FIFA open formal probe into $80m paid out to Blatter, Valcke and Kattner

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By Paul Nicholson and Andrew Warshaw

August 9 – FIFA’s ethics investigators have opened a formal investigation into the $80 million in pay rises and bonuses that former FIFA top brass Sepp Blatter, Jérôme Valcke and Markus Kattner awarded themselves over a five year period until they were suspended or fired by the governing body.

Blatter, the former president, Valcke former acting secretary general and Kattner, former director of finance and corporate services, will be investigated for “possible violations of art. 13 (General rules of conduct), art. 15 (Loyalty), art. 19 (Conflicts of interest), art. 20 (Offering and accepting gifts and other benefits) and art. 21 (Bribery and corruption) of the FIFA Code of Ethics (FCE) in the context of salaries and bonuses paid to Mr Blatter, Mr Valcke and Mr Kattner as well as other provisions included in the contracts of these three individuals,” said a FIFA press release.

“Furthermore, the investigatory chamber will investigate a possible violation of art. 16 (Confidentiality) of the FCE by Mr Kattner.”

FIFA’s American lawyers Quinn Emanuel, the firm hired by FIFA to conduct an investigation into alleged widespread corruption, released detail in June that Blatter, Valcke and Kattner had approved a series of bonuses saying they had made “a coordinated effort” to “enrich themselves” between 2011 and 2015.

The release of their contractual arrangements had come 24 hours after documents and electronic data were seized during a raid on FIFA’s offices. It also came on the same day that Swiss and German media published further reports of an alleged conspiracy led by FIFA’s new president Gianni Infantino and his legal chief Marco Villiger to delete minutes of a recent meeting in Mexico at which officials discussed how to get rid of anti-corruption guru Domenico Scala.

Three months later, with Infantino eventually cleared by FIFA’s Ethics body in a separate investigation into alleged expense abuses and use of private jests, the investigatory chamber has decided to open a formal inquiry into Blatter, Valcke and Kattner.

At the time Quinn Emanuel said the evidence uncovered by its own internal investigation would be shared with the Swiss Attorney General’s office and the US Department of Justice and Swiss law may have been breached.

“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 CHF 79 million – in just the last five years,” Bill Burck, a partner with Quinn Emanuel, said.

“Additionally, FIFA will refer the matter of these contracts and payments to the Ethics Committee for its review.”

The documents revealed that Valcke and Kattner had long-term severance deals and indemnity against any legal action, whether they were dismissed for ‘just cause’ or not. Quinn Emmanuel said that there was evidence that “raised serious questions about the way a series of problematic contract amendments … were approved”.

“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.”

FIFA said that before 2013 those who signed the contracts were “in principle” also the ones who approved them. “They had the authority they needed, and they simply told payroll and HR (human resources), the department generally in charge for employment contracts at FIFA and which reported to Mr Kattner, how much should be paid out and to whom.”

There were also questions over the compensation sub-committee which oversaw officials’ compensation from 2013 onwards. Contracts were extended until 2019, with “big increases in base salaries and bonuses” as well as the guaranteed severance payments. These amounted to SFr17.5 million and SFr 9.8 million to Valcke and Kattner respectively in the event that their contracts were terminated, which was always likely if Blatter lost the last election.

The three officials pocketed SFr23 million as “special bonuses” awarded four months after the 2010 World Cup in South Africa, FIFA said. At the time sources close to Kattner, who was acting as deputy general secretary and was fired with immediate effect a week ago, insist that however sizeable his compensation and bonuses package, everything was above board and did not in any way constitute illegal activity.

They point out that FIFA’s auditors never flagged up any wrongdoing and that the bonus programme was part of FIFA’s official compensation policy.

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