ADVERTISEMENT

Report: US officials are investigating a $160 million Nike/Brazil sponsorship deal

Scalphunter

Seminole Insider
Gold Member
Apr 3, 2002
4,049
2,338
853
Tallahassee
Pertinent to FSU since they are our apparel sponsor.

U.S. authorities are examining payments made by Nike Inc. under a groundbreaking 1996 soccer sponsorship with Brazil for possible evidence of any wrongdoing by the company in addition to its counterparts in the deal, people familiar with the matter said.

The examination indicates the company is still of interest as the Justice Department pursues its wide-ranging probe of corruption in the global soccer business.

Allegations of corruption around Nike’s 10-year, $160 million agreement to sponsor Brazil’s national team are discussed in barely veiled terms in the Justice Department’s 161-page indictment of officials in and around soccer’s governing body, FIFA.

The indictment describes a multinational U.S. sportswear company that struck a deal to sponsor the Brazilian federation, and then cut a side deal with a sports-marketing middleman, who allegedly used payments from the company for bribes and kickbacks. The people familiar with the matter confirmed the company is Nike.

Nike said the indictment doesn’t allege that the company or its employees engaged in criminal activity and said it is committed to ethical behavior.

“We have been cooperating, and will continue to cooperate, with the authorities,” the company said in an email.

Nike’s negotiating counterparts at the Brazilian soccer federation CBF and the middleman, Traffic, are described in the indictment as unindicted co-conspirators. The indictment doesn’t discuss Nike or any of its employees by name.

The inquiry by U.S. prosecutors has raised questions about a deal that was a crucial win for Nike. At the time, the company was widely seen as out of the race in soccer. But it pushed boldly into Brazil in an effort to sign the reigning world champions and gain clout in the sport. The Brazilian contract helped drive Nike’s revenue and sponsorship heft in soccer to where it is today: neck-and-neck with rival Adidas AG.

People involved the sports-marketing business at the time said in recent interviews that Nike rushed into the top echelon of a sportand into a country that it didn’t understand very well.

Questions about the deal began long before U.S. authorities began their probe. The Brazilian Federal Accounting Office audited CBF’s accounts around the turn of the millennium and found anomalies with payments made by Nike to the Brazilian federation, according to the records of a Brazilian parliamentary commission that held an inquiry into the deal at that time.

The agreement called for Nike to make scheduled payments directly to the CBF via its account at Banco Real, according to a translation of a copy of the agreement in the commission’s records.

But the audit found that Nike sometimes routed payments via different accounts, according to a translation of the audit report included in the committee’s records.

“There were several banking transactions that weren’t done directly to that account, instead going through a triangulation through banks, whose goal should be better explained,” the translation of the audit report copy says.

The report doesn’t include an explanation of the transactions. According to the contract, Nike could send the money via other accounts if instructed to do so by CBF. It’s unclear to whom Nike made the payments, which according to the schedule set forth in the contract were due in annual installments of between $5 million and $20 million over 10 years.

The Brazilian parliamentary inquiry in particular questioned whether the terms of the contract were overly favorable to Nike in terms of control over exhibition matches and appearances by players. It also questioned why the contract was done through an intermediary.

Reynaldo “Ingo” Ostrovsky, who served as Nike’s communications manager in Brazil after the contract was signed, testified in 2001 that Nike originally approached Traffic when it became interested in sponsoring the Brazilian national team knowing the sports-marketing firm held the marketing rights.

In the testimony, Mr. Ostrovsky was asked by the Brazilian lawmakers how much Nike had to pay Traffic for the rights to CBF.

“The contract makes it quite clear that Nike did not make any payments to Traffic,” Mr. Ostrovsky said, according to a translation of the transcript. “The contract says the financial settlement, if any, it will be done between the CBF and the Traffic. We do not, have not made any financial or monetary settlement with Traffic.”

Mr. Ostrovsky declined to comment.

Translated language from a copy of the contract included with the commission report says that Nike agreed to make payments directly to CBF, which would then make any payments due to Traffic.

U.S. authorities, however, allege that three days after the deal between the sportswear company and CBF was signed, a representative from the company and a representative from Traffic signed a separate, one-page agreement whereby Traffic was permitted to invoice Nike directly for additional marketing fees. A statement on the Traffic Group website said that the firm continues to operate normally and news reports alleging wrongdoing are based on incomplete information.

A spokesman for Nike, Reggie Borges, said Mr. Ostrovsky was referring in his testimony to the contract between Nike and CBF, and not the one-page agreement signed between Nike and a Traffic affiliate.

The indictment alleges Traffic eventually invoiced the company for $30 million and that the middleman then used the funds in part to pay bribes and kickbacks.

The indictment refers to the company’s negotiating counterparts at the CBF and the middleman, called Traffic Group, as co-conspirators. The Traffic representative, founder José Hawilla, has pleaded guilty to charges related to the probe. He has admitted to crimes including money laundering and fraud related to the broad soccer probe. Mr. Hawilla’s lawyer said his client is cooperating with the investigation.

Write to Sara Germano at sara.germano@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com

http://www.wsj.com/articles/u-s-probes-nike-payments-under-brazil-deal-1434148799
 
Stupid question probably, but why can't a nation "bribe" FIFA for a vote? I get why it's ethically suspect, but why is it against the law (if it is)? They're not a justice entity or a law-making organization, they're a glorified bunch of soccer moms. No?

Why can't Nike pay $160 million in a shady sponsorship deal? Isn't it Nike's shareholders' money? And can't they sponsor who they see fit? If they don't like what they're getting for their money, shouldn't they be the ones raising hell, legally?

What laws are broken when international soccer bodies are getting "paid off"?

I'm sure I'm being naive, but I don't see why these things would be illegal.
 
Stupid question probably, but why can't a nation "bribe" FIFA for a vote? I get why it's ethically suspect, but why is it against the law (if it is)? They're not a justice entity or a law-making organization, they're a glorified bunch of soccer moms. No?

Why can't Nike pay $160 million in a shady sponsorship deal? Isn't it Nike's shareholders' money? And can't they sponsor who they see fit? If they don't like what they're getting for their money, shouldn't they be the ones raising hell, legally?

What laws are broken when international soccer bodies are getting "paid off"?

I'm sure I'm being naive, but I don't see why these things would be illegal.

I am startled that the Justice Department has devoted so much time/money/effort investigating sleazy conduct committed largely by third world counties. Why do we care if a banana republic paid someone off to bring a soccer freak-fest to their country? What's next? Investigating WWE for wrestling matches being fixed? Just seems like we have way too many problems on other fronts to devote resources to soccer corruption.
 
I am startled that the Justice Department has devoted so much time/money/effort investigating sleazy conduct committed largely by third world counties. Why do we care if a banana republic paid someone off to bring a soccer freak-fest to their country? What's next? Investigating WWE for wrestling matches being fixed? Just seems like we have way too many problems on other fronts to devote resources to soccer corruption.
Because they used US banks to funnel the money.
 
Because they used US banks to funnel the money.
But it isn't for drug running or other illegal activity, i think is the question. They were just paying money to get their company as the sponsor. So whether they gave all the money to CBF or gave some to CBF and some to people that allowed them in the door just to talk to CBF, why is the FBI concerned how they choose to spend money outside the country, as long as it is not to bring something illegal into or out of the U.S. and their accounting methods for the money are appropriate?
 
But it isn't for drug running or other illegal activity, i think is the question. They were just paying money to get their company as the sponsor. So whether they gave all the money to CBF or gave some to CBF and some to people that allowed them in the door just to talk to CBF, why is the FBI concerned how they choose to spend money outside the country, as long as it is not to bring something illegal into or out of the U.S. and their accounting methods for the money are appropriate?
A) it's illegal
B) when it became apparent that the bribery that runs rampant in international soccer may largely (or entirely) be to blame for the USA not winning its bid to host the 2022 WC, it became an American issue. you don't use US banks to bribe people into screwing the US over and expect to get away with it.

as for nike, screw them i hope those chief walmart pimping hoes rot as well (though i doubt anything really comes of it)
 
A) it's illegal
B) when it became apparent that the bribery that runs rampant in international soccer may largely (or entirely) be to blame for the USA not winning its bid to host the 2022 WC, it became an American issue. you don't use US banks to bribe people into screwing the US over and expect to get away with it.

as for nike, screw them i hope those chief walmart pimping hoes rot as well (though i doubt anything really comes of it)
Was referring to Nike sponsoring Brazil. I understand the world cup site selection.

But yes I am also not a fan of new logo.
 
I am startled that the Justice Department has devoted so much time/money/effort investigating sleazy conduct committed largely by third world counties. Why do we care if a banana republic paid someone off to bring a soccer freak-fest to their country? What's next? Investigating WWE for wrestling matches being fixed? Just seems like we have way too many problems on other fronts to devote resources to soccer corruption.

You might not remember, but in the US some states (for some reason New Jersey comes to mind) were investigating wrestling to have it governed by the professional sports laws, that's when they came out and said it was all fixed and scripted.

As for why the US DOJ did what they did, well there are a number of reasons, but it has very little to do with cleaning up soccer.
 
The main issue is that there was dirty money flowing freely, and none ended up in the pockets of any US Congressmen.

That will get you in trouble every time.
 
The main issue is that there was dirty money flowing freely, and none ended up in the pockets of any US Congressmen.

That will get you in trouble every time.
This, I suspect, is the real answer.

To whoever said its illegal... Why is it illegal in the U.S. for Qatar, for example, to pay a bribe to Jack Warner, a Trinidadian? Explain that.

Furthermore, why is Nike not allowed to pay whatever it sees fit to sponsor soccer in Brazil?

Neither of those are clear to me. I'm not being defiant. I really want to know why it is illegal.
 
I am startled that the Justice Department has devoted so much time/money/effort investigating sleazy conduct committed largely by third world counties. Why do we care if a banana republic paid someone off to bring a soccer freak-fest to their country? What's next? Investigating WWE for wrestling matches being fixed? Just seems like we have way too many problems on other fronts to devote resources to soccer corruption.
"Soccer freak-fest" will be worth upwards of $10 billion dollars to the economy of the host country. When we lost the bid to Qatar, who at the time had no national team or a single viable stadium, it raised a few eyebrows.
 
ADVERTISEMENT
ADVERTISEMENT