America seemingly has found a new product to export – its criminal justice system. Many recent high profile criminal cases brought by the Justice Department, including a multi-billion dollar settlement with Swiss bank Credit Suisse for its banking practices in Switzerland and a number of other recent financial industry prosecutions and Foreign Corrupt Practices Act cases, have centered around activity that has occurred mainly overseas. The United States asserts its jurisdiction in these cases because the American banking system or its capital markets and exchanges were somehow involved.
Other countries are following the United States’ lead in this regard by partnering with the US government in these prosecutions. For instance, the United Kingdom’s Serious Fraud Office assisted the Justice Department in the Forex cases. In addition, other nations are seeking to enact new laws that mimic the broad United States laws and the large criminal fines available thereunder.
The Justice Department’s latest high-profile international case came to the forefront last week, when nine officials of the Fédération Internationale de Football Association, also known as FIFA, including two current FIFA vice presidents, were indicted by the United States. The indictment charged the FIFA officials with racketeering, wire fraud and money laundering conspiracies, as well as tax evasion, in connection with their alleged participation in a “24-year scheme to enrich themselves through the corruption of international soccer.” Five sports marketing executives also were indicted, alleged systematically to have paid and agreed to pay more than $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.
Only 2 of the 14 people indicted are American citizens. FIFA is an association governed by Swiss law and based in Zurich, Switzerland. Nevertheless, Attorney General Loretta Lynch has maintained that this is a matter for the United States to prosecute, asserting that the defendants planned their crimes in the United States, used the United States banking system to further their crimes, and planned to profit through schemes that targeted the “growing United States market for soccer.”
Some have lauded Lynch’s efforts stating that “[t]he pantheon of world soccer has a new hero,” “destined to go down as the most consequential woman in the history of the game,” and that she should be saluted by football fans everywhere. Not everyone agrees with these assessments. When questioned about the case by journalists, Russian President Vladimir Putin stated, “It may be possible that some of [the international FIFA officers] did something wrong, I do not know, but the USA definitely have nothing to do with this. These officers are not United States’ citizens, and if anything did happen, it did not happen on the territory of the United States and the USA have nothing to do with it. This is yet another obvious attempt to spread their jurisdiction to other states.”
Questions about FIFA arose in 2010 after FIFA announced that the World Cup would be played in Russia in 2018 and Qatar in 2022. Critics cried foul play, arguing that neither country made sense – Russia had problems with racism, human rights violations and infrastructure, while summer temperatures in Qatar, a country with very little soccer history, often exceed 100 degrees. Some believed the illogical results meant that the bidding process was corrupt.
FIFA hired Michael Garcia, a former United States Attorney for the Southern District of New York, to conduct an internal investigation, which produced a 350-page report. FIFA subsequently issued a 42-page summary of Garcia’s findings, clearing itself of any wrongdoing, which Garcia characterized “incomplete and erroneous.” The Federal Bureau of Investigation was not convinced and conducted its own investigation into whether the allegations of bribe-taking and kickbacks took place on American soil. The recent indictments are the result of that investigation.
A number of the FIFA-case defendants arrested in Zurich have said that they plan to contest the any extradition request made by the United States. As the Amanda Knox, Edward Snowden, and Roman Polanski cases reveal, the law of extradition can be complex and fraught with political issues.
Pursuant to the extradition treaty between the United States and Switzerland, the United States government will have to file a detailed request to Swiss authorities presenting evidence that a reasonable basis exists to believe the FIFA officials committed the crimes charged. In the past, the United States has been unsuccessful in extraditing white-collar criminals from Switzerland for tax crimes because the crimes alleged by the United States are not crimes in Switzerland. This “dual criminality” requirement may come into play in the FIFA case as well if the United States cannot show that the crimes alleged – wire fraud, money laundering, tax evasion – are also crimes in Switzerland.
The United States-Swiss extradition treaty also has a territoriality requirement, meaning that the United States government must show that the alleged crime was committed on American soil. The Justice Department has alleged that the crimes were agreed to and prepared in the United States and that many bribe payments were carried out through United States financial institutions. Given the breadth of American tax and banking laws, the territoriality requirement of the treaty may not be hard to satisfy by US standards, but the Swiss interpretation remains to be seen.
The FIFA extradition process will be closely watched here and abroad. Its success or failure likely will have a significant impact on the future of the United States Justice Department’s approach to international wrongdoing by non-Americans.
From The Insider Blog: White Collar Defense & Securities Enforcement.