Dauntless digger

Investigative reporter Andrew Jennings, the 2017 ACFE Guardian Award recipient, has been chasing bad men around the world for more than three decades. He's dug into the crimes of the members of the International Olympic Committee. And his discoveries at FIFA have led to the eventual indictment and convictions of scores of fraudsters. And he's still ready with the shovel.

Andrew Jennings, a longtime independent investigative journalist, needed some help. He knew something was rotten in the Fédération Internationale de Football Association (FIFA), the international governing board of association football, but he needed some extra evidence.

"In 2001, I turned up at a FIFA press conference in Zürich," Jennings says in a recent Fraud Magazine interview. Jennings grabbed a seat in the front row, directly opposite Sepp Blatter, then FIFA's president. "When he finished giving his usual rubbish to the newswires I put my hand up, grabbed the roaming mic and immediately asked him, 'Have you ever taken a bribe?'

"He was shocked," Jennings says. "How dare a mere reporter ask him, the president of world football, just such a question. Beautifully dressed reporters moved away from me left and right. That was exactly what I intended. To make sure he would never forget me, I was dressed in hiking gear."

Jennings, of course, wasn't really addressing his question just to Blatter. FIFA executives listened intently. "They were bland, but I knew that some of them were not happy with the work they had to do," Jennings says. "They had rent to pay, kids to support through school. They must keep the oath of Omertà [code of silence] or risk losing their jobs. Zürich is a small town, and you don't get a second job easily. But there had to be somebody who could help me."

Jennings' plan to flush out an informant worked. "Six weeks later, I was in downtown Zürich outside a darkened building at midnight," he says. "Suddenly a door opened and I was hustled in, taken up to a penthouse, and there I was offered a drink. It was obvious what I was there for, and within a few minutes a senior FIFA official rushed through the door, apologized for being late and dumped an armful of documents before me. He led me in turn to other senior officials who controlled marvelous sources of material."

Jennings used the evidence to seal his investigative case against Blatter and the organization. In 2006, he released his book, "FOUL! The Secret World of FIFA," in which he alleges a world of bribes, vote rigging and ticket scandals. In June 2006, he told his FIFA story on "Panorama," a British television current affairs documentary program, in the episode, "The Beautiful Bung: Corruption and the World Cup," in which he investigated further allegations of million-dollar bribes to secure marketing rights for the sports marketing company, International Sports and Leisure (ISL), and vote buying to secure Blatter's presidency position.

A visit from the FBI and a cat apartment

In 2009, Jennings says he received a call from a middleman source who said some American gentlemen were in town, and he thought Jennings might like to meet them. The visitors were FBI special agents. Jennings says he met them twice more over the next two years. In 2011, he gave them evidence that included documents that implicated American Chuck Blazer, a FIFA executive committee member, the secretary general of CONCACAF (the federation that oversees soccer in North America, Central America and the Caribbean) from 1990 until 2011 and executive vice president of the U.S. Soccer Federation.

Jennings' slow, methodical digging pushed the FIFA case into the public eye and into the FBI's workload."

An investigative journalist born and made

Jennings knew his calling early on. "There was no question but from late teenage that I wanted to become an investigative reporter," he says. He went to university but says he was bored after two years. He began doing some investigations and sold them to national newspapers, including The Sunday Times.

"I knew that I needed to learn everything about newspaper production," he says. "I soon gravitated to national papers and moved from reporting to the heart of the paper — night production on the Daily Express, then selling 4 million copies, and then a range of other papers.

"But I wanted to know more. I didn't believe in what I was involved in publishing — it was too superficial. That led me inevitably to what we called the alternative press. Still, there was no sign of what we later called the internet. But the 1970s shows that there was a wealth of enquiring talent outside the confines of the industry; that was where the fun was to be had. They didn't need any qualifications to tell them they sniffed a dirty smell."

Jennings says he was drawn into more freelance TV investigations and eventually moved to London to work on the BBC Radio Four's "Checkpoint" program. "Again, I moved slowly, all the time learning more. Then came my break. I was scheduled to make a one-hour documentary" on corruption in Scotland Yard for BBC TV.

"Nobody [at the BBC] noticed for several months that my investigations into police corruption started with a north London gangster but eventually moved to the most senior level of the of the Metropolitan police. The allegation was serious corruption," he says.

He finished the documentary, and in 1986 the technicians readied it for transmission. "Then the axe came down. The head of news and current affairs deemed we hadn't got enough evidence! This was one of the world's biggest broadcasters. End of show. I was sent back to work on regional programs.

"I wasn't prepared to accept this," he says. "It was the end of my career in television. I quit the BBC and went home to write the book ["Scotland Yard's Cocaine Connection"]. Money was running tight, and then the phone rang. … It was the editor of Britain's toughest and unflinching-courage public affairs show — "World in Action" [produced by British ITV Granada] — with vast influence and viewers' figures. He'd heard that the BBC had dropped the baton. Would I like to come in and see him?

" 'World in Action' had all the resources needed to tell the story. I re-made the film with a producer named Paul Greengrass. He's since gone on to make the Bourne series of films," Jennings says.

There's seldom someone who works with such feverish devotion and dedication and such passion."

And you'll get there eventually …

Jennings, at 73, isn't shy and is definitely not retiring. He and his wife live in a rented farmhouse in the remote English countryside. But he's still digging, and calling and pecking away at his computer with his index fingers. Headlines on his website, Transparencyinsport.org, "The Bagman and FIFA's Bosses," "Belize's Bad Boy Bertie gets Blatter's Backing," "Bribes fear as London bids to host 2017 Track champs," show a man who's still doing what he's always done.

"In this day and age, you do not come across characters like Andrew Jennings very often," says CBS producer Michael Gavshon, during a recent "60 Minutes" segment. "There's seldom someone who works with such feverish devotion and dedication and such passion. It just doesn't happen anymore. … He's absolutely fearless. He's never been one to pull his punches. …

"For years he was saying things that sounded quite outrageous, that people could not accept, people didn't want to hear. In fact, 15 years after investigating FIFA, everything he said is proven to be true," Gavshon says.

"It is for others to say these stories are great coups," Jennings says. "I admit to being pleased, but I'm sure there is another story around the corner. The only advice I have for fraud examiners, but it's important advice, is this: If you know, hang on in there; you will catch them eventually. Every year that passes, the final result is that much sweeter."

For more, see the sidebar, "Bribery is often difficult to detect."

Dick Carozza, CFE, is editor-in-chief of Fraud Magazine. His email address is: dcarozza@ACFE.com.

Bribery is often difficult to detect

Because of the indictment of scores of FIFA-related officials in the last few years, the public is learning about the entrenched corruption in the organization. However, Andrew Jennings says the “rot set in” at least as far back as 1974 when Brazilian lawyer and businessman Jean-Marie Faustin Godefroid de Havelange took over as FIFA president. In 2006, Jennings told the Brazilian Senate that Havelange might have built a fortune of tens of millions of dollars from bribes paid through a front company.

Though corruption allegations wafted around Havelange for years, he was never indicted. He resigned from the International Olympic Committee (of which he was a member since 1963) in 2011, citing health concerns — the day before he was to appear before an ethics committee investigating claims that he received a bribe of $1 million from International Sports and Leisure, FIFA’s sports marketing company at the time.

Though he escaped criminal prosecution (and died at age 100 in August 2016), apparently, Havelange’s atrocious Tone at the Top example continues to this day. “The betrayal of trust … is outrageous,” said then-U.S. Attorney General Loretta E. Lynch during a Dec. 3, 2015, press conference after the U.S. Department of Justice (DOJ) indicted a second batch of FIFA-related officials.

The DOJ charged the original FIFA defendants with racketeering, bribery and other corruption charges. As of November 2016, the U.S. had convicted 21 on various racketeering and corruption charges with 42 defendants publicly charged.

The scope and range of the alleged crimes are staggering. “Not content to hijack the world’s most popular sport for decades of ill-gotten gains, these defendants, as alleged, sought to institutionalize their corruption to ensure that it lived on, not for the good of the game but for their own personal aggrandizement and gain,” said then-Attorney General Loretta E. Lynch.

Lynch said that several of the defendants illustrated the depth and persistence of the alleged corruption. “The defendant Héctor Trujillo currently serves as a judge on the Constitutional Court of Guatemala, purportedly dispensing justice by day while allegedly soliciting bribes and selling his influence within FIFA,” she said.

“Another, Alfredo Hawit, ascended to the position of CONCACAF president that was left open when we charged his predecessor with corruption in May — and then, as alleged, assumed the mantle of those same corrupt practices. The defendant Ariel Alvarado is a member of FIFA’s Disciplinary Committee, entrusted with stamping out the corrupt behavior in which he is now alleged to be involved,” Lynch said.

The DOJ has impressively pursued scores of alleged (and many now convicted) FIFA-related officials who thought they, as their predecessors, could ride the gravy train into extremely comfortable retirements.

How does such corruption become so deep-rooted in an organization? Big money begets bigger money especially when top officials cozily communicate to their underlings that pay-to-play bribery deals help everybody take home some extra covert cash.

Corruption is a term used to describe various types of wrongful acts designed to cause an unfair advantage. It can take on many forms, including bribery, kickbacks, illegal gratuities, economic extortion and collusion. Generally, it involves the wrongful use of influence to procure a benefit for the actor or another person, contrary to the duty or the rights of others. The various forms of corruption are often used in combination, which reinforces the schemes’ potency and makes them more difficult to combat.

Corruption, which can be found in any business or organization, is one of the three major categories of occupational fraud and abuse (along with asset misappropriation and fraudulent statements). The most common area for corruption in an organization is in the purchasing environment; most corruption schemes involve employees acting alone or in collusion with vendors/contractors.

Corruption is a significant problem for organizations, particularly due to the drive for growth in international markets. Despite the multitude of anti-corruption legislation and increased enforcement efforts around the world, corruption is still prevalent.

Bribery

We can define bribery as the offering, giving, receiving or soliciting of corrupt payments (i.e., items of value paid to procure a benefit contrary to the rights of others) to influence an official act or business decision.

At its heart, a bribe is a business transaction, albeit an illegal or unethical one. A person “buys” influence over the recipient of the bribe to procure a benefit that’s contrary to the duty or the rights of others.

Bribery schemes can be difficult to detect. In the employment context, bribery involves a conflict of interest in which the employee’s personal interest overwhelms his professional responsibilities. Though bribery schemes aren’t nearly as common as other forms of occupational fraud, such as asset misappropriations, they tend to be much more costly.

Bribery involves collusion between at least two parties. Bribery schemes are classified into two types: official bribery and commercial bribery. Official bribery refers to the corruption of a public official to influence an official act of government. The term stems from traditional bribery statutes that only proscribe payments made to influence the decisions of government agents or employees.

In contrast, commercial bribery refers to the corruption of a private individual to gain a commercial or business advantage. In commercial bribery schemes, something of value is offered to influence a business decision rather than an official act, as is the case in official bribery.

Commercial bribery might or might not be a criminal offense. For example, the U.S. has no general federal law prohibiting commercial bribery in all instances; however, it does have statutes prohibiting bribery of employees of financial institutions to influence a loan.

And the U.K. Bribery Act does contain a general commercial bribery offense. Therefore, the law of the particular jurisdiction and the facts of the case will determine if bribery in the private sector might be prosecuted criminally.

But generally, commercial bribery is a civil offense — meaning the aggrieved party can recover damages and other private remedies — in most jurisdictions, and it can often be pursued in a civil action as breach of fiduciary duty or conflict of interest.

Kickback schemes

Bribery often takes the form of kickbacks, a form of negotiated bribery in which a commission is paid to the bribe taker in exchange for the services rendered. Thus, kickbacks are improper, undisclosed payments made to obtain favorable treatment.

In a government setting, kickbacks refer to the giving or receiving of anything of value to obtain or reward favorable treatment in relation to a government contract. In the commercial sense, kickbacks refer to the giving or receiving of anything of value to influence a business decision without the employer’s knowledge and consent.

Usually, kickback schemes are similar to billing schemes. They involve the submission of invoices for goods and services that are either overpriced or fictitious.

Kickbacks are classified as corruption schemes rather than asset misappropriations because they involve collusion between employees and third parties. In a common type of kickback scheme, a vendor submits a fraudulent or inflated invoice to the victim organization and an employee of that organization helps make sure that a payment is made on the false invoice. For his assistance, the employee-fraudster receives a payment from the vendor. This payment is the kickback.

Most kickback schemes attack the purchasing function of the victim organization; therefore, employees with purchasing responsibilities often commit these frauds. Purchasing employees usually have direct contact with vendors and therefore have an opportunity to establish a collusive relationship.

Sources: U.S. Department of Justice: Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption, Sixteen Additional FIFA Officials Indicted for Racketeering Conspiracy and Corruption, and Attorney General Loretta E. Lynch Delivers Remarks at Press Conference Announcing Law Enforcement Action Related to FIFA; João Havelange, president of Fifa from 1974 to 1998, dies aged 100, by Jonathan Watts and Owen Gibson, Aug. 16, 2016, the Guardian; 2016 ACFE Fraud Examiners Manual, 1.601-1.603.