October 26, 2016

US investigates broadcasters in widening FIFA case

A journalist walks in front of FIFA’s headquarters in Zurich, Switzerland on 2 December 2015. Photo: Reuters

New York: A sports marketing company that was described in a sweeping indictment this month as retaining contracts because of the ‘support’ of corrupt soccer officials has longstanding ties to the US entertainment company 21st Century Fox, according to securities filings and other government documents.

The description of T&T Sports Marketing Ltd in the indictment signals that US prosecutors have intensified their focus on media companies and what they might have known about any bribes, people familiar with the matter said.

When prosecutors announced their corruption investigation of world soccer’s governing body FIFA in May, they spoke in court papers about ‘an array of broadcasters and advertisers’ but otherwise did not specifically address their role.

21st Century Fox listed T&T as a subsidiary last year in a filing with the US Securities and Exchange Commission. Its investment in the company stretches back to 2002, government documents from the United States and Argentina showed.

Fox had no operational control of T&T, a Fox spokeswoman said. She declined to comment further.

Fox was not named in the indictment and was not accused of any wrongdoing. T&T was also not accused of any wrongdoing.

T&T, which is registered in the Cayman Islands, does not have a listed telephone number and it was unclear if it has employees of its own.

A spokeswoman for the US Attorney’s Office in the New York City borough of Brooklyn, where the cases against top soccer officials and entities were brought, declined to comment. A spokeswoman for the FBI also declined to comment.

The 3 December indictment said three executives ‘affiliated’ with T&T bribed at least 15 high-level soccer officials to support the company’s exclusive worldwide broadcasting rights for events such as the Copa Libertadores, a major South American club tournament. The three executives were at the time with Argentine sports marketing firm Torneos y Competencias, the indictment said.

One of the three executives, Alejandro Burzaco, the former chairman of Torneos, was indicted for the bribery scheme in the United States in May and pleaded guilty last month. The two others were described in the indictment as co-conspirators but not named. Torneos, a part-owner of T&T with Fox, was not charged.

The 15 soccer officials have been charged, and two of them pleaded guilty last month.

The indictment does not explain how T&T benefited from retaining the broadcasting contracts. T&T is not a broadcaster itself, but by obtaining broadcasting rights, it could resell them to major broadcasters.

21st Century Fox, which is led by media baron Rupert Murdoch, ended up with the rights to broadcast the Copa Libertadores and other tournaments.

The avalanche of corruption allegations prompted FIFA President Sepp Blatter to say he would resign, only days after being re-elected to a fifth term. Batter has not been charged with a crime, and denies any wrongdoing.

Prosecutors have charged 41 people and entities in a probe of soccer corruption spanning the globe. Soccer bosses from throughout the Americas are among the defendants in a case that prosecutors said involves $200 million in bribes and kickback schemes tied to marketing of major tournaments and matches.

The schemes deprived soccer federations of the full value of broadcasting and marketing rights and had powerful anti-competitive effects, prosecutors said.

Potential liability

Media companies could potentially be criminally liable if they benefited from bribery and their employees had knowledge of it or were willfully blind to it, legal experts said. Emails, text messages and other documents, as well as interviews with cooperating witnesses, are typically used to assess what if anything employees knew and when.

Mere ownership in a subsidiary or affiliate involved in bribery would not be enough, however, for prosecutors to charge a major media company. There would need to be evidence the company knew or was willfully blind.

According to the indictment, T&T was owned in part by Argentina’s Torneos and in part by ‘a group of investors that included an affiliate of a major broadcasting company headquartered in the United States whose identity is known to the grand jury.’ The description does not go beyond that.

Today, only two companies own shares in T&T. A Fox affiliate owns 75 per cent and Torneos owns 25 per cent, according to Torneos.

Fox’s relationship with T&T dates back to 2002, when the company joined forces with Liberty Media Corp and a subsidiary of private equity firm Hicks, Muse, Tate & Furst to form a venture called Fox Pan American Sports. As part of the deal, Hicks transferred its 50 per cent stake in T&T to the new venture, according to government documents from Argentina. Fox completed its takeover of Fox Pan American Sports in late 2011, according to US securities filings.

A Liberty Media spokeswoman did not respond to questions about the deal. Hicks is defunct.

Satellite-TV company DirecTV also has an interest in T&T, according to a securities filing in February. It owns 40 per cent of Torneos, which in turn owns 25 per cent of T&T’s shares. DirecTV said in August that its $147 million investment in Torneos could be hurt by the ongoing FIFA investigations.

DirecTV is a unit of AT&T Inc, which declined to comment on the case. Torneos also declined to comment.

Fox has chosen the law firm Williams & Connolly to conduct an internal review related to the soccer investigation, people familiar with the matter said. The scope of the review could not be determined. Brendan Sullivan, a partner at the firm who represented Murdoch’s News Corp in the British phone-hacking scandal, could not be reached for comment.

Related posts