Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, June 29, 2016

Blatter, Valcke and Kattner awarded themselves £55m, say Fifa lawyers

The spectacular scale of greed at the top of Fifa was revealed on Friday when lawyers said that three high-ranking former officials – Sepp Blatter, Jérôme Valcke and Markus Kattner – had secretly given themselves pay rises and massive World Cup bonuses totalling 79m Swiss francs (£55m).

The lawyers acting for Fifa said the contracted payments were made during the officials’ last five years in office. They appeared to violate Swiss law. Evidence will now be given to the US justice department and to Swiss federal prosecutors who are investigating the financial scandal engulfing the world football body.

“The evidence appears to reveal a coordinated effort by three former top officials of Fifa to enrich themselves through annual salary increases, World Cup bonuses and other incentives totalling more than 79m Swiss francs in just the last five years,” said Bill Burck of Quinn Emanuel, the US law firm retained by Fifa during its corruption crisis.

Fifa revealed details of the contracts of its former president Blatter, former secretary general Valcke and former finance director Kattner one day after police raided its offices to seize evidence for the Swiss investigation. It is understood Blatter received £23.3m, Valcke £22.9m and Kattner £9.5m.

The raid included searches in the office of Kattner, Fifa’s German deputy secretary general, who was fired last week.

The Swiss attorney general, Michael Lauber, opened criminal proceedings against Blatter last September, and against Valcke in March.

Both are suspected of criminal mismanagement of Fifa money. Blatter and Valcke deny wrongdoing but were banned for six and 12 years respectively by Fifa’s ethics committee.

No additional criminal investigations have been opened against Kattner.

In a statement, Fifa said: “Additionally, Fifa will refer the matter of these contracts and payments to the ethics committee for its review.”

In a statement, Blatter’s US-based lawyer said on Friday the former Fifa chief’s compensation payments were “proper, fair and in line with the heads of major professional sports leagues around the world”.

The secret payments are another lurid episode from a Blatter era now synonymous with venality. They come at a time when Fifa’s new president, Gianni Infantino, is scrambling to show his administration marks a fresh start for an organisation mired in scandal from the grubby regime run by his predecessor.

Infantino’s reformist credentials were dented in April when he appeared in the Panama Papers leak. This week the German newspaper Die Welt reported he had ordered the destruction of the minutes of a Fifa executive committee meeting, a claim Infantino denied.

On Friday Fifa gave details for the first time of the “tens of millions of dollars” paid to the three individuals. Fifa said documents seized in the raid “raised serious questions about the way a series of problematic contract amendments ... were approved”.

It said: “These amendments resulted in massive payouts – amounting to tens of millions of dollars – to the former Fifa officials in the form of salaries and bonuses between the years 2011 and 2015.”

Put together, the new documents and evidence appeared to reveal “a coordinated effort” by the top officials to enrich themselves, Fifa said. Several of the amendments to contracts which came into effect on the same day were described as “very ominous”.

They included new eight-and-a-half year contract extensions given to both Valcke and Kattner, shortly before Fifa’s May 2011 presidential election. At the time it was unclear if Blatter would be re-elected or his rival Mohamed bin Hammam would get the job.

Their contracts were extended until 2019, with “big increases in base salaries and bonuses” and guaranteed severance payments. They amounted to 17.5m Swiss francs (£12.2m) and 9.8m Swiss francs to Valcke and Kattner respectively in the case that their contracts were terminated, which was likely if Blatter lost.

Fifa also agreed to pay all their legal fees. These arrangements probably violated Swiss law, Fifa said.

Additionally, the three officials pocketed 23m Swiss francs as “special bonuses” awarded four months after the 2010 World Cup in South Africa. The bonuses were given even though they were not mentioned in any contract.

Valcke and Kattner received a further 14m Swiss francs in bonuses for the 2014 World Cup in Brazil. They got another payment of 15.5m Swiss francs in June 2014 for the controversial 2018 World Cup in Russia.

Fifa highlighted a profound conflict of interest at the heart of world football. It noted that “the people who signed the contracts were in principle also the ones that approved them”. Kattner and other officials simply instructed Fifa’s payroll and HR departments “how much should be paid out and to whom”. These departments reported directly to Kattner.

In 2013 Fifa created a new compensation sub-committee. The committee set pay and bonuses for the three top officials, plus Fifa’s executive committee. This step – apparently done in the interests of transparency and accountability – failed to stop further abuses, Fifa said.

Later the same year the committee did “make an effort to reduce Mr Blatter’s bonus and salary”. However, it did not “make a similar effort” with either Valcke or Kattner. In fact, in 2013 and 2014 it approved substantial payments to both men for the 2014 and 2018 World Cups.

Even more astonishing, the committee made another controversial payment to Kattner, days after the US Department of Justice arrested several top Fifa officials at the Baur-au-Lac hotel in Zurich. The high-profile raid in May 2015 – which saw suspects bundled out of the hotel, screened by a blanket – came two days before Fifa’s presidential election.

Blatter was duly re-elected. The following day the committee met and gave Kattner an additional four-year extension on his contract, pushing his leave date from 2019 to the end of 2023. That meant that if he was dismissed from Fifa, Kattner would pocket eight years of future salary and bonus payments worth 9m Swiss francs (£6.3m).

With dry understatement, Fifa said that the timing of the deal was “noteworthy”, against a high-profile backdrop of “widespread fraud and corruption”.

Fifa concluded: “Quinn Emanuel believes the preliminary findings indicate additional investigation of these contracts and payments is warranted. Fifa has shared this information with the office of the Swiss attorney general and will brief the US Department of Justice on its existence.

“This is consistent with Fifa’s commitment to cooperate with the authorities. Additionally, Fifa will refer the matter of these contracts and payments to the ethics committee for its review.”

It remains to be seen what other murky secrets will emerge from Fifa’s cupboard over the coming months. On Friday Blatter’s long-term adviser and spokesman Klaus Stoehlker said he would be ending their professional relationship.

He told BBC Sport: “The Fifa volcano is exploding now.”
The three Fifa chiefs under scrutiny

Sepp Blatter - paid himself £23m in pay rise and bonuses

The 80-year-old former Fifa president dominated the bureaucracy of world football for 17 years, becoming by the time of his suspension last October an almost monarchical figure, international football’s own Sun King, dispensing largesse to his courtiers. He was born before the second world war in Visp, Switzerland, and worked his way up in the world of sports administration, helping promote the use of Longines clocks and watches for sporting events, running Switzerland’s ice hockey federation and helping organise the Olympic Games in 1972 and 1976, before joining Fifa as technical director in 1975. He took over from João Havelange as president in 1998, and has been dogged by claims of financial irregularities throughout his tenure. As of April this year, he was describing his downfall as a US “coup d’état” and claiming that world leaders were still clamouring to talk to him. “Just a little while. I will come back,” he told them. That comeback looks a lot more fanciful after the latest revelations.

Jérôme Valcke - received £23m as pay rise and bonuses

The former Fifa secretary general has also had a colourful career. The 55-year-old Frenchman was a television journalist and then a sports television executive before joining Fifa in 2003 as director of marketing and TV. But he was forced out in 2006 after Fifa was found to be trying to negotiate a sponsorship deal with Visa while it still had a contract with MasterCard. Fifa was fined and Valcke and three colleagues were found guilty of “repeated dishonesty” by a New York court and dismissed. “Fifa’s negotiations breached its business principles,” a federation statement said at the time. “Fifa cannot possibly accept such conduct among its own employees.” However, Blatter brought Valcke back into the fold just a year later as deputy secretary general.

Markus Kattner - received £9.5m as pay rise and bonuses

Kattner served as deputy secretary general and chief financial officer, and acted as secretary general for a few months following the ousting of Valcke in September 2015, until Kattner himself was sacked last month for paying himself huge bonuses while in his financial director position. Kattner was born 45 years ago in Bayreuth and played for a while in Germany’s second division basketball league. But he later moved to Switzerland and, like Blatter before him, studied business in Lausanne, and forged connections with the Fifa president’s nephew Philippe Blatter, who would go on to take over Infront Sports and Media, in charge of sales of global rights to the 2006 World Cup. By then Kattner had already taken up his position as Fifa’s top financial officer and a close courtier to Blatter. As acting secretary general Kattner had presented himself as a reformist leader, telling a Fifa congress in February: “The goal is to be considered a modern trusted and professional sports organisation by 2018.”

Original Article
Author:  Luke Harding

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