A scandal involving officials of the Fédération Internationale de Football Association (FIFA), the governing body of international soccer, has been public since 2015, when the United States Department of Justice (DOJ) indicted 14 FIFA officials and sports marketing executives.
To date, the investigation has resulted in criminal charges for over 50 individuals, banks and other corporations across 20 different countries. Charges have included conspiracy to commit money laundering, bribery, wire fraud and racketeering conspiracy, with the focus of the investigation on bribes and kickbacks related to contracts to televise soccer matches.
The Association of Certified Fraud Examiners’ (ACFE’s) Fraud Examiners Manual defines kickbacks, a form of bribery, as “improper, undisclosed payments made to obtain favorable treatment.” Kickbacks and bribes can take many different forms and can be perpetrated using a variety of means, but at the most basic level, kickbacks are an illegal transaction between colluding parties. Often, kickback schemes result in the victim overpaying for goods or services to defray the cost of the kickback itself. Possible red flags of a kickback scheme include steadily rising prices for the same product or service or an unusually close relationship with a vendor.
Kickback schemes are difficult to detect because the transactions may occur outside of the victim’s normal accounting system -- for example, in the case of a cash bribe or a trip paid for by a vendor. In addition, internal controls to detect suspicious transactions will likely fail to detect a kickback, but a fraud hotline or another anonymous reporting tool may allow a whistleblower to step forward. Establishing a hotline is an important control for businesses to establish, as the ACFE’s 2020 Report to the Nations states, a hotline or email was the reporting method used by whistleblowers in 33% of cases.
The scope and number of schemes investigated over the last several years is remarkable and necessitated the creation of a FIFA Task Force within the U.S. Attorney’s Office to prosecute the cases and coordinate the return of victims’ funds. The proceeds paid to victims is largely the result of the work of the DOJ’s Asset Forfeiture Program, which works to recover the proceeds of illegal activity and return them to victims. The victims in this case, including FIFA and several other international soccer organizations, have been granted more than $201 million in victim remission. Activity related to the investigation continues with the announcement of $32 million recently being remitted to these organizations, which have committed to supporting charitable missions by using the proceeds to create and support the World Football Remission Fund.
The government’s case is ongoing, and it will likely be years before the final prosecutions related to the case are brought to justice. Kickback schemes are hard to detect, but they can affect any business. The expertise of the Schneider Downs Business Consulting team can help you identify red flags of fraud within your organization.
This article is part of series highlighting fraud from the professional sporting world in support of the Association of Certified Fraud Examiner's (ACFE) annual International Fraud Awareness Week. We invite you to read our other articles at the links below.
ACFE's International Fraud Awareness Week is an opportunity for anti-fraud professionals and communities to come together to look at how far reaching the effects of fraud can be. Check out our Schneider Downs Business Consulting LinkedIn page throughout the week for additional information from the ACFE.
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