Thinking About the FIFA Bribery Scandal


The U.S. Department of Justice’s hit announcement in late May that U.S. prosecutors have indicted fourteen defendants on corruption charges including actions of the International Federation of Football (FIFA) and associated regional participant organizations captured news headlines around the world. As new details about the scandal have continued to emerge the report has continued to control the news. But while the press coverage has been all-inclusive, it hasn’t consistently been completely accurate. Among other things, contrary to the idea in several national U.S. press reports, the DoJ’s substantial criminal indictment doesn’t contain any charges under the Foreign Corrupt Practices Act (FCPA). Nevertheless, at least according to some commentators, predicated on the claims made to date, specific businesses could find themselves facing FCPA-associated examination.

The Department of the May 27, 2015 press release regarding the indictment of Justice are available here. The government’s 161-page indictment. The Wall Street Journal’s May 28, 2015 front page article describing the claims in the indictment and relevant authorities court filings are available here.

Section of the confusion about the potential participation of FCPA-related claims has to do with the reality the center misconduct alleged is the making of improper payments to FIFA officials by representatives of sports advertising firms. As stated by the DoJ’s press release, the criminal defendants are alleged to have “methodically paid and consented to pay well over $150 million in bribes and kickbacks to acquire money-making media and advertising rights to international football tournaments.”

But though the FIFA corruption-related indictment contains improper payment claims, the criminal actions isn’t an FCPA prosecution, as the Southern Illinois Law School Professor Mike Koehler points out in a June 1, 2015 place on his FCPA Professor website (here). Instead, as the DoJ summarized about the indictment in its press release, the criminal actions calls for charges of racketeering, wire fraud and money laundering conspiracies. A number of the defendants were charged with obstruction of justice and tax evasion.

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A.I.G. to Pay Nearly $1 Billion to Settle Class-Action Suit Brought by Shareholders


Stockholders of the insurance giant American International Group have gained acceptance of a $970.5 million resolution resolving claims that they were misled about its subprime mortgage exposure, leading to a liquidity crisis and $182.3 billion in federal bailouts.

Judge Laura Taylor Swain of Federal District Court granted final approval on Friday at a hearing in Manhattan for what attorneys for the investors phoned one of the biggest class action settlements to come out of the 2008 financial crisis.

It’s the biggest investor class action settlement in a case in which no criminal or regulatory enforcement measures were pursued, the plaintiffs’ attorneys have said.

A.I.G. said it was pleased with the judge’s order.

The Justice Department as well as the Securities and Exchange Commission closed connected investigations involving A.I.G. in 2010.

Robert Benmosche, Rescuer of A.I.G. After Bailout, Expires at 70FEB. 27, 2015
David Bois, who’s representing Maurice Greenberg and other A.I.G. investors in their suit challenging the conditions of the government’s bailout, on the last day of the trial in November.Just Released Files Discloses Guidance to Fed in A.I.G. BailoutFEB. 2015, 20
DealBook: Treasury Brings In $7.6 Billion From Deal of Last Shares in A.I.G.DEC. 2012, 11
Judge Swain noted that no prospective class member had objected to the conditions of the deal, which she said was strong signs that it was “rational, reasonable and acceptable” and ought to be approved. She said the sum was “quite large” and that investors would face considerable threat if they continued to litigate rather than settling.

The resolution covers investors who purchased A.I.G. securities from March 16, 2006, to Sept. 16, 2008, when the firm received its first bailout.

An objection was overruled by judge Swain by two individuals who purchased shares before the start of that interval but who said they ought to be contained in the group.

For the plaintiffs’ attorneys’ work, Judge Swain given the law firms Barrack, Rodos & Bacine as well as the Miller Law Firm $116.46 million in fees and more than $4 million in expenses.

Investors, headed by the State of Michigan Retirement Systems, which manages several state pension plans, accused A.I.G. of neglecting to reveal the dangers it took on through its portfolio of credit default swaps and a securities lending program.

They said the failures had led investors to purchase debt and stock they wouldn’t have purchased, causing billions of dollars in losses.

A authorities saving in 2008 led citizens to take an almost 80 percent position in the New York-based insurance company.

The government has since sold its position in A.I.G., resulting in a favorable yield of $22.7 billion to the Treasury Department and the Federal Reserve.

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The Rule of Law

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