FIFA now also under Strict Supervision
Pfäffikon SZ, Switzerland – Two weeks ago I was driving past the impressive FIFA headquarters in Zurich with two Dutch guests. At the time I could not conceive of the notion that only two days later the FIFA would be world news, surrounded by corruption scandals. One of the most powerful sports institutions in the world is facing heavy weather following thorough detective work and several arrests on part of the American FBI. After the doping scandal was uncovered in professional cycling, now apparently, it’s football’s turn.
Dismantlement
The Swiss I converse with are not eager to see a dismantlement of the FIFA. After the attack on the banks they view it as yet another infringement by the USA with the goal of crushing Switzerland. On the global stage the former president of the FIFA – Sepp Blatter – is being vilified, but the question is, is that justified? To answer that question, we must go back to 1974; the World Cup in Munich which resulted in a Dutch trauma when the final was lost against West-Germany. It would be the first time the FIFA discovered that a lot of money could be made with football.
Television rights
In the years that followed the income from the sale of television rights would become a turning point for the FIFA. In this context you may perhaps remember the demise of the Swiss sports marketing bureau International Sport and Leisure (ISL)? The judicial documents which were released later showed that former FIFA president João Havelange had received a sizable amount in bribes. Corruption has ruled for over 40 years within the FIFA. Still Blatter’s biggest enemy has to admit that he has turned the FIFA into a giant financial stronghold.
Qatar
In this vein granting the dwarf nation of Qatar the rights to organise the world cup in 2022 is interesting. Some 100 years ago Qatar was still dirt poor. The income stream generated through oil sales changed everything. Meanwhile Qatar belongs to one of the three richest countries in the world. Personally I do not view Qatar as a country but as a well run business. Qatar can provide the world with gas for at least the next 270 years. Moreover, the Qatari state fund has involvements with VW, Porsche, Deutsche Bank and Credit Suisse – coincidentally – FIFA’s home banker. Money therefore does not play a role. It is to say the least, striking, that a country where it is stifling hot and which has a mere 12 stadiums at its disposal, is allowed to organise the World Cup football. It simply indicates that with enough money, anything is for sale.
Supervision
From my own financial experience and background it is entirely logical that the FIFA’s cash flows are placed under scrutiny. But certain critical questions can also be addressed to FIFA’s accountants, in this case KPMG. Additionally, perhaps it’s a worthwhile idea to place these powerful so-called “non-profit” organisations and their executives under increased supervision by the Finma (Swiss Financial Market Supervisory Authority). Apparently their own Code of Ethics isn’t working as it should.
Sepp Blatter must have known something didn’t smell right within his organisation. After all, it was known that he was fairly close with João Havelange. It’s likely Blatter wanted to compromise on the bribery issues in order to remain top dog. Time will tell if Blatter resigned under pressure from the FBI or if he succumbed to mighty sponsors. Additionally, it needs to become clear if Blatter broke Swiss law.
Clean Sweep
It goes without saying that yours truly believes that Michael van Praag – supported by Johan Cruijff – is the ideal person to manage the FIFA. Moreover, I don’t find Michael van Praag’s decision in the mean time to drop out, to be very conveniently chosen. That has no bearing on the fact that Van Praag has more than enough experience and is not under direct influence of the Americans. Something that cannot be said of prince Ali bin Al-Hussein. That makes Van Praag a trustworthy and independent FIFA manager. It will probably take at least another 10 years before the FIFA is corruption-free, do not kid yourself.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above shares and has no intention of doing so in the next 72 hours.
