Saturday, June 19, 2021

Swiss bank Julius Baer escapes trial in FIFA corruption case, agrees $80m deal

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Large Swiss bank Julius Baer & Co. on Thursday received a deferred prosecution agreement from federal prosecutors and agreed to pay a criminal fine and forfeiture of about $80 million for money laundering conspiracy charges related to bribes involving the international soccer governing body FIFA.

The deal means that Julius Baer will not face trial or criminal punishment in the case if the bank abides by the terms of the agreement for the next 42 months.

The agreement, the latest in a series of FIFA-related criminal cases, was announced in Brooklyn, New York, federal court during an arraignment hearing for the bank, which was formally charged with money laundering conspiracy.

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The crime related to a scheme that involved sports marketing companies bribing officials at FIFA and other soccer federations to get broadcast rights for games.

A total of $36.37 million was laundered through Julius Baer as part of that scheme, which agreed to pay that amount in forfeiture, with the rest of its payments covering the criminal fine.

Julius Baer is Switzerland’s third-largest bank. According to a Reuters report last November, the bank had been cooperating with the DOJ’s probe of alleged money laundering and corruption involving FIFA officials and affiliates.

The U.S. Department of Justice said Thursday that Julius Baer admitted known that the accounts of certain clients “were associated with international soccer, which was generally understood to involve high corruption risks.”

“Nevertheless, a [bank] executive directed the opening of these accounts be fast tracked in the hope that these clients would provide lucrative business,” the DOJ said in a press release.

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A bank official, appearing during the virtual proceeding, pleaded not guilty to the case, and told U.S. District Judge Pamela Chen the bank was agreeing to the deferred prosecution deal.

The terms of that deal include the admission by the bank that the criminal allegations against it are true and accurate, and that they can be used against Julius Baer in other proceedings.

“Today’s resolution sends a strong message to all banks and other financial institutions that if they knowingly misuse our financial system to hide their clients’ criminal proceeds or to promote a corrupt scheme, they will be held to account,” said Nicholas McQuaid, the acting assistant attorney general of the Justice Department’s criminal division.

“From the time of the first FIFA-related indictment, the department has promised to hold accountable the financial institutions involved in this global criminal scheme. We are delivering on that promise,” McQuaid said.

The DOJ said that from February 2013 through May 2015, the bank through a former client relationship manager named Jorge Luis Arzuaga, conspired with sports marketing executives who included Alejandro Burzaco, the controlling executive of Argentina-based Torneos y Competencias S.A. to launder the bribes through the United States to soccer officials for broadcast rights.

The bank “conspired to execute these illegal transactions through accounts at the Bank to conceal the true nature of the payments and promote the fraud,” the DOJ said in its press release.

The release noted, “Burzaco pleaded guilty to racketeering conspiracy and other offenses in November 2015.”

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“Burzaco and co-conspirators agreed to pay approximately $30 million to the senior vice president of FIFA, who was also the president of the Asociación del Fútbol Argentina, for his support in the award of regional broadcasting rights to the 2018, 2022, 2026 and 2030 editions of the World Cup,” the DOJ said.

Burzaco’s company also agreed to pay tens of millions of dollars to bribe officials in the South American football federation CONMEBOL, all of whom were also FIFA officials, “for the rights to the Copa América tournament (including the 2015, 2019 and 2023 editions of the tournament and the 2016 Copa América Centenario, a commemorative centennial edition of the tournament played at stadiums across the United States),” the DOJ said.

Julius Baer in November took a provision of nearly $80 million on its books to cover what the bank expected to pay in fines after agreeing in principle with the U.S. Department of Justice to the deferred prosecution deal.

That same month, Arzuaga, who had worked in the bank’s Montevideo, Uruguay, and Zurich offices, was sentenced to three years of supervised release in his own criminal case, after pleading guilty to conspiracy several years earlier.

In March, Swiss regulators announced they would lift an acquisition ban they had imposed on Julius Baer related to the bank’s failures to prevent money laundering by its clients.

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