Fifa launches its own bank: is there no end, and will no one stop them?

 

 

 

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By Tony Attwood

Imagine that you had a company and it had lots of money.  I mean lots and lots and lots of money.  What would you do with it?   

The answer is probably simple.  You might invest it in new projects.  And perhaps pay yourself and your fellows ever more money while doing so.

But then maybe you think, paying yourself lots of money might look a bit suspicious, especially if you already received vast amounts of money.  Like £3.2 million a year (or $3.9 million; or €3.6 million) which is the salary of Infantino the head of Fifa.  And indeed no one seems to mind, not even when it is pointed out that is up $1 million on what he got in 2018.   

Indeed we can see why Fifa would be keen to give Infantino more money because a) he is making Fifa grow more and more powerful and more and more profitable, and b) because Fifa is a not-for-profit organisation. 

And yet there is a problem because Switzerland has had negative interest rates for a while (although these are now coming to an end), so no one has wanted to have money sitting  there in the bank. 

So Fifa has had to think about what to do with the millions of dollars profit that it has made and which is stashed away in a bank and which is losing value.  So what has it done?   

Well, you wouldn’t know from reading the UK media but in fact Fifa has started its own bank, which will hold its own money.  And which will protect the privacy of those who bank with it.  Such as the head of Fifa who is,… oh what’s his name, ah yes, Infantino.

And through which all transfers will now have to be paid for.  

Now at the end of 2020, Fifa held in its bank account 1.4 billion Swiss francs (£1,256 billion) at the end of 2020 – on which it was paying 0.75% back to the bank each year.  So how with its own bank Fifa has its own money and is offering loans of 5 million Swiss francs or more to those who it feels deserves them.  But unlike the central Swiss bank, the Bank of Fifa is charging interest.

Initially, the Bank of Fifa has started handing out loans to Swiss local authorities.  Bern for example borrowed 75 million francs.  But how much more has it loaned and to whom?

We certainly don’t know in terms of football clubs and the like but the list of ‘clients’ who borrowed from this unusual banker is a long one, and the sums involved are considerable. Zumikon, for example, a municipality from the canton of Zürich, came to Fifa for three loans of 10 million francs. Bigger local authorities borrowed even more: Winterthur asked for and got 60 million, Bern 75 million. Luzerner Zeitung, the Swiss German-language daily newspaper, asked Fifa to provide a figure for the total amount which had been loaned in that fashion.  Fifa declined.

So the journalist took the Fifa annual reports and worked it out.  In 2018 it was more than 700 million US dollars.    And therein lies another twist.  The Swiss franc is appreciating in value, so in essence Fifa is running a bank that is betting on the currency markets.  

So who is running this scheme?   Fifa’s Chief Finance Officer who runs the operation is Thomas Peyer, who was appointed by…. well, guess.   Yep it was Gianni Infantino.

And it came with a simple plan.   Fifa has lots of US dollars.  It changes them into Swiss francs and loans them to the local authorities in Switzerland.  When the loan comes to an end Fifa turns the money back into US dollars.   Generally, over time the US dollar is falling against the Swiss frank, so Fifa makes money.  And then pays its top people (possibly including Infantino) bonuses.

There is nothing illegal here.  Except Switzerland is trying to stop the rise in the value of its own currency, which is why some authorities in Switzerland are now refusing to deal with Fifa and its bank.  Because in essence, as the article in “Inside the Games” says,  “Fifa has basically been gambling against the government of the country where it operates”… as the Swiss authorities, “have been spending billions to buy euros and dollars to try and fight the dramatic rise of their own currency on the markets and the negative effect this rise has had on the country’s economy.”

Now that is interesting because it comes while Switzerland is continuing to investigate what Infantino was up to with his illegal secret meetings with the man who at the time was head of the Swiss judicial system

But there is more, because with its own bank Fifa is able to lend money to football associations worldwide, all of which are obliged to be members of Fifa.   Fifa then is able to keep the associations in its grip, not just as the world body of football, but also as its banker.

And now Fifa has set up a new central clearing house for all transfers to add what it calls   “transparency and accountability” to the transfer market.  And clubs have no choice – everything must now go through the Bank of Fifa.  This will give the bank another $7 billion worth of turnover and further chances to exploit changes in exchange rates!

Indeed as Infantino admitted, Fifa wants to control the transfer market, and in effect having everything go through the Bank of Fifa will means individual police forces investigating local corruption in transfers, might well find it now a lot harder going. Of course Fifa could root out any corruption – although how you feel about that will depend on how you feel about Fifa.

As Infantino said, “Payments to the agents and payments from one club to another club, all this will be processed through this Fifa clearing house… This will bring finally some transparency and accountability in the whole transfer market.”

So you may feel that is a perfectly reasonable and indeed long-overdue move.  Or you might wonder why the bank is not completely independent of Fifa – an arm perhaps of one of the long-established banks that has traded for over 100 years without a stain on its integrity.

And you might also wonder why the British press, which constantly bends the knee to Fifa and all its inventions, and refrains from investigating Fifa in any way over anything, has not mentioned any of this.  But I suspect the answer is obvious.