner, in an angry response to Zurich’s attempt “to hang him out to dry”, countered that he got the television rights for the Caribbean region for several World Cups for a nominal fee in exchange for helping Blatter get elected president of FIFA.

The Blatter hit-back, when it came a month later in January 2012, was muted by talk of developmental initiatives in support of national football associations. FIFA framed its denial of the Warner-issued rewards for supporting Blatter’s presidential campaigns this way: “Until 1998, TV rights were provided by the rights-holders for symbolic sums in many territories (for example in Africa), in order to maximize the worldwide television coverage and also to support national associations and confederations with a source of revenue for football development.”   

FIFA’s truth 

Spinning its own set of lies to the backroom dealing and Blatter-run interference that made Jack Warner a football untouchable for more than a decade, FIFA claimed that the award of television rights contracts worth tens of millions of US dollars for as little as $1 had nothing to do with Warner’s fierce support for Blatter.

The truth, according to FIFA, was that: “Such rights were ceded in order to provide an additional source of revenue for football development in the CFU. This had nothing to do with the 1998 or 2002 election campaigns, or with any other election campaign. To imply the contrary is completely false.” 

FIFA contended that all television deals were approved by the marketing and TV board, the finance committee and the executive committee of the ruling body. It, however, omitted to mention that the former high-ranking football jefe sat as the deputy chairman of the finance committee and was a member of FIFA’s Executive Committee (ExCo) until his sudden resignation in June 2011 after accusations of bribery.

Warner, who is known for his frank talk, in a statement issued in the aftermath of the cash-for-votes bribery scandal, said he was given the lucrative TV rights for as little as TT$1, and that “President Blatter sold me the World Cup TV rights for 2002 and 2006, no doubt in appreciation of the work I did (with Mohamed bin Hammam) for his re-election.”

Warner said he refused to endorse Blatter in the June 2011 election for a fourth term although he was offered the rights to the 2018 and 2022 World Cup for a nominal fee and other inducements to develop football in the region, including relaying turf at a Trinidad and Tobago stadium and US$1 million in grants “to do with as he chose”.                                   

Blatter’s rule

FIFA’s damage containment effort failed to address the serious conflict of interest inherent in the Blatter handouts of lucrative TV rights to a favoured ExCo member and former football ally. It also failed to say whether there was any audit of the income earned by JD International to determine how that money was spent.

 Both Warner and FIFA claim the money was used for developing football in the region but neither side has provided proof of financial statements. 

Persons familiar with the situation, however, say the bulk of the profits went to Warner’s private war chest.  

Michel Zen-Ruffinen, Blatter’s former deputy and protégé, in a bombshell May 2002 report, took aim at the fraudulent misuse of FIFA’s governance structure by the Swiss football administrator and the opaque deal-making of FIFA’s influential hierarchy.  

The confidential 22-page report of the former FIFA general secretary was sharply critical of Blatter’s continued  failure  to discuss serious issues of “general mismanagement dysfunctions in the structure and financial irregularities”.

Zen-Ruffinen, an international sports lawyer who left the world governing body after an unsuccessful attempt at corruption reform, in standing up for what he called “the good of the game”, said Blatter had consistently breached FIFA’s statutes and had played a pivotal role in dismantling best governance practices.

He said FIFA was run like a “dictatorship” and accused Blatter of manipulating the FIFA network for his personal gain and that of his trusted lieutenants.

He also spoke of Blatter’s private “Fcrew” which he said operated in much the same way as an executive board of a private corporation.

Zen-Ruffinen also detailed some of the larger financial improprieties involving the controversial Caribbean football figure Warner.

The case against Jack Warner

In his report to FIFA’s ExCo, the former FIFA general secretary raised ethical and other questions about Blatter’s continued protection and support of Warner and the latter’s failure to adhere to a modicum of conflict of interest rules.

He said: “The president has constantly taken decisions which are favourable to the economical interests of Jack Warner and some of his family members, and thus are contrary to the financial interests of FIFA.”

“In connection with the TV rights for the World Cup it has to be underlined that Jack Warner received them at the symbolic price of $1 through another body for World Cups 1990/94/98. This was, however, done under the former FIFA administration. As regards the 2002 World Cup TV rights, Jack Warner has obviously pressured the President by threatening that he would withdraw from the U-17 World Cup in 2001, which he was organising. In the end, the business went to Warner,” said Zen-Ruffinen.

He said Blatter also took the unusual decision to have FIFA Travel surrender all of the teams’ travel business to the U-17 world championship in Trinidad and Tobago to Warner’s family-owned travel agency, Simpaul’s to the detriment of FIFA’s coffers.

He also noted the huge disparity between the US$4.5 million budget accepted for the U-17 and the final cost of US$8.21 million presented to FIFA.

He said the Blatter-controlled FIFA shockingly accepted the near-doubling of budgeted costs for the U-17 championship which was explained away by Warner as “an error in his final calculation”.

FIFA board minutes paint a similar story of Blatter-provided rewards and defence of Warner.

Blatter’s defence of Warner

The contentious television rights issue to Warner’s private Cayman company was discussed in some detail at the November 30, 2001 ExCo meeting held in Busan, South Korea.

FIFA board minutes provided this insight: “The FIFA President pointed out the different aspects of the issue and expressed regret that the executive had suffered press harassment because of it.”

Zen-Ruffinen provided an overview of the contractual situation relating to CSTN which had secured the 2002 Caribbean media rights from FIFA’s former marketing partner ISL, which collapsed in 2001 after overpaying bribes to former FIFA bosses including Joao Havelange for the commercial rights to World Cup events.

Warner had struck a deal (he has given conflicting stories about who with) that gave him the TV rights for several World Cup editions for the princely sum of $1 but lost to key rival CSTN when ISL put out the 2002/2006 rights to tender.

Warner’s abuse of his ExCo connections and private threats to withdraw support for the U-17 saw a reversal of his TV fortunes.

Germany’s Kirch Media, which held the 2002/06 World Cup TV rights inside both Europe and the US, took over the rights of the rest of the world following ISL’s bankruptcy.

It also terminated the rights secured by CSTN on a false claim that the company had defaulted on a payment to ISL.

Hardly surprising is the fact that Warner’s former ally-turned-traitor Chuck Blazer had an interest in Kirch Media. By the time CSTN was able to make its case, the deal with Warner’s Cayman company had been done.

And while Blatter defended his Caribbean confederate, several FIFA ExCo members were not at all happy with this turn of events.

Deputy FIFA chairman David Will deemed the affair “inappropriate” and “unethical”.

He said it was unethical for an ExCo member “to appear to be using FIFA connections for the purpose of private gain and that such conflict of interests must be avoided as it cast a dubious light on the ExCo as a whole and exposed its members to media bombardment”.

The truth lies somewhere in the middle

Warner, who previously and publicly said he first got the rights for a symbolic $1 from Havelange told the Busan meeting that he acquired them from the deceased FIFA vice-president Guillermo Cañedo.

According to the FIFA board minutes: “A long argument ensued, during which comparisons were made to the FIFA involvement with Hyundai Company, with which vice-president Chung was associated, as well as to the late Cañedo’s connections with the World Cup television rights and the broadcasting corporation, OTI.”

The heated discussion led former vice-president Dr Chung Moon-Joon, son of the founder of the Hyundai Motor Company to pen this letter to Blatter: “The relationship between Hyundai Motors and myself bears no comparison to FIFA and certain ExCo members who are trying to exploit such ties to further their personal gains. I have explained this to you on several occasions. If you still do not get the picture, I must have failed in my efforts.”

He argued that: “Integrity is what draws the line between some people using FIFA TV rights to pursue their private gains and Hyundai sponsoring the FIFA tournaments. If you still find it difficult to understand the difference between Hyundai’s sponsorship and Jack Warner’s TV rights case, please do not hesitate to contact me.”

In the end, Warner was asked to assign the relevant TV rights between his Cayman company and Kirch Media to the CFU of which he was president. A rich himself-to-himself deal. CSTN’s chairman and CEO Selby Browne, who claimed he took a US$3.5 million hit in the pocket by the theft of his company’s media rights-asset, said he is yet to recover from this Warner heist.

He said Blatter has failed to pay the agreed to losses incurred by CSTN and has made clear that FIFA’s position was the matter is closed.

Continues next week.