20 June 2015
According to Forbes José Hawilla, a former sports journalist, built Traffic Group over a 30-year period from a small Brazilian company that sold ads for bus stops to a major sports marketing firm and a powerhouse in the soccer business. He acted as a middle-man for the Brazilian Soccer Federation’s sponsorship agreement with Nike in the 1990s and expanded into the negotiation of marketing and television rights to major tournaments for FIFA, soccer’s governing body.
At one point, Hawilla had a major U.S. private equity firm, Hicks, Muse, Tate & Furst, buy a big minority stake in Traffic Group. He opened an office in Miami and helped launch North American Soccer League franchises in Florida and North Carolina. Traffic Group kept a Citi private bank account in New York and a bank account in Miami, which received tens of millions of dollars from a Cayman Islands company that Hawilla controlled.
But Hawilla’s ties to the U.S. made him vulnerable to U.S. law enforcement and on Wednesday federal prosecutors in Brooklyn unsealed his plea agreement to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice. Hawilla, who is 71, has agreed to forfeit over $151 million, $25 million of which has already been paid. Traffic Sports International and its U.S. arm have also pleaded guilty. Traffic Group’s U.S. president, Aaron Davidson, who is also chairman of the North American Soccer League, has been indicted by federal prosecutors in Brooklyn.
There are five corporate executives who have been caught up in the U.S. Justice Department’s sweeping corruption investigation that on Wednesday announced the indictment of nine FIFA officials. FIFA got 70% of its $5.7 billion of revenues between 2011 and 2014 from the sale of TV and marketing rights to the 2014 World Cup. It sells the media and marketing rights associated with soccer events to sports marketing companies, which serve as middle men who then negotiate and sell those rights to TV and radio broadcast networks. But federal prosecutors claim that since 1991 this process has been corrupted by $150 million of bribes and kickbacks that mostly went to soccer officials from sports marketing executives in connection with the media and marketing rights to FIFA World Cup qualifying events in the Americas.
The corruption described by U.S. prosecutors on Wednesday started with Hawilla. According to the unsealed criminal information and related indictment, Hawilla’s corrupt dealings began in the early 1990s. Hawilla had in 1986 started dealing with Nicolas Leoz, the president of CONMEBOL, soccer’s governing body in South America, who eventually became a member of FIFA’s executive committee. Hawilla did a deal with Leoz to acquire the worldwide commercial rights associated with CONMEBOL’s Copa America men’s national team tournament and as the value of those rights and other CONMEBOL properties soared, Leoz and other CONMEBOL officials solicited tens of millions of dollars in bribes that Hawilla agreed to pay, court documents say. The bribes included deals for sponsorship rights acquired by U.S. sportswear companies.
Hawilla later moved to the U.S. and started to work with Jack Warner, then president of CONCACAF, soccer’s governing body in North America, Central America and the Caribbean. Hawilla also negotiated with Charles Blazer, then CONCACAF’s New York-based general secretary, who has pleaded guilty to wire fraud and tax evasion. Hawilla wanted Traffic Group’s U.S. arm to get the rights for the Gold Cup, CONCACAF’s men national tournament. The U.S. government claims that Hawilla paid Warner and Blazer bribes to win these rights from 1996 to 2003 and the fraud scheme expanded to other rights involving soccer federations in Trinidad and Tobago, Costa Rica and Nicaragua. Warner was particularly forceful in keeping the bribes flowing. “There are some people here who think they are more pious than thou,” Warner once told a group of soccer officials regarding a scheme that was unrelated to Traffic Group, federal prosecutors claim. “If you’re pious, open a church, friends. Our business is our business.”
Federal prosecutors claim that Davidson, who ran Traffic Group’s U.S. arm, played a key role in expanding these schemes. “Is it illegal? It’s illegal,” Davidson told Hawilla at a 2014 business meeting in Queens, New York, federal prosecutors claim. “Within the big picture of things, a company that has worked in this industry for 30 years, is it bad? It is bad.”
In time, other sports marketing businesses tried to muscle in on Traffic Group’s business by paying bribes of their own to soccer officials, the U.S. government says. The federal government points to Hugo Jinkis of Argentina and his son, Mariano Jinkis, Jose Marguilies of Brazil, and Argentina’s Alejandro Burzaco and his Torneos y Competencias sports marketing business. Traffic Group even filed some litigation in 2011 in Florida to try to break up dealings between soccer officials and its competitors.
Then, around 2013, Eugenio Figueredo took over as chief of CONMEBOL. Hawilla’s Traffic Group teamed up with Burzaco and Hugo and Mariano Jinkis, to form Datisa, a company that entered into a $317 million contract with CONMEBOL to gain the Copa America worldwide rights for 2015, 2019 and 2023 and another event in 2016. Datisa also got a $35 million contract from CONCACAF. In return, federal prosecutors claim that Datisa agreed to pay $110 million in bribes to soccer officials. The U.S. government says $40 million of those bribes have already been paid.
Hawilla, Hugo Jinkis and his son, and Burzaco, all attended a press conference in Miami a year ago to announce the Copa America Centenario, a 2016 event to mark the 100 anniversary of the first Copa America. Federal prosecutors claim that after the press conference, Hawilla, Hugo and Mariano Jinkis, and Burzaco got together to talk about their bribery scheme. “All can get hurt because of this subject,” Burzaco told them. “All of us go to prison.”