Blatter enables AFC to keep its skeletons under lock and key

Source Phillip Schmidli, Getty Images

By James M. Dorsey

Embattled FIFA president Sepp Blatter has spun the world soccer body’s crisis as a public relations and reputation management issue and a problem caused by individuals rather than a crisis resulting from financial and political corruption embedded in FIFA’s culture. In doing so, he has given a blank check to interested soccer administrators to conduct business as usual instead of ensuring that their organizations do not confront a crisis similar to that of FIFA.

Despite the arrest last week in Switzerland of seven of his associates in advance of possible extradition to the United States< Mr. Blatter has yet to acknowledge that his group has structural corruption issues that need to be addressed. Mr. Blatter’s approach is being followed by associates elsewhere such as Asian Football Confederation (AFC) president Sheikh Salman Bin Ebrahim Al Khalifa.

The AFC like CONCACAF, its counterpart in North and Central America and the Caribbean, and CONMEBOL, the South American Confederation, faces potentially serious questions regarding the integrity of it’s awarding of broadcasting and marketing rights to sports marketing companies and broadcasters. US legal proceedings have forced CONCACAF and CONMEBOL to revisit their commercial arrangements with their marketing partners.

Messrs. Blatter and Salman have however shown little inclination to introduce structures that would replace their rule by patronage, a system that ensured Mr. Blatter’s re-election despite multiple corruption scandals on his watch, with one that holds out hope for transparency and accountability. One model would be the Dutch Postcode Lottery, which rakes in similar amounts of money each year, but distributes funds through a separate and independent foundation.

Mr. Salman, much like Mr. Blatter, has refrained from discussing the need for internal reviews and investigations and has opted instead to ensure that the AFC’s skeletons remain closeted. Mr. Salman congratulated Mr. Blatter on his election victory, which he helped make possible by committing Asia to support the FIFA president who faces questioning by Swiss authorities.

Mr. Blatter’s election may have bought Mr. Salman time, but like the FIFA president, pressure on the head of the AFC to clean up his organization rather than act as if there are no potential time bombs is likely to mount as US and Swiss legal proceedings progress. The US investigation has already prompted, according to the BBC, two British banks to launch internal reviews to establish whether they were used for payments related to the US indictments.

Moreover, former FIFA vice president Jack Warner, who turned himself in to police in Trinidad & Tobago after his name appeared among those indicted in the US, has suggested in the past that he has the evidence that could bring FIFA’s roof down. Mr. Warner released in 2011 in a shot across FIFA’s bow an email from FIFA s general secretary Jerome Valcke asserting that Qatar had bought its 2022 World Cup hosting rights.

Afraid that Mr. Warner would endanger Qatar’s success, disgraced former FIFA vice president and AFC president Mohammed Bin Hammam bought the Caribbean’s silence, according to The Sunday Times, with a $1.2 million bribe. Mr. Warner no longer has anything to loose and could follow in the footsteps of his sons, Darryl and Daryan, who have turned state’s witnesses in the US.

The Sunday Times focused its reporting on FIFA and Qatar based on millions of documents believed to have been obtained from an AFC server. It is unclear what secrets about the AFC may be buried in those documents.

However, a 2012 audit by PricewaterhouseCooper (PwC), whose recommendations have yet to be acted on, questioned a $1 billion master rights agreement (MRA) with World Sport Group (WSG), a sports marketing company headquartered in Singapore, a beacon of anti-corruption. WSG failed to squash reporting on the audit with legal proceedings against this blog’s author when the Singapore Supreme Court ruled against the company in a 2013 landmark verdict.

Mr. Salman was not in charge of the AFC at the time of the audit that focused on Mr. Bin Hammam’s financial management of the group but his record since coming to office in 2013 is hardly stellar in terms of transparency and accountability.

The Bahraini national has centralized power within the AFC and manipulated the group’s elections last month to ensure that Kuwaiti Sheikh Ahmad Al-Fahad Al-Sabah would get a seat on the FIFA executive committee that could position him to succeed Mr. Blatter latest in 2019 when the FIFA president’s current terms ends.

Like Mr. Salman, Mr. Ahmad is a staunch supporter of Mr. Blatter and one of international sports most important power brokers, who last week reportedly worked the corridors to ensure that the FIFA president would defeat his reformist challenger, Prince Ali Bin Al Hussein.

Since coming to office, Mr. Salman has buried the PwC audit that questioned the fact that the WSG contract had not been tendered or concluded on the basis of financial due diligence, does not detail $250 million in direct costs nor give the AFC auditing rights, and may be undervalued. The audit further noted that WSG had not been required to provide a bank guarantee to the AFC or allow the Asian body to review the company’s financial data.

“We understand from AFC management that although the AFC has made repeated requests to WSG to provide a breakdown of direct costs, to date this has not been provided. WSF (World Sport Football Ltd, a company associated with WSG) have cited that they have no legal obligation to provide this information,” the 2012 audit said.

The audit further noted two payments to Mr. Bin Hammam by a WSG shareholder totalling $14 million. The audit, which was limited in scope and resources said that “no direct evidence has been identified to confirm a link between the payments purportedly for the benefit of Mr Hammam and the awarding of the MRA.” The audit raised similar concerns about an eight-year broadcasting rights agreement with Qatar’s Al Jazeera network.

“We have been unable to get clarity as to why third parties, some of whom appear to have some connection to WSG, are paying Mr Hammam large sums of money.  As stated above, although it is believed that these funds were for Mr Hammam personally, we cannot discount that these funds were intended for the AFC,” the audit said.

The audit warned that Mr. Bin Hammam’s financial management potentially put the AFC at risk of having been used as a vehicle for money laundering, bribery and sanctions busting related to Iran and North Korea.

Mr. Salman’s only known action related to the PwC audit was last month’s suspension of AFC general secretary Dato Alex Soosay after this blog and the Malay Mail disclosed a video-taped and written statement in which AFC finance director Bryan Kuan Wee Hoong disclosed that Mr. Soosay had asked him to tamper or hide any documents related to the general secretary that could be of interest to the auditors. Mr. Kuan’s allegation suggested that others within the AFC had been involved in Mr. Bin Hammam’s financial management of the group.

In a statement at the time, the AFC appeared to be seeking to deflect attention from the PwC audit by saying that the investigation of Mr. Kuan’s allegations were related to a “FIFA investigation.” Mr. Kuan’s allegations were never reported to FIFA. In the tape and in his written statement, Mr. Kuan left no doubt that the incident was related to the PwC audit.

James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies as Nanyang Technological University in Singapore, co-director of the Institute of Fan Culture of the University of Würzburg and the author of the blog, The Turbulent World of Middle East Soccer, and a forthcoming book with the same title.