The last PANA hearing: “the Football Leaks”

Photo @Robert Villalta

The latest hearing of the PANA Inquiry Committee was held in Brussels on Tuesday 26th September. The main topic of the meeting was the “football leaks” per initiative of GUE/NGL MEP Marina Albiol Guzman (Izquierda Unida).

The football leaks revealed that football agents and tax advisors have elaborated complex structures for tax avoidance and tax evasion on the income generated by the transfer of image rights. Mark Pieth noted at the ECON/PANA Interparliamentary meeting held in January 31 2017 that football agents should be subject to anti-money laundering regulations in a similar way in which a real estate agent is.

The “football leaks hearing” heard from Merijn Rengers, investigative journalist NRC Handelsblad; Kimberly Morris, Head of TMS Global Transfers & Compliance – FIFA; Julien Zylberstein, legal counsel at UEFA; Gregor Reiter, Deutsche Fußballspieler-Vermittler Vereinigung E.V. – European Football Agents Association (EFAA).

Even when GUE/NGL had requested multinational sports companies to be invited as speakers, the PANA Secretariat did not do so in the end. Why sports multinational companies? Or any other multinational company?

In the replies to the question sent by the PANA Inquiry Committee in advance of the meeting, Merijn Rengers replied that “…multinational companies pay to a shell company (in the Netherlands for instance), who – in turn – channels the money offshore. For the multinational entities, their contracts look clean – free from dealings with dodgy companies from Panama. The question remains in how far they know (and/or need to know) who is behind the normal looking shell companies who appear to be their business counterpart.”

According to what was relayed to the PANA Committee by Kimberly Morris, FIFA has recently (26 February 2016) launched a series of reforms that came into force in April 2016that concerned the transfer of players, among them a football player’s “disclosure of individual compensation”; which does not, however, include the compensation received from the trading of image rights.

Ironically though, when asked at the PANA hearing as to whether FIFA would be willing to share this disclosed information (on the individual compensation of football players) with tax authorities, Kimberly Morris replied that such request had already been made by Tax Authorities from the global South which have been very willing to share the information with whomever that requested it. But in order to actually share it, FIFA needs to receive the request of information from a Swiss court.

Well…that is something that will not happen soon!

Julien Zylberstein repeated several times during the hearing that UEFA was indeed very concerned about the big social problem that tax evasion and tax avoidance represent. Though this of course was not their responsibility in any way, but that of the Member States and ultimately the European Commission.

GUE/NGL MEP Stelios Kouloglou (Syriza) asked if UEFA and FIFA were willing to impose sanctions on players that had already been condemned for tax evasion and tax fraud by a judicial court.

Kimberly Morris replied that FIFA could apply international sanctions as long as clubs imposed sanctions on their players first and required such sanctions to be made global. However, in practice this only applies to sports sanctions and not tax related problems.

Moreover, both Zylberstein and Morris referred to the ban on TPO (Third Party Ownership) introduced by FIFA per suggestion of UEFA in December 2014. However, Merijn Rengers replied that in practice, clubs and agents have found ways to circumvent the ban on TPO: “In the Netherlands, the Dutch association KNVB for instance actively advised clubs on how to make cosmetic adjustments in their contracts so that nothing really changed regarding sell on rewards for agents after new FIFA rules forbade these sell on rewards.”

Regarding the funding of football clubs, Merijn Rengers commented that there are football clubs in The Netherlands where unknown foreign “investors” yearly spend (and lose) tens of millions and nobody seems to know where the money comes from.

Julien Zylberstein observed that UEFA introduced the Financial Fair Play in 2010, and as a result, when in 2010 football clubs had accumulated 1,700 million Euros in losses, in 2015 the losses only reached 300 million Euros.

However, the question on who finances football clubs was not addressed, thus Stelios Kouloglou noted that considering that football clubs seem to be a great vehicle for money laundering, “wouldn’t UEFA and FIFA be willing to introduce binding standards on entities financing football clubs that would allow for a more thorough control on the ownership of football clubs?”, he asked.

Morris replied that since 2016 FIFA has been working on a regulatory framework for football clubs in order to set some standards on club’s financial documents, financial flows and to promote transparency.

So…we will have to wait and see…

A topic that was not addressed during the hearing, partly because of the evasive attitude of some of the speakers, was the scandal involving the revelations of the Panama Papers on UEFA and FIFA:

  • The rights to the Champions League, the UEFA Cup and the Super Cup were acquired by an Argentinian company called Cross Trading. Cross Trading immediately sold the rights onto the broadcaster Teleamazonas for about three or four times the amount paid for them. The contracts covered the period from 2003 to 2006 and from 2006 to 2009. Cross Trading is a subsidiary of a company called Full Play, which is owned by Hugo Jinkis. In 2015 in an unrelated matter, Jinkis was alleged by US prosecutors to have handed over millions of dollars in bribes and kickbacks to football executives to obtain and retain media and marketing rights. Cross Trading (incorporated in 2006 and deactivated in 2015) was established in the Seychelles, in Niue and in Nevada: three companies with the same name. Cross Trading signed a deal with UEFA’s broadcasting and marketing partner, called Team. Gianni Infantino (FIFA’s president since 2016) appears on the contracts since he was UEFA’s director of legal services at that time.
  • The name of the former Uruguayan FIFA vice president Eugenio Figueredo, one of the six officials arrested in Zurich, also appears in connection with several companies in the Panama Papers Book. (Obermaier and Obermayer, 2016: 89).

To be truthful, we would need a specific Inquiry Committee focused only on FIFA and UEFA’s corruption scandals to address the problem fully.