Fifa's Chuck Blazer 'may have acted unlawfully over TV contracts'

Chuck Blazer, the whistle-blower who reported corruption within Fifa last year, may have acted unlawfully over a multi-million dollar TV rights contract, according to lawyers acting for the football confederation he still represents.

Confidential memos - obtained by BBC Sport - from lawyers acting for Concacaf, the organisation that runs football in North America, Central America and the Caribbean - allege that Blazer is attempting to claim more than $7m (£4.5m) in unpaid commissions for TV rights and sponsorship deals.

It also alleges that Blazer - a member of Fifa's all powerful executive committee - was paid "a basic monthly fee" of at least $10,000 (£6,400) per month under the terms of a deal struck in 1994 with former Fifa vice-president Jack Warner, who was the then president of Concacaf.

CHUCK BLAZER FACTS

  • Fifa executive committee member since 1997
  • He supported Manchester United as a child
  • Mexico winning the Confederations Cup in 1999 is his favourite footballing memory
  • His hobbies include technology, video, internet, and finance
  • Source: Fifa.com

Blazer's deal with Warner granted commissions of 10% - known as an "override fee" - on all sponsorship and TV rights deals negotiated by the American, through his company Sportvertising.

The initial deal between Concacaf and Sportvertising expired in 1998. However the arrangement between both parties continued on after that date.

Concacaf confirmed last week that commissions and salary for Blazer equalled between $4m (£2.5m) and $5m (£3.2m) last year.

But the football federation now appears ready to robustly challenge any legal claim for the unpaid commissions by Blazer.

The memo, drawn up by the New York law firm King & Spalding, advises that the contract agreed between Warner and Blazer in 1994 could potentially be challenged along with any obligation to make payments.

King & Spalding provide an overview of Concacaf's potential legal claims, although they also warn that the advice is given "based on our limited information of the facts, as we have not reviewed Concacaf files or interviewed its personnel".

Significantly, the legal advice from King & Spalding, given to Concacaf on 6 December 2011, argues the agreement between Blazer and Warner could be construed as "fraud in the execution".

To do so the lawyers state that "... Concacaf must show excusable ignorance of the contents of the agreement. This argument is only available to Concacaf if it demonstrates that Blazer and Warner kept the agreement secret and never disclosed its terms to Concacaf. As with other fraud claims, this will require an intensive factual inquiry".

JACK WARNER

Jack Warner
  • Chuck Blazer reported Jack Warner to Fifa ethics committe in May 2011
  • Warner resigned from his positions in international football
  • Fifa said the ethics committee case against him was closed and the "presumption of innocence is maintained"

These latest allegations come just days after a meeting in Budapest where Concacaf's legal counsel, John Collins, told confederation delegates attending Fifa's annual Congress that the organisation has reported itself to US authorities after failing to file tax returns for several years.

When contacted by BBC Sport over the contents of the confidential memos, Blazer declined to comment, stating he wished to seek guidance on the issue first.

But speaking last week in response to the revelations over Concacaf's tax affairs, he defended his record as general secretary saying: "I spent 21 years building the confederation and its competitions and its revenues and I'm the one responsible for its good levels of income.

"I'm perfectly satisfied that I did an excellent job. I think this is a reflection of those who were angry at me having caused the action against Warner.

"This is also a reaction by people who have their own agenda. I now have to consider what my options are but to say the least I am very disappointed."

King & Spalding's memo also advises Concacaf the contract could be argued as voidable with Blazer and Warner in violation of their "fiduciary duties to Concacaf".

Similarly they lay out how it may be possible for Concacaf to show that the contract "is void or voidable because Jack Warner did not have the authority to enter into the agreement on Concacaf's behalf".

In response to the memo, Warner told BBC Sport: "At no point have I ever acted fraudulently with Mr Blazer nor have I ever knowingly violated my duties to Concacaf."

The legal advice goes on to point out how the contract between Blazer and Concacaf expired in 1998 and that, even if the agreement was valid, it could be possible to argue that no money is owed for "any contracts entered into after 1998".

However, in a follow-up briefing to four members of Concacaf's executive committee - also obtained by BBC Sport - John Collins warns that existing precedent in New York case law "will be problematic for Concacaf" in winning any potential action involving Blazer.

The advice is put forward on the belief that Blazer may potentially argue that, after the expiration of the original contract, a new contract was created based solely on the conduct of both parties. Such deals are known as "implied in fact" contracts under New York law.

According to the Collins memo, Blazer is seeking compensation for three deals he negotiated. He has yet to launch any formal legal action over the unpaid commissions.

Specifically, Collins alleges in the memo that Blazer is trying to claim $7.15m in separate commissions. This is made up of $5.2m relating to the broadcast rights for the 2013 to 2021 Concacaf Gold Cup, $700,000 for the expected net ticket revenues for the 2013 Gold Cup and $1.25m for authorising "teams from the Concacaf region to participate in the Copa Libertadores", South America's premier club cup competition.

The legal memos graphically demonstrate the internecine war at the top of the confederation as the fall-out from the corruption scandal that tainted last year's Fifa presidential election, which was eventually won by Sepp Blatter, continues.

Blazer reported Warner and former Fifa presidential candidate Mohamed Bin Hammam to Fifa's ethics committee in May last year, following allegations that financial incentives were offered to members of the Caribbean Football Union at a meeting in Trinidad.

Warner subsequently resigned from all his positions in international football last June after being suspended by Fifa pending the outcome of the inquiry.

Following Warner's resignation, Fifa said the ethics committee case against him was closed and the "presumption of innocence is maintained".

Bin Hammam, who continues to deny the allegations, was then banned from football for life by Fifa in August. His case is currently under appeal at the Court for Arbitration in Sport.

In a separate development BBC Sport has also learned that two apartments, worth $800,000, located in Miami's exclusive South Beach district were purchased under Blazer's guidance in May 2010.

It is understood Concacaf's executive committee did not discuss their purchase. The apartments were bought - and registered - through Concacaf Marketing & Television - a wholly owned, Florida-based subsidiary of Concacaf.

Concacaf delegates last week voted to have Blazer removed from Fifa's executive committee but failed to get their motion added to the Fifa Congress agenda in sufficient time to gain its required approval.