Football. High Transfer Fees and Money Laundering

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An honorable member of the Coffee Shop Has Just Posted the Following:

From The Economist.

A villain’s guide to football

Welcome to the beautiful game

Football clubs can easily be used as stealing machines. Here is an instruction manual. The stories are real, but most details are concealed

Jul 13th 2013 |From the print edition
A NEW football season approaches, and with it new players, overpriced replica kits and unsavoury club owners. If you are one of them, most observers will wrongly assume that you are laundering only your reputation, and that you are willing to lose millions on a philanthropic sporting folly to do so. That is too kind. Your new asset will not just help you wash your dirty money. It will make more of it too.
It is a good time to enter the football racket. Banks are less generous and sentimental about loans. Tax officials are less lenient, too, as Rangers, a big Glasgow club, discovered: it was forced into liquidation by tax arrears, afterwards being reconstituted under new ownership. But hard times mean clubs are desperate and going cheap. Set up a holding company (or a nest of them) in a discreet jurisdiction, as many owners do, and you have a money-laundering and embezzlement machine at your disposal. The authorities are unlikely to bother you (see article).
Start with ticket revenues. Exaggerating the attendance at matches lets you run some of the dirty takings from your previous career through the turnstiles, turning them into legitimate income (this particular ruse works best if you buy a middling club, where games are not routinely sold out). Conversely, if you need some petty cash you can siphon off the gate receipts—a tactic that some of Brazil’s football kingpins, the cartolas (“top hats”), are rumoured to have employed in the past.
The market in players, between clubs and across national borders, is another golden opportunity. Time was when the scams were simple: bent coaches would take “bungs” (backhanders) to buy a player with the chairman’s wallet. Now the tricks are more complex—and some owners are in on them. One aim is money-laundering. Transfers involve huge and largely subjective sums (since a player is worth whatever someone is willing to pay for him). With agents or other intermediaries involved, payments pass through multiple hands and jurisdictions: perfect for concealing the origin and direction of the cash. Sell a player to a friendly club that publicly overstates the true price, and you can supplement the real fee with a couple of million ill-gotten euros of your own: that money is now clean and in your club’s accounts. Pull the trick in reverse—inflating the value of a player you are buying—and you gain a usefully overvalued asset on your balance-sheet, which will help your club to borrow.
Transfers can also help you privatise club revenues and defraud minority shareholders. With the help of a co-operative agent, the fees, commissions and even parts of players’ salaries can find their way back to you (and away from the taxman). Agents who are personal friends may be safest. The regulations which govern transfer deals are easy to circumvent.
Another wheeze—annoyingly banned by some national football associations—is third-party ownership, where the rights in a player are owned (or part-owned) not by his club but by an outside consortium. So you can secretly invest in players whom you then rent to your club, trousering the proceeds. Or sell your club’s star man to your front company for a depressed fee, then sell him on at full price. Naturally you will award the club’s construction and catering contracts to your own firms.
Matches made in heaven

Most outsiders reckon that, when games are rigged, infiltrators are to blame: Asian criminal gangs and Balkan gangsters are the usual suspects. But the surest fixes are inside jobs. After all, you pay the players’ salaries, so you are in the best position to suborn them. You can decide who is picked or dropped, or who goes on the transfer list (or doesn’t). That gives dodgy owners plenty of scope to influence players’ behaviour. Footballers who are paid badly or erratically, as they often are in eastern Europe or the former Soviet Union (see chart), tend to be most susceptible.
But match-fixing happens in big and supposedly reputable European leagues, too—and because bookies assume the games are clean, you can lay big bets inconspicuously. If you or the players balk at losing on purpose, you can still arrange—and bet on—in-game details, such as the timing of the first corner kick. When the fix is in, consider emulating the Macedonian chairman who sold on the details of a thrown game to mafiosi. Betting syndicates will even buy intelligence on players’ injuries, nervous breakdowns and so on. Happily for you, match-fixing is hard to prove, and most police forces aren’t interested.
These are only the basics: after a season or two you can go in for more extravagant scams. Be inspired by Arkan, the deceased Serbian paramilitary who is said to have used his football club to traffic arms and drugs. It might be best, however, to stay clear of Russia, where the game has an alarming death rate, and where warlords from the North Caucasus (sinister even by football’s standards) have recently started buying into the business. Caution is also advisable in Bulgaria: 15 football club bosses have been murdered in the top football league just over a decade. An American diplomatic cable written in January 2010, and published by WikiLeaks, said “allegations of illegal gambling, match fixing, money laundering, and tax evasion” plague the Bulgarian game.
Some national associations do a spot of due diligence on new owners, but this is unlikely to interfere with your plans. Having a criminal record can be a bar to acquiring a club—but if you made your money in a place where the law was flexible and the courts accommodating, such inconvenient details can be scrubbed from your record. Enjoy the beautiful game!


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