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Panama leak drags Fifa back into spotlight for alleged bribery

April 12th, 2016 - Posted by Sam Hemmant in Anti-Bribery And Corruption, Anti-Money Laundering

"Just when I thought I was out, they pull me back in," said Michael Corleone in The Godfather Part III.

Executives at Fifa and Uefa can probably sympathise with Don Corleone after last week's Panama leak put the spotlight of the media and possibly enforcement agencies back on the organisations governing World and European football respectively.

In 2015 Fifa suffered major reputational damage with an investigation into bribery and corruption allegations against many of its senior officials, culminating in its president Sepp Blatter stepping down. The election of his successor Gianni Infantino in February was seen as a chance for Fifa to move on from the scandal with a clean slate.

But documents in the Panama files allege that the Swiss-Italian co-signed a TV contract in 2006 with two businessmen who have since been accused of bribery. These men, Hugo and Mariano Jinkis, are currently fighting extradition to the United States.

US prosecutors allege that, as the owners of an offshore company on the Pacific island of Niue called Cross Trading, the Jinkis' paid millions of dollars in bribes to South American football officials over several years in return for lucrative TV rights for regional football tournaments. They immediately sold these contracts to Ecuadorian broadcaster Teleamazonas for three to four times the amount they paid for them.

The recent Panama leak alleges that a few years before these deals in South America took place; Mr Infantino co-signed a contract with Hugo Jinkis while the former was director of legal affairs at Uefa. Under the deal, Cross Trading paid £111,000 for exclusive rights to broadcast Champions League football in Ecuador between 2006-07 and 2008-09, then sold these on to Teleamazonas for £311,170.

Uefa insists this deal was above board and that it could not have known Mr Jinkis would be involved in a separate scandal a decade after it was signed. Mr Infantino also denies any wrongdoing and says he welcomes an investigation into the matter. The Swiss police have started an investigation into the scandal and raided Uefa's headquarters in Nyon last week to seize details of the contract.

Football on a yellow card

The footballing authorities had hoped to keep their noses out of trouble after a torrid 2015 in which Mr Blatter was investigated by the Swiss authorities in relation to a payment of £1.35 million made to then Uefa president Michel Platini in 2011. Both deny the payments were improper, but Fifa's ethics committee has banned them from football for eight years (since reduced to six after an appeal).

Although they are not accountable to shareholders in the same way that a business is, Uefa and FIFA should not be complacent about their commitment to fighting corruption. A poll by Transparency International and Forza Football in February this year showed 69% of fans have no confidence in Fifa. Perhaps more worryingly for Fifa, 43% of the 25,000 fans in 28 countries polled said the scandals were affecting how they enjoy football.

Without maintaining high standards of integrity, sport risks losing the very fans that not only create the atmosphere in the stadiums, but also provide much of the money that keeps professional sport going.

Offshore – an away match

Uefa is one of many institutions, individuals and companies implicated in the Panama files, a leak of 11.5 million documents from the files of offshore financial law firm Mossack Fonseca.

The Panama allegations reflect the practice of setting up shell companies in offshore tax havens and hiding the real owners behind nominee directors. Depending on how much a client pays, more than one secret jurisdiction and anonymous company can be involved. Cross Trading, the offshore company owned by the Jinkis', is an example of how such companies have allegedly been used to conceal who really owns a firm's assets.

The leaked documents suggest that Mossack Fonseca supplied anonymous offshore companies with nominee directors: stand-in names enabling the real owners of organisations to operate in complete secrecy. This can make it difficult for investigators to identify who really benefits from a company's income.

Although individual countries have different rules on ultimate beneficial ownership, members of the G20 committed to working together to implement tougher principles on beneficial ownership transparency in 2014.

With investigations underway in many G20 countries following the Panama files leak, the effectiveness of these principles will be tested in the coming months.

More on Panama leak and beneficial ownership from LexisNexis: http://bis.lexisnexis.co.uk/blog/posts/anti-bribery-and-corruption/the-hidden-world-of-elite-beneficial-ownership-the-panama-leak


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