Bribes for TV soccer rights allegedly paid with ‘agreement and support’ of Murdoch’s Fox executives – By Oliver Laughland & Jon Swaine (theguardian.com) / Dec 14 2017
Senior executives at Rupert Murdoch’s 21st Century Fox corporation are alleged to have agreed for millions of dollars in bribes to be paid to South American soccer officials to secure major broadcast deals, according to US prosecution documents.
The documents form part of the sprawling US investigation into corruption in world football, and for the first time reveal the executives’ alleged role in the scheme.
The three men were named in a previously unreported court filing, which alleges they took part in a bribery-for-broadcasting-rights scheme that is detailed by the US justice department in separate documents that shield the identities of certain organizations and individuals.
US prosecutors say that the multimillion-dollar payments helped an offshore partnership involving Fox – T&T Sports Marketing Limited – obtain the lucrative rights to televise South America’s premier club competition, the Copa Libertadores, which is watched by over a billion football fans worldwide and has launched the careers of numerous international stars including Pelé and Neymar.
Neither Fox nor any of the identified executives have been charged by US authorities. Fox Sports said in a statement that it “did not participate in any wrongdoing”, but declined to answer a series of detailed questions submitted by the Guardian.
The company and the three executives have been accused of involvement in bribery via an ongoing civil case brought against Fox and others by a rival broadcaster, Gol TV, which is based in Florida. The company claims to have unfairly lost out on media rights due to the alleged kickbacks.
Fox Sports said it was “vigorously defending” the complaint.
However, the criminal trial of three former South American soccer chiefs in New York , as well as hundreds of pages of court documents connected to the civil case, company records and contracts reviewed by the Guardian, has shed new light on the Fox executives’ alleged role in the scheme.
Torneos y Competencias, the Argentinian media company that partnered with Fox through T&T, is also being sued in the separate civil case. But Torneos has already admitted wrongdoing for its part in the scandal as part of the criminal investigation, and has agreed to pay US authorities a large fine in order to avoid prosecution.
As part of this written deal, known as a “deferred prosecution agreement”, Fox’s former business partner has signed off on a series of “agreed facts” between the company and the US government, which the parties agreed are accurate for the purposes of the prosecution. These facts include anonymous references to individuals allegedly involved in the scheme.
US prosecutors tried unsuccessfully to halt the separate civil case as their investigation is ongoing, but were denied by a judge. As a result, Torneos had to testify under deposition about some of the anonymous identities contained in the agreement. It identified Carlos Martinez, the chief executive of Fox Networks in Latin America; Hernan Lopez, who departed last year as head of Fox International Channels; and James Ganley, the former chief operating officer at Fox Pan American Sports, which has been wholly owned by Fox since 2011 and was partly owned by Fox before then.
Bribes for the Copa Libertadores were paid, at times, “with the agreement and support” of these executives, according to the agreed facts with the DoJ.
The US attorney’s office in the eastern district of New York, where the criminal investigation is being run, declined to comment.
Lawyers for Lopez said: “Mr Lopez built his entire career on a foundation of respect and integrity, and he never authorized or was aware of any improper payments on his watch.”
Lawyers for Ganley said: “Mr Ganley has a well-earned reputation as a highly accomplished and ethical business executive. He has never been involved in any wrongdoing, and has never been accused of wrongdoing. Any contention to the contrary is flatly false.”
Neither responded to detailed questions from the Guardian. Martinez did not respond despite multiple requests for comment.
The revelation that the DoJ and Torneos agree on the men’s alleged involvement follows witness testimony in a trial in New York by former Torneos CEO Alejandro Burzaco. The testimony also named the three men. Burzaco has already pleaded guilty to racketeering, wire fraud and money laundering conspiracies in the case, and has been assisting US prosecutors with the investigation.
It emerges as Fox is close to a multibillion deal with Disney to sell off significant international assets in the US. In the UK, Fox is seeking to secure full control of Sky, the British satellite giant, and is awaiting a decision from the competition watchdog on a takeover bid.
The executives’ alleged role in the football rights scheme involves a complex network of offshore companies, contracts and payment structures that changed over time.
It revolves, in part, around Fox’s ties to Fox Pan American Sports (FPAS), a Latino sports TV venture based in Florida that was created in 2002 with backing from private equity investors.
By 2005, according to company filings, Fox owned 38% of FPAS, which in turn owned half of T&T, while the other half was owned by Torneos.
Fox’s involvement stepped up later that year as FPAS increased its ownership stake in T&T to 75%. Ganley became a director of T&T on 28 April 2005, according to company records.
Ganley, 65, is a Florida-based cable TV veteran whose dealings with Fox date back more than 25 years. He was chief financial officer of a pay-per-view television distributor that was bought out by News Corporation in 1992. In 1997, he was chief financial officer of an advertising firm that partnered with Murdoch’s company to create Fox Television Sales, selling advertising for Fox channels.
Documents indicate that after joining as a director at T&T, Ganley signed off on multimillion-dollar payments from T&T to another offshore firm, Somerton, which US prosecutors say was an offshore shell company delivering bribes.
The controller of Somerton has already pleaded guilty to racketeering conspiracy, wire fraud conspiracy, and two counts of money laundering conspiracy.
In a contract seen by the Guardian bearing Ganley’s signature, dated 10 November 2006, the former FPAS chief operating officer signed off on a $1m annual payment to Somerton, in five blocs of $200,000, in exchange for “consulting services” related to the Copa Libertadores. The contract-mandated payments were made each year between 2007 to 2014.
Another contract, introduced at the ongoing trial, dated 21 January 2008 was also signed by Ganley and instructs T&T to pay Somerton $3.7m, ostensibly to assist T&T in re-negotiating rights to the Copa Libertadores.
However, according to Burzaco, who was shown the contract by prosecutors during his testimony, the money was intended as a one-off bribe to five senior officials at Conmebol, South American soccer’s governing body. This included payment to Julio Grondona, Sepp Blatter’s No 2 at Fifa and head of football in Argentina until his death in 2014, and the then Conmebol president Nicolás Leoz, who has been indicted and is fighting extradition. The officials had agreed to extend T&T’s rights to the tournament until 2018 without hearing any other bids, according to Burzaco, and were already receiving their annual bribes to ensure support of T&T.
“Is this a real contract?” Burzaco was asked by assistant US prosecutor Sam Nitze as the 2008 contract was presented to the New York jury.
“It’s not a real contract, sir,” Burzaco replied, before identifying Ganley’s signature.
Securing the extended rights to the tournament was a major financial coup for Torneos and Fox, Burzaco said, and allowed the broadcaster to significantly expand its reach in the region.
The civil suit alleges that T&T made payments to Somerton, and another shell company created to pay bribes, until 7 December 2012.
(Alejandro Burzaco leaves the US district courthouse in Brooklyn in 2015. Photograph: Don Emmert/AFP/Getty Images)
Hernan Lopez, the former CEO of Fox International Channels, signed on as a T&T director in June 2010. Martinez, the current CEO of Fox Latin America, followed two years later on 31 October 2012, according to records.
Murdoch’s company eventually took over Fox Pan American Sports completely in December 2011, paying $400m to buy out the remaining two-thirds of the company. Ganley stayed on as a T&T director under the new ownership structure for almost a year, records show.
The move was hailed inside the company as a great success. News Corporation said in company filings it was one of the main reasons for a 10% boost in overall revenues the next year.
At the same time, the company was working to recover from a wide-ranging scandal in its British newspaper division over the hacking of phones and bribing of public officials by tabloid reporters.
At the end of 2012, according to allegations in the civil complaint, Carlos Martinez, the Fox executive and then a T&T director, signed documents that “restructured” how T&T paid bribes.
According to the complaint, the documents moved the payments to shell companies to a company with a similar name registered in the Netherlands. That company, the civil complaint says, was owned by Torneos. It was administered by Mossack Fonseca, the legal firm at the centre of the Panama Papers scandal. It was, according to the civil complaint, used to receive payment for Copa Libertadores rights from the Brazilian broadcast giant Globo, and to pay out bribes through shell companies.
The alleged illicit purpose of the Netherlands company was supported by the testimony of Argentinian former CEO Burzaco.
During his four days of evidence at the trial, Burzaco said Lopez and Martinez were aware that the Netherlands company was involved in the payment of bribes in exchange for Copa Libertadores rights.
Under oath, he placed the two Fox executives at a meeting in Miami in September 2014 between himself and Juan Ángel Napout, the former head of football in Paraguay, who is currently on trial, and Luis Bedoya, the former head of Colombian football, who has already pleaded guilty to multiple corruption charges.
Burzaco told the court last month that none of those present wanted to amend the structure of illicit payments run through the Netherlands company: “The five persons that we were having lunch together at Milos restaurant in Miami Beach, knew that funding for the bribe payments under the Conmebol Copa Sudamericana [another club tournament T&T acquired the rights to] and Copa Libertadores contracts, was coming from Globo payment to T&T Netherlands, and from them to the [football] executives.”
He added: “So me, Hernan Lopez, Carlos Martinez, and me nor Juan Ángel Napout, nor Bedoya wanted to modify that structure.”
Burzaco has confessed to paying tens of millions in bribes, and also testified that he was himself offered a bribe to hand over the Copa Libertadores rights. The bribe was offered by the owner of the TV station suing Fox, he said.
(Juan Ángel Napout of Paraguay arrives at the federal courthouse in Brooklyn. Photograph: Don Emmert/AFP/Getty Images )
At certain points, Burzaco alluded to a close relationship with Martinez and Lopez.
Lopez, 47, was a rising star in Fox television and climbed to the position of chief executive of Fox International Channels, before departing the company in a January 2016 shakeup. He had been credited with spearheading a successful expansion into new markets. On his way out, Lopez received financial backing from Fox for a new podcasting startup company based in Los Angeles. His lawyers told the Guardian the departure was “was amicable and had nothing to do with any investigations”.
Martinez, 48, is the current president of Fox’s Latin American television division, having climbed the company’s ranks over several years.
Burzaco was asked, under cross-examination, about a series of 2011 emails with Lopez in which Burzaco offered to broker a meeting with the then president of Argentina, Cristina Kirchner, by using his connections with Grondona, the Argentinian soccer chief who was Blatter’s No 2.
Burzaco also recalled a meeting where the Fox executives, Lopez and Martinez, met José Maria Marin, the former head of Brazilian football, who is currently on trial; and Marco Polo Del Nero, who replaced Marin after his arrest and has been indicted in the case.
Both are accused of accepting multimillion dollar bribes in exchange for tournament rights, including the Copa Libertadores.
Burzaco said the meeting occurred at the Waldorf Hilton hotel in London on May 2013 as the group visited the city for the Champions League final that year between Borussia Dortmund and Bayern Munich.
The meeting’s purpose, Burzaco said, was for Fox to forge “stronger link[s]” with officials in Brazilian football. At a meeting straight afterwards, where Lopez and Martinez were not present, according to Burzaco’s account, the Brazilian officials complained to him that their annual seven-figure bribe payments for the Copa
Libertadores rights had not yet been paid.
Shortly after, the US government announced its investigation into Fifa and corruption in world football, following a dramatic morning raid at a hotel in Zurich in May 2015, Conmebol announced it was reviewing its rights contracts for events including the Copa Libertadores. T&T’s contract was subsequently cancelled and Fox signed a direct agreement with the governing body.
https://www.theguardian.com/media/2017/dec/14/fox-alleged-bribes-tv-soccer-copa-libertadores
