US sports equipment supplier Nike (NYSE:NKE), one of the sponsors of FIFA and the Brazilian football federation, said Wednesday it had cooperated with the authorities investigating corruption, estimated at US$150 million, including the 2010 World Cup.
The indictment alleges that bribes were paid and pocketed in connection with the sponsorship of the Brazilian national soccer team by "a major U.S. sportswear company." While the investigators have not named the company, they offered sufficient hints, stating that the sportswear firm signed a 10-year, $160 million sponsorship deal with Brazil’s soccer/football team in 1996, which is suspiciously similar to the very deal that Nike signed with that same team that same year.
The markets have taken the indictment in stride and Nike’s shares opened lower on Thursday morning, recovering in the afternoon but still trading at their lowest for the week and 0.20% lower than it closed on Wednesday.
Following its famous dynamic and action inspiring slogan, Nike stopped the rumors and, while avoiding specific comments on the allegations, it issued a statement of concern:
"Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery. We have been cooperating, and will continue to cooperate, with the authorities," said a Nike spokesperson late Wednesday, adding that Nike has “cooperated and continue to cooperate with the authorities," wrote the famous brand with the swoosh to AFP.
Meanwhile, the same unnamed sportswear sponsor of the Brazilian team in the indictment, is accused of paying US$40 million to the Swiss bank account belonging to a businessman buying and selling marketing rights in Brazil, according to court documents cited by Bloomberg.
Sales of Nike’s soccer equipment may soon match or exceed those of basketball, where the company built its reputation and popularity.
"As fans (soccer) everywhere, the game is important and we are passionately concerned about these serious charges," said Nike still Wednesday.
Other major corporations and FIFA sponsors are also sweating from McDonald's to Coca-Cola and all have called for more "transparency" and "ethics".
Nike’s European competitor and official FIFA supplier Adidas has learned from coaches who urge a strong offense to produce an effective defense, urging FIFA to "to implement and enforce consistent standards for transparency in everything it does."
Russia’s oil and gas giant Gazprom declined to comment on the case, indicating that it did not face any “concrete” accusations.
The investigation and arrests send a signal to those involved in corruption worldwide. Indeed, as MSNBC’s Rachel Maddow noted, the FIFA investigation represents a “paradox” because while soccer is the most popular sport in all countries except the United States, but it US justice that intervened to stop the corruption its major governing body has generated.
American investigators may soon take on another overseas corruption case, this time targeting China, and specifically the recruitment of scions of the Chinese regime to head Asian branches of US banks.