Swiss to Investigate World Cup Bids After FIFA Arrests

Seven top FIFA officials were arrested Wednesday on U.S. corruption charges, and prosecutors in Switzerland subsequently opened an investigation into controversial World Cup bids that were awarded to Russia and Qatar.

The U.S. Department of Justice said a total of nine FIFA officials and five corporate executives have been indicted for racketeering, wire fraud, money laundering and other charges. Federal investigators also unsealed guilty pleas, which occurred between July 2013 and May 2015, from another four individuals and two corporate entities.

Word of federal charges comes just two days before FIFA, soccer’s international governing body, is scheduled to hold an election for president. Sepp Blatter is seeking a fifth term. Meanwhile, the 2015 Women’s World Cup hosted by Canada starts June 6.

Most of the charges center on CONCACAF, the continental body that governs soccer in North America, Central America and the Caribbean, and an alleged scheme to accept bribes in exchange for media contracts. Authorities executed a search warrant at CONCACAF’s Miami headquarters Wednesday morning.

The DOJ noted that TV and marketing rights to the 2014 World Cup accounted for 70% of FIFA’s $5.7 billion in total revenue between 2011 and 2014.

Attorney General Loretta Lynch said bribery also occurred as part of the bidding process for the 2010 Men’s World Cup hosted by South Africa; the 2011 FIFA presidential election; and agreements regarding sponsorship of the Brazilian national soccer team by “a major U.S. sportswear company.”

At a press conference, Lynch declined to comment whether Nike (NYSE:NKE), which signed an endorsement deal with the Brazilian Football Confederation (CBF) in 1996, is the unnamed sportswear company.

Based on documents released by the DOJ, defendant Jose Hawilla and his company, Traffic Sports, paid a high-ranking representative of the Brazilian team a kickback for agreeing to the deal with Nike. Traffic Sports was the marketing agent for the CBF.

Nike issued a statement saying the company is “concerned by the very serious allegations.”

“Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery. We have been cooperating, and will continue to cooperate, with the authorities,” Nike added.

The Arrests

Swiss police arrested FIFA officials Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and José Maria Marin in Zurich. Webb is the current president of CONCACAF and a vice president at FIFA.

Six of the seven defendants are fighting extradition to the U.S., Swiss authorities said.

Investigators say four marketing executives from the U.S. and South America are tied to the $150 million in bribes and kickbacks that were paid to secure media and marketing rights to soccer tournaments worldwide.

A broadcasting executive is charged with serving as an intermediary between the soccer and marketing officials.

Charges also were filed against Nicolás Leoz, a former FIFA executive committee member, and Jack Warner, who led CONCACAF from 1991 to 2011. Warner resigned in 2011 amid accusations that he attempted to bribe Caribbean federation representatives leading up to FIFA’s presidential election.

During a press conference at FIFA headquarters, spokesman Walter de Gregorio said the World Cup tournaments in Russia and Qatar will go on as planned. He also said FIFA is cooperating with law enforcement.

“FIFA welcomes actions that can help contribute to rooting out any wrongdoing in football,” the organization said in a statement. “We are pleased to see that the investigation is being energetically pursued for the good of football and believe that it will help to reinforce measures that FIFA has already taken.”

World Cup Controversy

FIFA will remain in the hot seat as the Swiss attorney general begins looking into allegations of corruption related to the 2018 and 2022 Men’s World Cup tournaments, which were given to Russia and Qatar, respectively.

Swiss prosecutors plan to question 10 unidentified individuals who were involved in the voting process. Police also seized electronic documents at FIFA’s Zurich headquarters Wednesday.

“This lengthy controversy has tarnished the mission and ideals of the FIFA World Cup and we have repeatedly expressed our concerns about these serious allegations,” Coca-Cola (NYSE:KO), a major FIFA sponsor, said in a statement.

FIFA has been no stranger to controversy, particularly when it comes to the 2022 World Cup in Qatar.

In addition to criticism over Qatar’s record of human rights violations, FIFA came under fire after accusations of bribery first surfaced in 2011. FIFA asked former U.S. attorney Michael Garcia to probe the bidding process, and he completed a two-year investigation in September.

However, FIFA never publicly released the Garcia report, choosing to instead publish its own summary. FIFA’s ethics committee acknowledged that impropriety occurred but ruled the Qatar vote was valid.

On Wednesday, FIFA reaffirmed that Russia and Qatar will host the next two World Cups.