The football world is agog over a SFr2 million payment made by governing body FIFA to Michel Platini, the man who aspires to be its next President, in 2011 – for work completed in 2002.
Platini has explained that current FIFA President Sepp Blatter informed him when the Frenchman started his role as his advisor that it was not initially possible to pay the totality of his salary because of FIFA’s financial situation at that time.
Given all that might be at stake here, it is worth reminding ourselves what FIFA’s financial situation was – and what else it was spending money on around the time that payment of Platini’s SFr2 million was postponed.
To do this I will draw on a number of documents, notably a 21-page dossier prepared by one-time FIFA general secretary Michel Zen-Ruffinen and distributed to the body’s Executive Committee in May 2002, and a 30-page “Rectification” of the general secretary’s allegations published by Blatter the same month.
FIFA had been facing problems, that much is clear.
In May 2001, bankruptcy proceedings were opened against the ISL and ISMM sports marketing organisations.
Prior to this, ISL had administered worldwide distribution of marketing licences for the 2002 and 2006 World Cups on FIFA’s behalf, while ISMM looked after TV rights outside Europe and the United States.
This led to a request by Executive Committee members for an investigation into FIFA’s financial situation.
A letter to National Associations dated 1 February 2002 and signed by Chung Mong-Joon, a rival candidate of Platini’s in the current race to succeed Blatter, Lennart Johansson, Platini’s predecessor as UEFA President, and Issa Hayatou, who was to lose to Blatter in the 2002 FIFA Presidential election, explains the reasons for the request.
This letter refers, among other things, to “FIFA’s liquidity problems in 2000, that made it necessary to take out a bank loan of SFr300 million in order to avoid that the accounts would show a deficit of SFr220 million at the end of the year”.
Zen-Ruffinen maintained that FIFA “is in a bad shape today”. He continued: “The financials only seem to be in order, in fact, FIFA today lives from income of the future”.
He goes into more detail in the body of the document, alleging, “As of the end of 1999, the liabilities exceeded the assets of FIFA” and that “the management letter of 2001 of the auditors includes a forecast of equity which is most alarming”.
These appear the sort of circumstances, in sum, in which a postponed payment, of the type experienced by Platini, seems understandable.
And yet, in his detailed response to the allegations, Blatter states bluntly: “FIFA’s financial situation is sound.”
Indeed, KPMG’s audit report dated 31 December 2001 “showed that FIFA has equity of SFr154 million and reserves of SFr367 million.
“As of the end of April 2002, FIFA’s liquidity totalled SFr913 million.”
A string of payments alleged by Zen-Ruffinen to have been made between 1999 and 2001 is also of some interest, given that Platini was apparently being made to wait for some of his money.
These include SFr470,000 to the Local Organising Committee (LOC) of the FIFA Confederations Cup Saudi Arabia 1997, after the LOC had asked FIFA for some financial support to alleviate the deficit that the tournament had generated.
A payment of $30,000 in September 2001 to “the Honorary President”. In his Rectification, Blatter states: “On 5 September 2001 Joao Havelange was paid $30,000 as an advance for his compensation as Honorary President of FIFA for the year 2002.”
He goes on: “An amount of $25,000 was paid, by [cheque], to the family of the late member of honour and long-term member of the Executive Committee, Abilio d’Almeida to cover hospital cost.”
Blatter also confirms approving a request from the Football Union of Russia, dating from September 2001, for $80,000 of monetary support for the 10th edition of the CIS Cup.
The same amount had been requested the previous year, which, Blatter says, “on 8 November 2000 the general secretary approved…and wished the organisers good luck for their tournament.”
In response to the allegation that “the secretary to the President received a Mercedes as business car”, meanwhile, Blatter retorts that the general secretary’s secretary “was given a specially equipped Mercedes”.
The documents also contain much interesting detail about FIFA’s use at this time of outside consultants.
Zen-Ruffinen alleges for example that McKinsey “received most significant business”, with invoiced amounts ranging “from SFr420,000 to SFr760,000 per month (!) between June 2000 and March 2002, totalling roughly SFr12 million”.
Blatter confirms “the information on the invoiced amounts is correct”.
He continues: “As a streamlined organisation, FIFA utilises a great number of outside consultants in its work…McKinsey was not the largest consultant employed…
“Until now, contracts totalling SFr64 million have been signed with A.T.Kearney, of which SFr54 million has already been paid.”
David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics, the 2010 World Cup and London 2012. Owen’s Twitter feed can be accessed at www.twitter.com/dodo938.