The FIFA Corruption Scandal from the Perspective of Public International Law

A special thank you to Rebecca Hamilton for her editing and review of this article.

The conduct of Fédération Internationale de Football Association (FIFA) officials has been raising eyebrows and attracting media attention for years,[1] but the indictment unsealed by the U.S. Department of Justice on May 27, 2015 was nevertheless surprising.[2] The charges were surprising in part because of the sheer scale of corrupt activities alleged by U.S. federal prosecutors. The 161-page indictment describes systemic bribery spanning a 24-year period, going back to 1991. The fourteen indictees include sports marketing executives and current and former high-level officials of FIFA, as well as the two continental confederations for the Americas, Confederation of North, Central American and Caribbean Association Football (CONCACAF) and South American Football Confederation (CONMEBOL).[3]

These soccer officials at FIFA and the continental confederations allegedly solicited and received over $150 million in bribes and kickbacks from sports marketing executives in connection with lucrative media and marketing rights to various soccer tournaments and matches.[4] These officials also allegedly received bribes and kickbacks in connection with the selection of South Africa as the host country for the 2010 World Cup, the 2011 FIFA presidential election, and sponsorship of the Brazilian national soccer federation by a major U.S. sportswear company. The indictment includes some colorful and interesting details. For example, not only did FIFA officials receive $10 million in exchange for their votes for South Africa as the host of the 2010 World Cup, but this bribe money ultimately came out of FIFA funds that would have otherwise gone to South Africa to support the World Cup there.[5]

The indictment also struck many by surprise because it seemingly involves the U.S. government in the prosecution of mostly foreign nationals for corrupt conduct related to soccer tournaments and broadcasting rights outside of the United States and in connection with FIFA, a Swiss entity. In fact, commentators in newspaper articles and blog posts have described this as an exercise of extraterritorial jurisdiction by U.S. federal prosecutors.[6] One commentator, for example, concluded that the “first and most obvious” problem raised by the FIFA indictment was whether the relevant U.S. laws apply extraterritorially.[7] A close look at the indictment, however, reveals that the United States is actually enforcing legislation that is based on the territoriality principle—the most well-accepted and heavily relied upon form of prescriptive or legislative jurisdiction under public international law.[8] Even though this case features substantial international elements, the indictment itself only targets conduct that took place in the United States.

The international elements of this case merit some elaboration before taking a closer look at the conduct that occurred on U.S. territory and the U.S. laws that form the basis for the charges set out in the indictment. First, out of the fourteen indictees, one is a U.S. national and one is a dual U.S.-Uruguayan national.[9] The other indictees are nationals of Argentina, Brazil, the Cayman Islands, Costa Rica, Paraguay, Nicaragua, Trinidad and Tobago, the United Kingdom, and Venezuela. A number of these foreign nationals did, however, own property and/or live in the United States during the period at issue in the indictment. In addition to the fact that most of the indictees are foreign nationals, foreign authorities have been involved in their arrest and extradition. Swiss authorities, for example, arrested seven of them at FIFA’s annual congress in Zurich on May 27, 2015, and as of this writing six remain in custody in Switzerland while awaiting extradition to the United States (Jeffrey Webb, the former president of CONCACAF and a former vice president of FIFA, has already been extradited).

Second, FIFA, CONCACAF, and CONMEBOL are all entities based outside of the United States. FIFA is an entity under Swiss law with headquarters in Zurich, Switzerland, though it has had a development office in the United States since at least 2011 and FIFA’s executive committee has held meetings in the United States.[10] CONCACAF has been incorporated since 1994 as a non-profit organization in the Bahamas, though its principal administrative office was located in New York and is currently located in Miami, Florida.[11] CONMEBOL, meanwhile, is domiciled and headquartered in Paraguay.[12] Third, Traffic Group, the multinational sports marketing company accused of bribing these soccer officials, is based in Brazil, though in the early 2000s it acquired a Florida-based subsidiary, which it renamed Traffic Sports USA.[13] Finally, the soccer tournaments that were the subject of lucrative broadcasting and marketing rights took place all over the world, from South Africa, to Brazil, to the United States.

But the crucial link between these bribery schemes and U.S. territory lies in the role played by U.S. banks and U.S. branches of foreign banks. The indictment emphasizes the central role played by the U.S. financial system in facilitating the corrupt conduct of the soccer officials and marketing executives.[14] FIFA, CONCACAF, CONMEBOL, and subsidiaries of Traffic Group, such as Traffic USA, relied on the U.S. financial system in a “significant and sustained” manner by conducting business via accounts at U.S. banks and by wiring money to and from U.S. bank accounts.[15] The counts of the indictment detail the role played by U.S.-based banks in transferring bribes and kickbacks from sports marketing executives to soccer officials. In detailing these transactions, each of the forty-seven counts of the indictment specifies that the bank transfer or other conduct at issue took place in New York, Florida, or California. The U.S. banking system provides the critical link with U.S. territory, and thus the basis for prosecution in the United States. The indictment solely targets corrupt conduct that took place in the United States, to the exclusion of conduct that took place abroad.

Because of the scope of existing U.S. federal laws, the indictment notably does not charge these individuals with bribery, even though the case revolves around the payment of bribes and kickbacks in return for contracts. This is because the United States lacks a federal law criminalizing private-to-private bribery, also known as commercial bribery. The soccer officials indicted by the Justice Department are not public officials, as FIFA, CONCACAF, and CONMEBOL are all private entities under domestic law, rather than international organizations or departments of national governments. The bribery of these officials by executives at sports marketing companies therefore constitutes private-to-private rather than private-to-public bribery. U.S. federal laws cover the bribery of foreign public officials under the Foreign Corrupt Practices Act,[16] as well as the bribery of domestic public officials,[17] but bribery solely within the private sector remains a matter for state law in the United States.[18]

The United States is one of 177 states parties to the United Nations Convention against Corruption (UNCAC), which includes a provision on bribery in the private sector (Article 21).[19] But this is a non-mandatory criminalization provision, meaning that states parties can choose whether or not to criminalize this type of corrupt conduct.[20] In order to comply with this provision, states parties only have to consider criminalizing private-sector bribery. In a “self-assessment” completed by the United States within the framework of UNCAC’s Review Mechanism, which monitors implementation of the treaty, the United States explained that Congress twice considered and declined to adopt legislation that would make private-sector bribery a criminal offence under federal laws.[21] In its self-assessment, the United States further explained that although private-sector bribery is not a criminal offence under federal law, remedies for this type of misconduct may be found in criminal and civil statutes that address fraud, breach of fiduciary duty, and racketeering.[22] Moreover, most U.S. states have criminalized “commercial bribery” under state law, and in those states that have not done so, it may still be punishable under laws criminalizing unfair trade practices.[23]

The indictment in this case lends some support to Congress’s decision not to criminalize bribery in the private sector due to the existence of other federal laws that may be used to target the same conduct. This prosecution effort does not appear to have been hindered by the absence of a federal statute addressing commercial bribery, although the existence of such a law might have simplified matters. A federal law that specifically criminalizes private-to-private corruption might further enhance the ability of prosecutors to target this type of conduct, particularly if Congress gave the law an extraterritorial scope. Moreover, a charge of bribery as opposed to wire fraud, for example, might draw greater societal condemnation, and a stiffer penalty could accordingly be attached to such corrupt conduct.

Instead of charging these soccer officials and sports marketing executives with private-sector bribery, this indictment instead charges them with racketeering conspiracy, wire fraud, money laundering, and money laundering conspiracy, among other charges.[24] “Racketeering” is a unique crime under U.S. federal law, designed to combat the infiltration of legitimate businesses by organized crime and criminal conduct more generally. The 1970 Racketeer Influenced and Corrupt Organizations (RICO) Act prohibits any person employed by (or associated with) an enterprise engaged in interstate or foreign commerce from conducting a “pattern of racketeering activity,” which consists of predicate acts including wire fraud and money laundering, as well as bribery under state law.[25] The extraterritorial scope of RICO is limited, however, and may not extend to the conduct in the FIFA case that took place abroad. The exact extent to which it covers extraterritorial conduct will soon be clearer, with the Supreme Court having recently granted certiorari in RJR Nabisco v. European Community, a case concerning RICO’s extraterritorial application.[26] But the current uncertainty about whether RICO may, for example, apply extraterritorially in cases involving money laundering by a U.S. citizen abroad is of relatively little importance in this case, given that only two of the fourteen defendants are U.S. citizens.

The indictment focuses instead on conduct that occurred exclusively in U.S. territory. Each count of the indictment is careful to specify that the alleged wire fraud or money laundering took place in the Eastern District of New York, the Southern District of Florida, etc. In doing so, the prosecutors are enforcing laws based on the territoriality principle under international law. Although this case appears, at first glance, to be another instance of U.S. prosecutors bringing charges against foreigners for extraterritorial conduct, the reality is quite the opposite. The prominence of the U.S. banking system, coupled with its “strength and stability,” as the indictment puts it, arguably increases the likelihood of corrupt conduct touching down in the United States, and in this case made it possible for the U.S. federal prosecutors to target the individuals allegedly responsible for corrupting international soccer.

About the Author

Cecily Rose is an assistant professor of public international law at the Grotius Centre for International Legal Studies, Leiden Law School.