Your Questions: Answered - Written by Barry & Richard on Monday, June 1, 2015 8:11 - 1 Comment
My company has entered into contracts with FIFA. Should I be doing anything?
My company has entered into various contracts over the years with FIFA. I read with alarm last week the news stories about the arrests of FIFA officials in Switzerland.
The US has signalled more arrests are likely and the Swiss prosecutor is also investigating.
Should I be worried that my business may be drawn into the FIFA investigation and should I be doing anything now?
The short answer
Expect more revelations. So far the enforcement action in the public domain focusses on the alleged bribe recipients – expect the suspected bribe payers to be targeted next and under the full glare of publicity.
A head in the sand approach is never the best option.
Businesses who have negotiated licencing deals etc. with FIFA would be well advised to run some basic checks (speak to a lawyer before you do to make sure the checks don’t create legal problems) to confirm their deals are not tainted.
The longer answer
To recap briefly, the gist of the allegations is that bribes were paid to obtain commercial benefits in connection with commercial rights granted by FIFA.
The US Department of Justice stated in its press release that the corruption surrounding FIFA “is rampant, systemic, and deep-rooted both abroad and here in the United States,”
In the meantime, the Swiss have announced that they are also investigating.
Put another way businesses should assume that the news and indictments last week are a taster of more to come.
Likewise, it appears possible, if not extremely likely that the conduct extends beyond the Americas and the Caribbean.
The DOJ Press Release went on to say:
“It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks. And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable. Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.”
“After decades of what the indictment alleges to be brazen corruption, organized international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States. Let me be clear: this indictment is not the final chapter in our investigation.”
So. It cannot be taken as read that corruption is limited to the conduct disclosed so far.
Businesses are now on notice that dealings with FIFA could be tainted by impropriety.
As a result it would be prudent to confirm that the arrangements your business entered into with FIFA are ‘clean’.
The context for undertaking these checks is broadly speaking the UK money laundering legislation.
In the context of our example a fresh stand alone offence (Section 328 of POCA) with a penalty of 14 years in prison would be committed if someone:
“enters into or becomes concerned in an arrangement which they know or suspect facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another.”
A FIFA contract could amount to Criminal Property
For these purposes rights flowing from an agreement with a contract which has been obtained through bribery or is otherwise tainted with FIFA could amount to criminal property.
What is suspicion?
In Da Silva  EWCA Crim1654 it was held that:
“the defendant must think that there is a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice. But the statute does not require the suspicion to be ‘clear’ or ‘firmly grounded and targeted on specific facts’ or based on ‘reasonable grounds’.”
In other words it’s a subjective test of what the individuals think.
Businesses in the regulated sector – an obligation to report
If your business is in the “regulated sector” (for example a financial institution) then this extremely low threshold is reduced further. Under Section 330 no suspicion is required at all.
Instead, it is simply enough that there was sufficient material to provide reasonable grounds for having a suspicion even if no such suspicion was in fact held by the individual.
If your business is in the regulated sector then you must tell the National Crime Agency failing which you will commit an offence of failing to report which carries a penalty of five years in prison.
Businesses in the unregulated sector – an offence of failure to report
If your business is in the unregulated sector then, while there is no obligation to tell the National Crime Agency, but the only defence to the underlying money laundering offence in Section 328 requires that you do so. Failing which, a brand new money laundering offence will be committed carrying with it a 14 year prison sentence.
Any evaluation of an organisations position will need to be done in tandem with an analysis of individuals own personal liability as each of the reporting obligations of the corporate and the different individuals is independant of the other (along with liability for the offences).
This can be done by undertaking some basic checks and reviews – though it would be best to speak to a lawyer first to make sure that the checks undertaken are done in a way which does not potentially create legal problems later and that the checks undertaken provide the assurance which is sought.
It’s worth dusting down the files and taking a look, just to confirm there is nothing to worry about.
If, on the other hand, a review uncovers a potential problem then work with your lawyers who can help and advise you on what to do.
Allegations have surrounded FIFA for years and FIFA story has a long way to run. We are minded of an old Winston Churchill quote:
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.