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Here’s How The Feds Say The Alleged FIFA Bribery Schemes Worked

The U.S. Justice Department is alleging massive corruption by officials associated with international soccer’s governing body. Here’s how the indictment says things went down.

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The U.S. Department of Justice announced more than a dozen indictments and guilty pleas in connection with an investigation into corruption in international soccer. The allegations cited a number of illegal financial schemes involving a network of FIFA officials, their associates, executives of sports marketing companies, and other intermediaries. United States federal officials allege these all relate to one another in a tangle of corrupt payments and favors.

Here are the basics of how prosecutors said the schemes worked and who the key players were.

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What Is FIFA?

The Fédération Internationale de Football Association (FIFA) is the international governing body for professional soccer leagues around the world. FIFA organizes the World Cup, the most popular sporting event on the planet, and its member groups organize smaller championships around the world.

FIFA made close to $2.1 billion in 2014, with profits of $141 million, according to its financial reports. Much of this revenue comes from broadcasting and sponsorship deals.

The bulk of the accusations involve two types of schemes:

Contracts for the commercial rights to soccer games

The indictment alleges executives from sports marketing companies paid bribes to high-ranking FIFA officials in order to win highly lucrative, exclusive contracts to the commercial rights associated with specific soccer tournaments. These include the rights to broadcast games, the right to sponsor tournaments, and the rights to use FIFA brands to promote or sell products. The indictment reveals that a small handful of companies monopolized these contracts for decades by keeping FIFA officials in their pockets with multimillion-dollar bribes and kickbacks.

Votes for the countries that will host the World Cup

FIFA decides which country will host the World Cup. This decision has huge consequences: The World Cup is the most popular sporting event on the planet, and countries compete fiercely to host the tournament and reap all the supposed economic benefits that come with it. The indictment alleges that, on several different occasions, countries bidding to host the World Cup bribed FIFA officials to vote for them.

There are other bribery schemes revealed in the indictments that are mostly designed to get people into positions of power within the FIFA structure — for example, officials bribing other officials to help them get elected to a higher office, from which they could wield more power and command bigger bribes. There is also a smaller scheme to illegally resell World Cup tickets at jacked-up prices.

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The indictments reveal a large cast of characters, some of them in starring roles and others minor players. The indictments include those who received bribes (FIFA officials), those who paid bribes (companies seeking contracts for broadcasting and marketing rights), and the intermediaries who facilitated and laundered the payments. They range from Austin "Jack" Warner, the former president of the federation of North American and Caribbean teams, to José Hawilla, the founder of a major sports marketing conglomerate alleged to have paid millions in bribes. A full list of those indicted has been posted by BuzzFeed News here.

Most of the bribery schemes involving commercial rights followed the same pattern. José Hawilla, the founder of the Traffic Group sports marketing conglomerate, is allegedly a major player in many of them.

For example, from 1987 to 2011, Traffic held the exclusive rights for marketing and broadcasting the Copa América, a major tournament between South American teams. He obtained and held on to these contracts by allegedly paying regular bribes to the high-ranking FIFA officials who were responsible for awarding the contracts. For about 20 years, this was Nicolás Leoz, the Paraguayan president of CONMEBOL, the federation of South American teams. For every successive Copa América tournament that Traffic wanted the rights to, the indictment said, it paid bribes to Leoz.

According to the indictment, Traffic then made money off of these contracts by selling individual rights to other companies — broadcasting rights to TV stations and sponsorship rights to beverage companies, for example. As the tournament became more popular and more commercialized, these contracts became more profitable, and the alleged bribes also grew — by the end of Leoz's reign at CONMEBOL, he was receiving bribes, the indictment says, in "the seven figures."

Sometimes the schemes involved bribing other, peripheral players. In 2007, for example, when the Copa América was held in Venezuela, the indictment alleges that Traffic gave a $1 million bribe to Rafael Esquivel, president of Venezuela's soccer federation, followed by a $700,000 kickback out of Traffic's profits from the tournament. Traffic made close to $30 million in profits from that year's cup, according to the indictment.

Hawilla then repeated this process with CONCACAF, the federation of teams from North America and the Caribbean, except in this case he directed the bribes toward Jack Warner and his sidekick Charles "Chuck" Blazer (who was the subject of a comprehensive investigation by BuzzFeed News' Ken Bensinger last year).

The indictment alleges that most of these payments were made using wire transfers, and the same intermediaries — a Brazilian businessperson named José Margulies, aka José Lazaro — shows up in many of them. Margulies allegedly brokered deals between FIFA officials and sports marketing companies, then allegedly helped facilitate the payments and hide the money using, among other accounting tricks, intermediaries and secret bank accounts in offshore tax havens. For some of the more recent bribes, the indictment says, Margulies charged a $150,000 annual fee and a commission of 2% per payment.

Then there are the alleged bribery schemes involving votes for which country will host the World Cup. The main players in these schemes according to the indictment were Jack Warner and Chuck Blazer, both of whom were members of FIFA's executive committee and could influence the elections.

In 2004, according to the indictment against Warner and the information against Blazer (who pleaded guilty), FIFA was considering bids for the 2010 World Cup from South Africa, Egypt, and Morocco. The indictment says that Warner received bribes from South Africa to support that country's bid — including one payment made to one of Warner's family members in a hotel in Paris in the form of a briefcase filled with stacks of bills totaling $10,000.

In another exchange, South Africa promised to divert $10 million in government money to the federation of Caribbean teams, ostensibly to "support the African diaspora." Warner had personal control over some of the federation's bank accounts and could divert some of the money to himself. Ultimately, the South African government was unable to pay the $10 million, so instead, the indictment says, Warner took the bribe from the money that FIFA was due to give South Africa to help host the Cup. Warner then laundered the money through a supermarket chain in Trinidad and Tobago and kicked $1 million to Blazer for his part in the scheme.

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FIFA has "provisionally banned" those indicted officials who still held their positions. All of those indicted, as well as those who pled guilty, face sentences of up to 20 years for various charges, including racketeering, wire fraud, and money laundering. Those that pled guilty have already agreed to forfeit millions of dollars, and some will forfeit more when they are sentenced.

Several major World Cup sponsors, including Budweiser, McDonald's, and Coca-Cola, have expressed concern over the alleged corruption and called on FIFA to cooperate with the authorities.

Federal officials have emphasized that the investigation is "ongoing," so this may only be the beginning of FIFA's legal problems.

David Noriega is a national reporter for BuzzFeed News and is based in Los Angeles.

Contact David Noriega at david.noriega@buzzfeed.com.

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