Wednesday, July 8, 2009

You Are Part of a Criminal Enterprise!

I love the smell of freshly-laundered $$$.

Have you ever bought a kit directly from your favorite club's website? Have you ever purchased tickets to a match? Have you ever donated money to the supporters' club? I have bad news for you - welcome to a RICO trial!

A report released last week by the Financial Action Task Force (FATF) has some strong words for football:

"[F]football is at risk from criminals buying clubs, transferring players, and betting on the sport [and] tax evasion...human trafficking, corruption, [and] drug trafficking..."

Well, that certainly seems like it could be a problem. Apparently one of the more common methods currently is for a player to sell his image rights to a 3rd party, and then have the club pay the latter for those image rights as an indirect salary to the player. Since it is not a direct compensation to the player, he does not pay taxes on that sum and the 3rd party funnels the money back to him discreetly. Even more damaging is the increasing dollar (Euro; pounds; etc) amount of international transfers and the often obscure machinations they entail.

However, the most insidious version of criminal activity comes when shady investors put money into a club, either as shareholders or as outright owners:

"The report cites several examples of clubs in financial difficulties whose deficits were funded by suspected criminals. Investors may get their 'laundered' funds back by selling the club's equipment and services at inflated prices, or via sales of media rights, tickets, players and merchandise."

Investigators claim to have already prevented the takeover of one Italian club by a criminal enterprise, although Berlusconi seems to have avoided their attention. The appeal of football clubs to large-scale criminal organizations is high when money gained from drug trafficking or gun-running needs to be laundered. We've already discussed the case of Mexican club Mapaches, who acted as a front for the Gulf Cartel.

In the world of competitive sport, moving money into and out of businesses worth hundreds of millions of dollars is surprisingly easy, and incredibly lucrative for criminals. The key is simply to have individuals or other businesses (essentially "shell" corporations) act as a go-between. When a business is used, there are typically so many layers of obfuscation that no one is aware of who is really behind the purchase of a football club (when asked for comment, Roman Abramovich simply replied "In Russia, money launders you!"). When individuals are used, they are typically making transactions that are smaller so as not to trigger automatic FINCEN (or similar agency) monitoring in a process known as "smurfing."

So really, whenever you spend money on your favorite club you may be doing an international criminal a favor. Why do you hate America?

1 comment:

strong like bull smart like tractor said...

There's an AIG joke in there somewhere, but I'll need more coffee if I'm going to find it.