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.
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.