As you know, we represent CONCACAF in connection with the investigation of the U.S. Department of Justice into worldwide soccer and indictments pending in the Eastern District of New York. The DOJ has obtained criminal charges against more than 40 defendants in connection with its ongoing investigation. More than 24 defendants have pled guilty. Three defendants are currently on trial. Their trial began on Monday, November 13. The three defendants are former presidents of South American football (soccer) confederations from Peru (Manuel Burga), Paraguay (Juan Angel Napout) and Brazil (Jose Maria Marin). The defendants are accused of accepting kickbacks and bribes from sports media companies in exchange for awarding lucrative media rights contracts to soccer tournaments. The trial is of great interest to many constituents in the sports world, as well as those clients interested in corruption trials more generally.

Trial Summary: November 13, 2017 (Day 1)

Opening Statements: the Government

The government explained the FIFA structure and the three defendants’ roles within it: FIFA is the global governing body, there are six continental federations, and each member (normally a country) has its own member-specific association. Defendant Napout was president of the association for Paraguay, defendant Burga was president of the association for Peru, and defendant Marin was president of the association for Brazil.

The government outlined the scheme of corruption, saying that the three defendants were involved in receiving bribes related to two soccer competitions: (1) Copa America, played in the United States, and (2) Copa Libertadores, played in South America. The government said that the evidence will show that the three defendants were involved in selling television and marketing rights for these tournaments to sports-marketing firms, who in turn sold the rights to television stations. Rather than have these sports-marketing middle men bid and compete for the rights, the defendants took bribes from the firms in exchange for the lucrative television rights.

The government emphasized the U.S. component of the schemes: defendants used U.S. companies and U.S. financial markets, conducted business in the United States and broke the law while selling rights to the U.S.-based tournament Copa America Centenario. Specifically, the government alleged that defendant Marin took his cash payouts and deposited them in a New York bank account, defendant Napout was paid in cash, and defendant Burga held off on receiving payments because he was under investigation for money laundering in Peru and did not want to raise any red flags.

The government closed by previewing its evidence of crimes: testimony form the sports-marketing executives, testimony from other soccer officials, bank records and other documents like contracts, emails and flight records.

Opening Statements: Defendant Napout

Napout did not dispute that FIFA is corrupt, but he stated that the government has made the overbroad allegation that everyone involved in FIFA is corrupt.

Napout emphasized the “sweetheart deal” that the government witnesses are receiving in exchange for their damning testimony against Napout: cash payments, immigration visas for the witnesses and their families, and prosecutorial immunity or leniency in the case of some witnesses who were involved in the corruption. This, Napout argued, tainted the credibility of these witnesses. For example, Napout noted that he was not indicted in the first round of U.S. indictments in 2015. Rather, Alejandro Burzaco, another high-ranking CONMEBOL official, was indicted and subsequently worked out a deal with the government to testify against Napout for no prison time.

Napout also noted that the government has no records or trace of dirty payments received by Napout. According to Napout, to get around this lack of evidence, the government is making the sham argument that Napout was always paid in cash.

Opening Statements: Defendant Burga

Burga argued that, while a lot of soccer officials were involved in bribery schemes, Burga was not. Burga emphasized that a lot of the witnesses that the government will use to make their case are some of the most corrupt people on earth. These are people, Burga argued, that were heavily involved in corruption in the soccer world and are testifying to get in the government’s good graces.

Burga argued that none of the documents that the government has compiled will evidence dirty payments that Burga received as an official with the Peru soccer association. The government argued that Burga did not take any payments because he was under investigation and instead was holding out for those payments until he was cleared. Burga argues that this is untrue and is just the government’s attempt to explain away the lack of a paper trail.

Opening Statements: Defendant Marin

Marin argued that he was just an interim head of the Brazil soccer federation and his presence alone is not enough to make him guilty of these corruption charges.

Marin set up the organizational structure of CONMEBOL while he was ascending the ranks: Ricardo Teixeira was president, while Marin and Marco Polo del Nero were vice presidents. Marin says that Teixeira and del Nero were leading the charge at CONMEBOL, and, when Teixeira resigned, the only reason Marin was appointed interim president rather than del Nero was because the bylaws required that vacancy be filled by the vice president who was the oldest in age. Del Nero assumed the role on the executive committee of FIFA. Marin intends to show that it was del Nero who was involved in any bribery schemes that occurred at CONMEBOL while Marin was president.

Marin also emphasized that the government’s witnesses are not credible due to the sweet deals that they have received in exchange for their testimony. Marin also emphasized the government’s burden in criminal cases of proving the defendant guilty beyond a reasonable doubt.

Government Witness #1: Stephanie Maennl 

Maennl is an employee at FIFA. Beginning in June 2010, Maennl worked as legal counsel for the organization in Zurich, Switzerland, before being promoted to head of Corporate Legal.

Maennl testified as to the organizational structure of FIFA, its continental federations, and the member associations (which are generally countries), and that each member association has to comply with its own statutes and regulations, as well as the statutes and regulations of their confederation and FIFA.

The focal point of Maennl’s testimony pertained to FIFA’s Code of Ethics and Code of Conduct, which are periodically revised. FIFA established an ethics task force in 2012 in the wake of allegations of bribery related to the awarding of the 2018 and 2022 World Cup to hosts Russia and Qatar, respectively.

FIFA’s Code of Ethics and Code of Conduct have a “zero-tolerance policy” for bribery. Furthermore, they ban accepting gifts or cash in any amount in exchange for favors. Maennl testified that the updated Code of Ethics and Code of Conduct were sent to each individual member association after being adopted in 2012.

Cross-Examination: Stephanie Maennl

Marin questioned Maennl if any member association is required to acknowledge receipt of the Code of Ethics and Code of Conduct. Maennl testified that they are sent via DHL, which would show proof of delivery. Marin countered with a question about the size of the organization, demonstrating that the materials may not have been received.

Napout and Burga did not cross-examine Maennl.

Government Witness #2: Stefan Szymanski

Szymanski is a professor of sport management at the University of Michigan who focuses his work and research on economics of the business of sport, with a particular focus on soccer. He testified as an expert witness for the government.

Szymanski testified that there are four categories of assets for soccer organizations: (1) broadcasting rights, (2) advertising and sponsorship rights, (3) licensing rights, and (4) ticket sales. Broadcasting rights are the most lucrative.

Szymanski explained the roles of the three players in the sale of soccer broadcasting rights: (1) the soccer organization, which owns the rights; (2) a sports-marketing firm, which purchases those rights; and (3) the television networks, which then buy those rights from the sports-marketing firm.

Szymanski testified that there are two ways that corruption can negatively impact revenue when it comes to the sale of soccer-broadcasting rights. The first is that a soccer organization that pockets some of the money from the sale of those rights is thereby depriving the soccer organization of what otherwise would be revenue. Secondly, corruption stunts the market for competition, where either the organization is not getting the best price (instead going with whoever will line the officials’ pockets most) or “clean” players are discouraged from entering the market and competing with “dirty” ones.

Cross-Examination: Stefan Szymanski

Marin pointed out that, while Szymanski was making broad points about the effects of corruption on the sale of broadcasting rights, Szymanski had not actually seen the contracts of CONMEBOL with the sports-marketing firms, nor had he used empirical data specific to this case in reaching his conclusions.

Napout and Burga did not cross-examine Szymanski.

Redirect: Stefan Szymanski

The government asked Szymanski if, in his 30 years of experience, in cases where he did use empirical data to reach his conclusions, he had ever seen an incident where corruption maximized the market benefit with respect to the business of sports. He testified that he had not ever seen that to be the case.

Trial Summary: November 14, 2017 (Day 2)

Government Witness: Alejandro Burzaco

Day two consisted entirely of the testimony of Alejandro Burzaco. Burzaco served as the chief executive officer of Torneos y Competencias (Torneos). He learned of his indictment in May 2015, when he traveled to Zurich, Switzerland for a FIFA Congress. He subsequently turned himself in to the U.S. authorities and pled guilty to racketeering conspiracy, wire fraud conspiracy and money laundering conspiracy. Burzaco used Torneos to pay bribes to Juan Angel Napout, Jose Maria Marin and Manuel Burga. Burzaco explained that bribes were also paid through a Torneos affiliate called T&T, which had been a joint venture until 2002 when Traffic sold its interest to a prominent broadcast company.

Relationship with Julio Grondona

Burzaco testified that he was close to Julio Grondona, a powerful figure in soccer. Grondona was the senior vice president of FIFA, and president of the Argentine Football Association prior to his death in 2014. When Burzaco became involved with Torneos in 2005, he began paying bribes to Grondona. These bribes came in two forms: one-time “signature” bribes for the support of a contract, or annual payments for Grondona’s continued loyalty. It is Burzaco’s opinion that few people other than Grondona and Napout understood the extent of the FIFA bribery schemes.

Copa Libertadores

The government then focused its questioning on the Copa Libertadores. Burzaco explained that T&T paid bribes to multiple parties within CONMEBOL and FIFA in order to retain the media rights to the Copa Libertadores. These bribes were paid in U.S. dollars and were wired to foreign banks, typically Swiss. The amount of the bribes would fluctuate depending on seniority – the president of CONMEBOL would receive the “presidential treatment,” a US$1 million dollar annual bribe, whereas the treasurer (Carlos Chavez) would receive US$600,000. Burzaco testified that the purpose of many of these bribes was to extend long-term contracts. However, doing so was against CONMEBOL’s interests, because it suppressed competition and innovation. These contract extensions were called “signature bribes.” In 2008, T&T’s contracts for Copa Libertadores and Copa Sudamericana were both extended for single payments of US$1 million to Nicolas Leoz (CONMEBOL president) and Grandona, whereas lower-ranking members would receive US$100,000.

Argentina Terminates the T&T Contract

Burzaco explained that, in 2009, the Argentine Football Association (AFA) and Argentine government terminated the T&T contract with local Argentine tournaments due to an government initiative called Futbol Para Todos, which mandated government media control of all soccer games. Burzaco therefore paid US$4 million in bribes to government officials. Burzaco feared that CONMEBOL would follow Argentina and terminate the T&T contract. In October 2009, Burzaco began communicating with Hugo and Mariano Jinkis, the owners of Full Play, in order to exert influence over CONMEBOL so that T&T could retain the rights to Copa Libertadores. Burzaco explained that, at the time, the “group of six” began demanding US$400,000 each for their support of T&T. Full Play acted as an intermediary, which made Burzaco nervous that Full Play would eventually push T&T out. These payments were paid out of CONMEBOL funds.

Copa America

In 2010, Hugo Jinkis of Full Play disclosed to Burzaco a plan whereby Jinkis would pay CONMEBOL a one-time bribe to terminate a contract with Traffic, which had exclusive rights to Copa America. The bribe would consist of US$60 million paid to CONMEBOL for the early termination of Traffic’s contract, and US$15 million paid to various CONMEBOL officials (US$6 million to the group of six, and US$9 million to Nicolas Leoz, Ricardo Teixeira and Grondona). Traffic then sued in Florida Federal Court, alleging that this subsequent contract violated Traffic’s agreement with CONMEBOL. Burzaco testified that he was “heavily involved” with the settlement process, even though he was not a named party. Traffic agreed to drop the lawsuit after Full Play, Torneos and Traffic agreed to share the media rights to Copa America. Together they formed a group called Datisa.

Burzaco’s testimony will continue on Wednesday, November 15.