UK offshore tax havens at heart of US investigation into World Cup corruption

George Town in Grand Cayman on the Cayman Islands. Photograph: Walter Bibikow/JAI/Corbis

British Virgin Islands, Caymans and Turks & Caicos feature heavily in justice department indictment of senior football officialsز

British overseas tax havens play a key role in what US authorities have called “rampant, systemic and deep-rooted” corruption in the world of football, analysis by the Observer reveals.

The 164-page US Department of Justice indictment, outlining the case against the 14 football officials and marketing executives who were arrested last week, shows that three of Britain’s overseas territories – the British Virgin Islands (BVI), the Cayman Islands and the Turks and Caicos, all tax havens – allegedly played a part in masking kickbacks between officials and executives.

The revelation has intensified calls for a clampdown on the offshore banking sector, where campaigners say a lack of transparency and oversight allows bribery and corruption to thrive.

According to the indictment, Costas Takkas, a UK citizen who acted as attaché to Fifa’s vice-president, Jeffrey Webb, used a firm called Kosson Ventures, registered in the BVI and with bank accounts in the Cayman Islands, to allegedly facilitate illegal payments between a South American sports marketing agency, Traffic, and Fifa officials.

John Mann, a Labour MP and Treasury select committee member, said the use of British tax havens made investigating the scandal all the more difficult: “The problem is that the Serious Fraud Office here can’t investigate these tax havens, and that anomaly needs rectifying. They are centres for money laundering in a very big way. We are negotiating to change relations with the European Union, but we should spend just as much time renegotiating the deals with the overseas territories. They are becoming a serious problem for the world.”

The indictment raises questions about whether the banks in the tax havens should have flagged the transactions to the authorities as a potential concern. The indictment states: “On or about November 21, 2012, two wire transfers, of $750,000 and $250,000, were sent from Front Company A’s account at HSBC bank in Hong Kong to a correspondent account at Standard Chartered Bank in New York for credit to an account in the name of Kosson Ventures, controlled by Takkas, at Fidelity Bank in the Cayman Islands”.

A $500,000 payment to Webb was made by Traffic “through the account of another individual, a business associate of Co-Conspirator #2, to another account controlled by the defendant Costas Takkas at Fidelity Bank in the Cayman Islands”.

Another defendant, marketing executive Jose Margulies, had a controlling stake in a firm called Somerton, based in the Turks and Caicos. According to the indictment, Margulies used the accounts of Somerton and a Panama-based firm – referred to by the US authorities as “Margulies Intermediaries” – to “mask the sources and beneficiaries of bribe and kickback payments”. Between March 2003 and March 2008, “Margulies Intermediaries wired more than $3.5m into accounts controlled by the defendants Rafael Esquivel [president of the Venezuelan football federation], Nicolás Leoz [former president of South America’s football confederation] and Eugenio Figueredo [head of Conmebol, the South American football confederation], almost entirely through even, six-figure payments”.

Robert Palmer, head of Global Witness’s money laundering campaign, said: “If you wanted to design a system to weed out corrupt and laundered money, you would do it exactly opposite to the way places like the BVI and Cayman Islands are set up. They may have a veneer of light-touch ‘regulation’, but secrecy is hardwired into their DNA and it can be almost impossible to get information out of these islands.”

The use of the Cayman Islands to facilitate the allegedly corrupt transactions appears to have been longstanding. The indictment states that, in 1999, “Traffic caused $200,000 to be wired to a correspondent account at Barclays Bank in New York, for credit to an account held in the name of an entity controlled by Co-Conspirator #1 at Barclays Bank in the Cayman Islands.”

In 2012 Webb emerged as a candidate to succeed Jack Warner as president of Concacaf, the federation representing the North and Central American and Caribbean footballing nations. According to the US authorities, “an executive at Traffic USA supported Webb’s candidacy by causing $50,000 to be paid from Traffic USA’s operating account to a Caymanian company” controlled by Takkas.

Some of the money channelled through Britain’s tax havens was allegedly funnelled into property. Takkas transferred funds from his Kosson Ventures account at Fidelity Bank in the Cayman Islands to SunTrust Bank in the US, allegedly to help Webb buy luxury homes in Stone Mountain, Georgia. The use of Kosson Ventures in the scheme was “intended to conceal the fact that the defendant Jeffrey Webb was the beneficiary of the payment”, according to the US prosecutors.

The Cayman Islands also played a role in a bribery scheme to allegedly persuadeFifa officials to vote for the 2010 World Cup to be held in South Africa. Warner is alleged to have promised one official $1m in return for his backing South Africa. It is claimed that “the first payment in the amount of $298,500 was made by wire transfer sent on or about December 19, 2008 … to a Bank of America correspondent account in New York, New York, for credit to an account controlled by Co-Conspirator #1 at a bank in the Cayman Islands”.

Experts said the use of offshore accounts to facilitate corruption hit poor nations hardest. Joseph Stead, economic justice adviser at Christian Aid, said the government needed to send a consistent message. “The UK government has rightly urged Fifa to uphold the ‘highest standards of governance, transparency and accountability’, but this would carry more weight if the UK required the same of its overseas territories. It should start by ensuring that they make public the owners of the hundreds of thousands of companies they host. This would help remove the opportunity for those tempted to engage in corruption and tax evasion.”

SOURCE: THE GUARDIAN

http://www.theguardian.com/football/2015/may/30/british-offshore-tax-havens-investigation-world-cup-fifa