By Paul Nicholson
January 19 – The US investigation into money laundering by South American football officials has gained a wider perspective as news has broken that one of the senior bankers at Swiss bank Julius Baer has been in US custody since the autumn.
Not named in any of the indictments that have so far seen 41 football officials accused, the arrest of Argentine Jorge Arzuaga raises the stakes in the game, both for the Swiss banking industry and for Julius Baer in particular.
Arzuaga was second in command at the bank and privy to its practices that have come under suspicion in the past both in the financial media and by the regulatory authorities. Arzuaga had left the bank soon after the first arrests at the Baur au Lac Hotel in Zurich in May 2015.
It is not clear where Arzuaga was arrested but he is now believed to be in the US, news that was revealed by leading Swiss financial newsletter Inside Paradeplatz today.
The fear for the bank is that if he does a deal with US authorities, the information he could hand over to US prosecutors will open a much wider investigation into the bank’s practices and its clients, not just those in football.
Often referred to in Zurich conversations as FIFA’s Bank, Julius Baer was the was the favourite resting place for a lot of private football money, the concern for many account holders will be that it could end up being the last resting place.
Arzuaga was the private banker of now deceased Julio Grondona. Grondona was president of the Argentine FA and for more than 20 years a member of FIFA’s executive committee – he was also head of FIFA’s finance committee. He is a central figure in the US prosecution case into the bribery and kick-backs concerning CONMEBOL tournaments.
Arzuaga was also the banker for Argentinian sports marketer Alejandro Burzaco who narrowly escaped arrest in Zurich but later handed himself into Italian police and is now in the US. Burzaco was chief executive of Torneos y Competencias, which held broadcast and sponsorship rights to the Copa America and Copa Libertadores.
It appears these two clients were the backbone of Arzuaga’s football clients at Julius Baer. Arzuaga had joined he bank in 2013, having previously run his own asset management company but that is believed to have been associated with Clariden Leu, a private banking subsidiary of the major Swiss bank Credit Suisse.
Julius Baer’s football client list grew quickly with the introduction of Arzuaga to the business. And it is their transactions that have sparked the interest of prosecutors.
Julius Baer has repeatedly defended accusations that it is ‘FIFA’s bank’, but it is clear that it does have a significantly high number of clients involved in football – including a number of Italian football club presidents who are involved in tax disputes with their own government.
The bank has also been involved in a separate tax dispute with US authorities – an amount that could be as high as $500 million – which provides further powerful motivation for prosecutors to flex muscle in the area. Football’s corrupt American executives may have unwittingly opened the door for a much larger and more lucrative incursion into the Swiss banking system by the US Department of Justice.
As the old saying goes, you use a small fish to catch a bigger fish, you use the bigger fish to catch an even bigger fish, and so on.
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