Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

The growing scandal over corruption at Fifa threatens to entangle Nike, the US sportswear company that is a sponsor of the Brazilian national football squad, and other multinational sponsors of the game in Latin America.

US prosecutors alleged in an indictment that an intermediary, a company controlled by Brazilian businessman José Hawilla, helped secure a landmark $160m, 10-year sponsorship deal in 1996 between an unnamed sportswear company and the country’s football federation, or CBF, by paying bribes.

Prosecutors did not name Nike in their indictment, which was filed to a US district court, referring to it as “sportswear company A” or “E” in two separate documents. They have not accused it of any crime.

But the deal by the unnamed company described in the two indictments appears identical to the one signed by Nike and CBF in 1996.

Nike said that it “believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery. We have been co-operating, and will continue to co-operate, with the authorities.”

In a later statement the company said: “The charging documents unsealed yesterday in Brooklyn do not allege that Nike engaged in criminal conduct. There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme.”

The website of Traffic, Mr Hawilla’s company, mentions a deal in 1996 with Nike as one of its landmark transactions. Nike’s sponsorship of the Brazilian team was also at the centre of a congressional inquiry into football in Brazil in 2001.

A number of Fifa’s biggest sponsors, including Visa and Coca-Cola, were quick to speak out about the allegations of corruption and fraud that have engulfed world football’s governing body and some of its affiliates.

The allegations swirling around the Nike contract will be closely watched by multinationals interested in participating in Brazil and Latin America’s increasingly lucrative sports advertising market.

Successive CBF chairmen have endured a number of scandals but until now had emerged unscathed.

In their indictment, US prosecutors said the unnamed sportswear company approached the CBF about a sponsorship deal around 1994.

The CBF and Traffic, which was then its marketing agent, began negotiations with the company.

Under the deal eventually signed with Nike in 1996, the CBF agreed to remit a percentage of the payments it received from the sportswear company to Mr Hawilla’s Traffic.

Mr Hawilla, who has pleaded guilty in the case as part of a plea-bargain agreement, then agreed to pay half of everything he made from the deal as kickbacks to a senior member of the CBF board, identified in the indictment as “co-conspirator 11”.

Prosecutors said that “co-conspirator 11” was also at various times a high-ranking official of Fifa and Conmebol, the South American football confederation.

The prosecutors said additional financial terms between Traffic and the unnamed sportswear company were not reflected in the CBF agreement.

Under these additional terms, the unnamed company agreed to pay a Traffic affiliate with a Swiss bank account an additional $40m in “base compensation” on top of the $160m it paid the CBF.

Three days later, the unnamed company and Traffic signed a one-page contract saying that the CBF had authorised Traffic to invoice the unnamed company directly “for marketing fees earned upon successful negotiation and performance of the . . . [agreement]”, it is alleged.

The 10-year sponsorship was terminated in early 2002. Nike is the current kit sponsor of the Brazilian national team.

The prosecutors also alleged that a sports marketing company involved in the negotiation of sponsorship deals for the Copa Libertadores, the South American championship run by Conmebol, paid bribes to secure the exclusive rights.

Toyota became the tournament’s first title sponsor in 1998, followed by Santander in 2008 and Bridgestone Corporation starting in 2013.

The prosecutors alleged that a sports marketing company, identified only as “sports marketing company A” and based in New Jersey, paid a series of bribes mainly to Nicolás Leoz, who was the president of Conmebol between 1986 and 2013, and a member of Fifa’s executive committee.

The payments, which started in the early 2000s, were in exchange for his support for the sports marketing company securing the exclusive rights to the tournament.

Santander declined to comment. Toyota and Bridgestone were not immediately available for comment.

Dilma Rousseff, Brazil’s president, said this week she welcomed the Fifa investigation, saying the country’s normally aggressive public prosecutors had been unable to tackle alleged corruption in football in the country because it was run by private organisations.

“I say that if it needs to be investigated, investigate it — all the World Cups, everything,” she told reporters on a trip to Mexico.

Additional reporting by Robert Wright in New York

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article

Follow the authors of this article

Comments have not been enabled for this article.