What the Fifa corruption scandal is all about

Officials from Fifa, football’s governing body have been arrested on corruption charges in early-morning raids. What’s going on? And will it affect future World Cups? Simon Wilson reports.

What has happened?

Last week, seven of Fifa’s most senior officials were arrested at a luxury hotel in Zurich, throwing world football’s governing federation into chaos. Swiss police, acting on behalf of US prosecutors, launched their early morning raid during Fifa’s annual congress and days before a vote on whether to re-elect its president, Sepp Blatter.

Hours later, US attorney general Loretta Lynch announced sweeping charges against nine Fifa officials (including those arrested in Zurich) and five sports marketing executives – and claimed that corruption within Fifa, stretching back decades, was “rampant, systemic and deep-rooted”.

Blatter’s spokesman brazenly claimed that the arrests were a sign that Fifa’s own “reform” process was working, and Blatter was voted in for a fifth term. This Tuesday, however, he announced he’d step down – just hours before reports emerged from the US that he, too, is the subject of a criminal inquiry.

What exactly are the charges?

The indictment from the US Department of Justice names 14 people (including three Fifa vice-presidents) on serious federal charges including racketeering, wire fraud and paying bribes worth more than $150m to obtain media and marketing rights to tournaments. Some allegations relate to the collapse in 2001 of ISL, a Fifa-affiliated marketing agency. Others relate to the awarding of the 2010 World Cup to South Africa, and Fifa’s last presidential election in 2011.

Blatter himself has not yet been charged with any offence, but this week saw the publication of a letter appearing to show that his right-hand man, Jerome Valcke, authorised a $10m payment from the South African FA to Jack Warner, the disgraced former Fifa vice-president representing the Caribbean. Warner’s former friend and deputy, Chuck Blazer – the former head of the American FA – has turned witness for the FBI as part of a plea-bargain deal.

Why is America involved?

US prosecutors, notoriously tough on white-collar crime, claim the right to indict anyone – subject to successful extradition – who they believe has committed a crime involving US dollars, the US banking system, or who has planned an illegal act while on American territory. Blazer, a defendant turned co-operator, was based in New York; the accused officials allegedly discussed or engaged in corruption while in the US, and several of the more than 30 banks and branches that handled tainted transactions are based there.

This “extra-territorial” claim of US justice is sometimes controversial. But in the case of Fifa, most Europeans agree that the Americans deserve a pat on the back. Vladimir Putin, on the other hand, has condemned the arrests as part of a Western plot to derail the World Cup due in Russia in 2018. Qatar, the hot, oil-rich statelet with no football history that was awarded the 2022 World Cup, has also lashed out at the anti-corruption investigation as a racist conspiracy.

Are those World Cups in doubt?

Currently, the FBI’s charges don’t relate to the 2010 decision to stage tournaments in Russia and Qatar. However, the Americans began their investigation into Fifa in the weeks following the 2010 decision, and have made clear that further charges are all but certain. In a separate case from the FBI’s, Swiss police raided Fifa’s headquarters in Zurich last week.

They seized electronic records and said they had opened criminal proceedings against “persons unknown” on suspicion of money-laundering and other possible offences in connection with the 2018 and 2022 competitions. Ten Fifa members who participated in the voting, including Russia’s sports minister, face questioning. If the process that picked Russia and Qatar is proved to be have been corrupt, Fifa may yet have to backtrack.

How has Fifa got away with it for so long?

Its monopolistic control of TV and marketing rights – worth $4bn at last year’s World Cup in Brazil – is “used by those in power to win the loyalty of football federations from poor countries, particularly in Africa”, says The Economist. Fifa’s structure, under which the tiniest Pacific or Caribbean island nation has the same voting power as Germany or Brazil, makes such corruption all the more likely.

Under Blatter, Fifa grew to the point where it has 16 more members than the UN; the Swiss boss could rely on the support of those federations, especially in Asia and Africa, invited to join the lucrative club on his watch. “Corruption is tolerated, as long as the money is spread around. Critics of Fifa are dismissed as bad losers and racists.” And there’s no shortage of money. Despite supposedly being a non-profit organisation, Fifa has cash reserves of more than £1bn.

The power of sponsors

Even before Blatter quit, some of the World Cup’s biggest sponsors expressed concern at how the wave of arrests had tarnished the image of the tournament. Visa took the strongest line – saying that it was considering its position – with Coca-Cola, Adidas, McDonald’s, Hyundai and Budweiser also speaking out.

This week Coca-Cola called Blatter stepping down “a positive step for the good of sport, football and its fans”. The firm said Fifa must now “take concrete actions to fully address all of the issues that have been raised and win back the trust” of football fans, and said it believed Blatter’s departure would “help Fifa transform itself rapidly into a much-needed 21st-century structure and institution”.