The FIFA scandal is increasingly ridiculous as was so deftly shown by John Oliver last night. But now a Big 4 firm appears to be caught in the tentacles of it, which further demonstrates its depth and reach.
A tipster dropped us a link to very interesting post from Matt Scott, a journalist who has covered football for the Guardian and now writes for Inside World Football. In his post, Scott writes that FIFA auditor KPMG has a lot to answer for:
[W]hat FIFA's auditor, KPMG, was paid for its work in Zurich we cannot tell. For some reason, and contrary to general disclosure requirements, it chooses not to publish the amounts it pays in audit fees in its annual financial report. Moreover, KPMG refused to tell me when I asked. This is important, because auditors have a number of functions.Chief among them is that they act as the guarantors of the transparency, accountability and honesty of the entity they are auditing. It is pretty troubling if they are not even willing to say how much they get paid by a not-for-profit organisation, particularly at what is so controversial a time for FIFA. This should matter to KPMG: when scandal-hit Enron collapsed back in 2001, the failings of its then auditor, Arthur Andersen, caused the big-four accountant to be brought down with it.
This week, as even those furthest removed from the football world now know, the US Department of Justice indicted 14 football officials and sports marketers alleging wire fraud, racketeering and bribery. Although in large part these activities related to cash movements from sports-marketing firms to the football officials, FIFA as a body corporate was not untouched by the indictment.
Page 83 of the indictment describes how it has found sufficient evidence to allege that during the bidding for the destination of the 2010 World Cup, the disgraced former FIFA vice-president, Jack Warner, solicited bribes to vote for South Africa. Initially, it is claimed, the South African government was going to pay it but could not find a way to carry out the payment. So eventually the cash made its way to Warner via Zurich: "Arrangements were… made with FIFA officials to instead have the $10 million sent from FIFA – using funds that would otherwise have gone from FIFA to South Africa to support the World Cup – to the Caribbean Football Union [CFU].
"In fact, on January 2, 2008, January 31, 2008 and March 7, 2008, a high-ranking FIFA official caused payments of $616,000, $1,600,000, and $7,784,000 – totaling $10 million – to be wired from a FIFA account in Switzerland to a Bank of America correspondent account in New York, for credit to accounts held in the names of CFU and [Confederation of North, Central American and Caribbean Association Football], but controlled by the defendant Jack Warner, at Republic Bank in Trinidad and Tobago."If the allegations contained in the indictment are proved, then it would seem to reflect a very serious failure of the KPMG auditors and the processes they oversaw at FIFA. FIFA's financial statements make clear that in 2008 only $15 million in total was paid to confederations throughout the year. Yet those three payments each constituted substantial slugs of that global sum: 4.11% of it on January 2, 10.67% of it on January 31 and fully 51.89% of it on March 7.
KPMG refused to discuss anything about the alleged payments in 2008 or how it as auditor had satisfied itself that they were made honestly. It would not talk about whether it felt the alleged Warner payments were isolated or if there was a risk of repeat in other regions. It entertained no discussion about FIFA's internal controls. And, as stated above, it certainly had nothing to say about what fees it picks up from FIFA.