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BG-013 Football · FIFA 2012

The ISL kickbacks — Two FIFA Men, 41 Million Francs, and a Quiet Repayment

Body
FIFA
The Scheme
Kickbacks from marketing agency ISL
Amount
~CHF 41M
Status
Settled

Summary

Between 1992 and 2000, FIFA's own marketing agency funnelled an estimated 41 million Swiss francs in kickbacks to the men at the top of world football, chiefly the long-reigning FIFA president João Havelange and his son-in-law Ricardo Teixeira, the head of Brazil's football confederation. The scheme was never tested by a guilty verdict. It ended, instead, in the most genteel resolution available to a continental institution caught with its hand in the till: a repayment. In May 2010 a Swiss criminal investigation in the canton of Zug was discontinued after Havelange and Teixeira agreed to pay back a fraction of what they had taken, and FIFA itself topped up the arrangement. The case file closed not with a conviction but with a transaction.

The mechanism was almost boring in its simplicity, which is part of why it lasted so long. ISL — International Sport and Leisure, the agency that held FIFA's World Cup television and marketing rights — paid commissions to the officials who controlled the rights it was buying. The payments ran through front companies designed to hide the true recipients, and at the time they were made, commercial bribery was not a crime under Swiss law, a legal gap the scheme fit into with unusual precision. ISL collapsed into bankruptcy in 2001 with debts later estimated in the hundreds of millions, and the receivers and prosecutors who picked through the wreckage found the trail of commissions running straight back to FIFA's leadership.

It took years and a court order to get the names into daylight. In July 2012 a Swiss court released the long-suppressed file, confirming that Havelange had received at least 1.5 million francs and Teixeira at least 12.4 million, the document noting the pair may together have taken some 22 million. In April 2013 FIFA's own Ethics Committee, working from an investigation by the American lawyer Michael Garcia, confirmed in writing that the payments were "bribes" — its word — and added a third recipient, the South American confederation president Nicolás Leoz. By then the principals had begun to vanish: Havelange had resigned his International Olympic Committee membership in December 2011, days before that body was due to sanction him, citing ill health. The verdict on record is a settlement. The finding on record is that bribes were paid.

Timeline

1974
The Havelange era opens
João Havelange becomes FIFA president, beginning a 24-year reign that commercialises the World Cup and binds the federation tightly to its marketing partners.
1982
ISL is founded
International Sport and Leisure, an agency linked to Adidas, takes on FIFA's television and marketing rights, becoming the conduit between the World Cup's commercial value and the officials who controlled it.
1992–2000
The commissions flow
ISL channels an estimated 41 million Swiss francs in kickbacks to FIFA officials, routed through front companies; commercial bribery is not then a crime in Switzerland.
May 2001
ISL goes bankrupt
The agency collapses with debts later estimated in the hundreds of millions, throwing its books open to receivers and prosecutors.
2002–2008
The Zug investigation
Prosecutors in the Swiss canton of Zug spend years tracing ISL's payments; in 2008 several former ISL executives are charged with offences including fraud and embezzlement.
May 2010
The case is dropped
The Swiss criminal proceeding against Havelange and Teixeira is discontinued after they agree to repay money; only about 3 million francs is recovered, with FIFA itself contributing 2.5 million.
December 2011
The IOC exit
Havelange resigns his IOC membership, citing ill health, days before the IOC ethics body is due to sanction him over the ISL payments.
July 11, 2012
The file is unsealed
A Swiss court orders release of the judgment, naming Havelange (at least CHF 1.5M) and Teixeira (at least CHF 12.4M) as recipients.
April 18, 2013
Havelange resigns from FIFA
The former president steps down from his honorary FIFA role as the Ethics Committee prepares to publish its findings.
April 30, 2013
FIFA calls them bribes
FIFA's Ethics Committee confirms Havelange, Teixeira and Leoz took payments it qualifies as "bribes," while finding president Sepp Blatter's conduct merely "clumsy."
April 2014
The wider inquiry closes
Garcia's broader ISL-related investigation is formally concluded; Leoz and Teixeira have by then resigned, foreclosing further FIFA sanction.
August 16, 2016
The principal dies
Havelange dies in Rio de Janeiro at 100, the ISL matter never having produced a conviction against him.

The arrangement that was not, technically, a crime

The elegance of the ISL scheme lay in its legality. For most of the years it ran, paying commercial bribes was not a criminal offence in Switzerland, where FIFA and its marketing partner were both domiciled. An agency could pay an official to keep the rights flowing its way, and a Swiss court would have nothing obvious to charge. The conduct that would later be branded corruption was, at the moment it occurred, a grey transaction sitting in a hole in the statute book — which is precisely where it was placed.

What ISL bought with its commissions was continuity. The agency held FIFA's television and marketing rights, the single most valuable asset in world sport, and it had an overwhelming interest in keeping those rights and the men who awarded them content. The payments were not random gifts; they were, in the Ethics Committee's eventual language, commissions paid to secure a commercial relationship. They moved through front companies whose only discernible function was to obscure who was actually receiving the money — a detail that rather undercut the later defence that everyone had thought the arrangement above board.

The recipients were not minor functionaries. Havelange had run FIFA since 1974 and sat on the IOC; Teixeira, his son-in-law, ran Brazilian football and held a FIFA executive seat; Leoz presided over the South American confederation. These were the people who controlled the supply of the very rights ISL was paying to keep. That the largest single sum named in the file, more than 12 million francs, went to Teixeira reflected the geometry of the thing: the closer an official sat to the decisions that mattered to ISL, the larger the commission that reached him.

The receiver's trail and the unsealed file

The scheme survived only as long as ISL did. When the agency went bankrupt in 2001, its collapse converted a private arrangement into a public estate. Receivers had to account for where the money had gone, and Swiss prosecutors in the canton of Zug opened an investigation that would grind on for the better part of a decade. By 2008 the prosecutors had charged several former ISL executives, and the documentary trail of commissions led unavoidably to FIFA's leadership.

Then came the settlement that gave this case its verdict. In May 2010 the criminal proceeding against Havelange and Teixeira was discontinued — not because the payments hadn't happened, but because the two men agreed to repay money. The recovered sum was small relative to what had been taken: roughly 3 million francs all told, of which FIFA itself paid 2.5 million, on the condition that the criminal actions be dropped. A scheme worth an estimated 41 million was closed out for a repayment of around 3 million and a federation's willingness to absorb part of its own officials' bill. The arithmetic was, even by the standards of negotiated settlements, conspicuously favourable to the men who had taken the money.

The names stayed buried until a court forced them out. On July 11, 2012, a Swiss court ordered the release of the judgment, and the file confirmed what had long been alleged: Havelange had received at least 1.5 million francs, Teixeira at least 12.4 million, and the two together possibly some 22 million between 1992 and 2000. The release reframed the 2010 settlement entirely. What had been quietly resolved as a discontinued case was now a documented record of officials repaying a sliver of what a court accepted they had pocketed.

FIFA's own word for it

For a body that had spent years insisting the matter was a closed Swiss affair, FIFA was eventually forced to grade its own leadership. The Ethics Committee, drawing on the investigation by Michael Garcia, published its findings on April 30, 2013, and chose its terms carefully. The payments to Havelange, Teixeira and Leoz, it concluded, were "made via front companies in order to cover up the true recipient and are to be qualified as 'commissions', known today as 'bribes'." It was an institution describing its own former president as a man who took bribes — and doing so only after a court had pried open the file.

The committee's treatment of the sitting president, Sepp Blatter, drew the obvious contrast. It found that Blatter's conduct "may have been clumsy" but did not amount to misconduct, while pointedly questioning whether he "knew or should have known" that ISL was paying bribes to FIFA officials before the agency went under. Clumsy was a generous adjective for a man at the centre of an organisation through which tens of millions in commissions had flowed, and it satisfied almost no one. The verdict that mattered to the principals, however, had already been settled three years earlier, in francs.

The exits were managed rather than imposed. Havelange resigned from the IOC in December 2011 just ahead of a sanction, and from his honorary FIFA role in April 2013 just ahead of the Ethics findings; Leoz and Teixeira resigned before FIFA's process could conclude against them. Each departure foreclosed the harsher sanction that might otherwise have followed. The men who had built and benefited from the scheme left on their own terms, which was the last advantage the arrangement bought them.

The Five Factors

01
The legal gap as business model
The scheme was engineered to fit a hole in Swiss law, where commercial bribery was not then criminal. When the rules permit a thing, the cynical will industrialise it; the absence of a crime is not the absence of corruption, and integrity systems that wait for the statute book to catch up will always arrive late.
02
The agency that pays the people who pick it
ISL held the rights and paid the officials who awarded them, collapsing the line between buyer and seller. Any market where the same individuals control both the asset and its disposal, with no independent check, will tend toward commissions flowing to the deciders.
03
Front companies and the engineering of deniability
The payments moved through shells whose only purpose was to hide the recipient. Concealment that elaborate is itself evidence of consciousness of wrongdoing; the structures built to obscure a payment are the clearest record of what the parties knew it to be.
04
Settlement as escape hatch
A repayment of roughly 3 million francs closed a case worth an estimated 41 million, with FIFA covering part of the tab. Where wealthy principals can buy out of criminal exposure for a fraction of the take, the settlement becomes a price of doing business rather than a deterrent.
05
Resignation before sanction
Havelange left the IOC and FIFA, and his co-recipients left FIFA, each just before a body could rule against them. An honours-and-membership system that lets the accused resign their way out of judgment converts accountability into an optional, voluntary exit.

Aftermath

No one went to prison for the ISL kickbacks. The Swiss criminal case ended in the 2010 settlement; the FIFA Ethics process ended in resignations that pre-empted formal sanction; and the principals largely saw out their lives without a conviction attached. Havelange died in Rio de Janeiro in 2016 at the age of 100. Teixeira, who had also resigned his Brazilian football and FIFA roles in 2012 amid mounting pressure, later faced separate United States and Brazilian corruption proceedings arising from the broader collapse of football governance. Leoz, named in the 2013 Ethics findings, was subsequently indicted in the 2015 US racketeering case and died in 2019 while contesting extradition.

The lasting consequence was less a punishment than a precedent of exposure. The unsealing of the Zug file in 2012 and FIFA's own use of the word "bribes" in 2013 made it impossible to maintain the fiction that football's commercial machinery had been clean under Havelange, and they fed directly into the reckoning that followed — Garcia's wider investigation, the 2015 indictments, and the slow professionalisation of FIFA's compliance and ethics functions. The ISL case did not jail anyone, but it established, in a federation's own documents, that the men who had run world football for decades had been on the payroll of the agency they were supposed to be supervising.

Lessons

  1. Treat a legal gap as a warning, not a licence: conduct that is merely not-yet-criminal in one jurisdiction is still corruption, and an integrity body should police it before the statute does.
  2. Never let the same officials control both an asset and its sale to a paying counterparty without independent oversight; that structure manufactures kickbacks by design.
  3. Read elaborate concealment as confession — front companies and hidden recipients are evidence of intent, not of clever tax planning.
  4. Do not let a negotiated repayment substitute for accountability when it costs the principals a fraction of what they took; price-based settlements deter nothing.
  5. Close the resignation escape hatch: an ethics process that the accused can pre-empt by quitting is a process that never reaches a verdict.

References