Blood Profits

by Vanessa Neumann

  It is huge: the sports market—including teams, stadia, merchandise, and broadcasting rights—accounts for almost 2 percent of gross global product (GGP). That is without the larger parallel market of illegal sports betting. The majority of the value lies in services (television broadcasting deals and sports betting), rather than the physical goods of the teams, stadia, and merchandise.

  The media are the primary source of funding for sports teams, more so than investments by their wealthy owners. The owners can then turn a profit in one of two ways: by trading promising amateurs they have trained and developed or, on the capital markets, by forming joint stock companies with tradable shares. “Following the money” is difficult for law enforcement, precisely because of the sophisticated manner in which value is generated in sport: the globalized markets of finance, consumption, ownership, broadcast rights, and sponsorship. No large football club has any national affiliation among these anymore.

  The simplest form of sport corruption is sport manipulation, the corruption of players: inducing them to participate in a fixed game—to take a loss, make a bad kick, lob, or dunk. The manipulation of sports competition is defined by our OECD task force as “an arrangement, act or intentional omission aiming to improperly change the result or the progress of a sports competition in order to totally or partially remove the unpredictability of that competition for the unwarranted personal material gain of oneself or others.”6 This encompasses four types of cases, two related to sports bets and two not7:

  1. A player or players purposely underperform, either to save their energy for a future game or to avoid facing a fiercer competitor.

  2. A player or players accept pay to alter an outcome, such as a boxer who “takes a dive.” This is corruption and covered by both criminal and disciplinary sanctions, though enforcement is lax.

  3. A player loses voluntarily because he has bet on his defeat, but is not externally manipulated. This is internal fraud: difficult to sanction criminally (because it is not usually codified in law) and usually dealt with through disciplinary sanction.

  4. A player loses voluntarily to allow someone else to win, when that someone has promised him an advantage or a payoff.

  The fourth is the most egregious form of match-fixing: it incorporates corruption and is the preferred form for organized crime syndicates. It runs afoul of both criminal law and the disciplinary code of any sport. Instigated and/or controlled by external criminals and groups in order to secure an illegal profit, it is also the most common and the most threatening of the manipulations.

  Europe is where the most cases of match-fixing have been discovered and prosecuted, likely because that is where the greatest value is and (ironically) where surveillance and judicial systems are more reliable. The most manipulated sport is the “beautiful game” of soccer (football to everyone outside the US). It is played on every continent and at all levels, so its popularity provides ample opportunity for betting, and a concomitant strong financial incentive for manipulation. The realities that players are temperamental and renowned for exaggerating injuries and that referees have a great deal of latitude without any instant replay to second-guess their decisions also help conceal bad calls, poor kicks, and faked injuries that can be used in a “fix.”

  Cricket is the second most manipulated game (particularly in Asia), but hanky-panky has also been uncovered in snooker (a form of billiards), basketball (particularly in the US), volleyball, wrestling, motor racing, boxing, badminton, and handball. However, true numbers, comparative or absolute, are hard to ascertain, as some federations have few surveillance or fraud detection resources, and leagues are multitudinous.

  The sports betting market is so vast, liquid, and transnational, its bets have algorithms more complex than hedge funds. Chinese triads and many other criminal organizations launder money through sports betting, whether or not the game is fixed. Sports betting operators can themselves be owned by criminal organizations, and often evade taxes and regulations by operating transnationally out of jurisdictions that provide permissive environments, such as the unregulated Internet. The big money at play in sport betting provides the financial incentive for sport manipulation.

  The enormous liquidity of the financial market around sports makes these illicit transactions extraordinarily difficult to spot. Some of the wilder (and perhaps more questionable) bets that paid off 8 include:

  • That Frankie Dettori would ride the winning horse in seven races in a row

  • That the Saint Louis Cardinals would win the 2011 World Series (the odds were 999–1)

  • That Germany would beat Brazil in the 2014 World Cup, 7–1, and that Sami Khedira would score a goal. When the 2,319–1 odds prevailed, the $20 bet turned into a $46,000 win.

  • That the New Orleans Saints would beat the Indianapolis Colts in the Super Bowl. Billy Walters, a man called so “notoriously lucky” Las Vegas bookmakers prefer not to take his bets, wagered $3.5 million—and won.

  The multiplying complexity of the types of odds on which one may place a bet has transformed the market from one for amateurs to one for professional investors—as well as a preferred platform for money laundering. The 200- to 500-billion-euro transnational sport betting market is highly attractive to organized crime.9 “A bettor in one country can access an online betting platform located in another country to bet on the results of sporting events taking place in a third country in real time.”10

  The final form of corruption in sport is corruption in the leagues, such as in the FIFA case. The league executives can take kickbacks to grant broadcasting rights or to grant a major sporting event to a particular host country: such is the allegation in FIFA’s granting of the 2022 World Cup to Qatar. Evidence is showing that Qatar colluded with the Spain-Portugal bid to trade votes in the contest for the 2018 and 2022 finals. Qatar then bought the votes of other countries in various ways: it paid handsomely for a “friendly” match between Brazil and Argentina in Doha; it offered to relocate the headquarters of the Asian Football Confederation to Doha. The crux, though, is FIFA presidential candidate Mohamed Bin Hammam, a Qatari, and Amadou Diallo, a Guinean national accused in the British Parliament of facilitating bribes on behalf of Qatar’s World Cup bid. They were close colleagues and collaborators for more than six years. Bin Hammam and Jack Warner are facing stiff disciplinary action for allegedly offering bribes to members of the Caribbean Football Union in exchange for votes in an upcoming election.11

  THE LURE OF LUCRE

  The International Center for Sport Security estimates that the global sports betting market is worth around $1.5 to 2 trillion. This is nearly equal to the World Bank’s estimate of the gross domestic product of Russia, which was $2.1 trillion in 2013. In 2013, it was claimed that $15.5 billion a year was made by organized crime from fixing matches. This seems entirely reasonable when one realizes that up to $2 billion was being wagered per match in the 2014 FIFA World Cup. In the US, where sports betting is legal only in Nevada, the illegal market is the invisible part of the iceberg. About $100 million is bet legally on the NFL’s Super Bowl; $3.8 billion is bet illegally. The illegal pool is thirty-eight times the size of the legal pool.12

  Worldwide, most gambling havens are also tax havens: places where weak regulation and anonymity are not only prized but monetized assets. Panama is an example; so are many Caribbean islands, like Aruba and Curaçao and the Bahamas. From these tax and gambling havens, sporting bets operators offer their services via the Internet, without the required licenses. According to a joint study of the Sorbonne and the ICSS in 2012, “80 percent of today’s global bets are illegal.”13 The winnings are transferred into bank accounts in well-regulated countries, and in that way illicit money is not only transferred, but laundered.

  Up to US$140 billion (a full 10 percent of global revenues of organized crime) are laundered through sporting bets,14 yet illegal betting is not usually an offense, much less a crime. So there is no risk and few deterrents to laundering vast sums of money this
way. This is a win-win for both the client and the service provider. Money launderers are great clients for gambling operators because they agree to regularly lose a lot of money without jeopardizing the financial interests of the fixed-odds operators.

  Large established, legal, and regulated betting establishments such as Las Vegas casinos, however, would have a reason to help law enforcement. In 2014, a Malaysian with a net worth of US$300 to 400 million, who was also a renowned high-stakes gambler, was arrested with his son and six others in Las Vegas’s Caesars Palace hotel. They had asked casino personnel to set up a large amount of electronic equipment and began running a billion-dollar illegal gambling operation right from their residence in Caesars Palace. When the personnel recognized the similarity with the casino’s sports books and betting odds for Web sites that were illegal in Nevada, they saved themselves from complicity by contacting the Gaming Control Board, which then launched an investigation in conjunction with undercover law enforcement. The ringleader was a high-ranking member of the Hong Kong–based 14K triad and owned IBCbet (one of the two online betting platforms he was using—the other was SBOBET), one of Asia’s largest online gambling Web sites.15

  Chris Eaton, the director of sport integrity at the ICSS (he was previously at Interpol and FIFA), says that all sports are manipulated, and that such corruption is “huge” in badminton.16 The money mainly flows into and out of Asian organized crime syndicates. It is a $2 billion-a-week turnover for triad-controlled Asian bookmakers.

  “It’s as big as Coca-Cola. And it does not produce anything. It’s just paper,” says Eaton.17

  Other estimates peg the value of Asian gambling on sports at $1 trillion per year, with 90 percent of it (a full $900 billion) being illegal, “wagered in the dark.”18 The trio of illegal online lotteries, betting, and gambling has been called the “Wild West”19 of illicit finance. Nigeria, with broad swaths overrun by Boko Haram, is a case in point.

  The Lottery Regulatory Commission is only concerned with the regulation of the operation and business of the national lottery of Nigeria. Nigeria has strict gambling laws, yet due to a lack of enforcement, hundreds of illegal online lotteries, betting and gambling schemes, slot machines, underground casinos, and football betting all operate freely, with lax regulation and no strong consumer advocacy groups to protect the individuals and families who lose money to dangerous criminals or terrorists. Neither the Economic and Financial Crime Commission (EFCC) nor the Nigeria Communications Commission (NCC) has the mandate to regulate the nearly 9,100 retail lottery terminals currently available in Lagos, Abuja, Port Harcourt, Aba, Benin City, Enugu, Ibadan, Onitsha, and other major cities.

  The easiest games to manipulate are those that do not matter for advancement in professional leagues—i.e., the “friendlies.” Criminal syndicates themselves can set up these matches in order to manipulate them. This scheme is effective and lucrative because of the dual willingness of bettors (who bring the cash liquidity) and the players. The players themselves don’t much care whether they win or lose a friendly, as it does not impact team ranking, so they are happy to take the money the fixers offer them. The bettors, on the other hand, feel tremendous national pride in these national games of their country playing against another, and so wager a lot of money.20

  In betting on national games, even if the match is just a friendly, the bettor has to root for his or her country. For the bettor, it is a matter of national pride in a country-versus-country contest. The national supporters for each team place their bets, putting a lot of liquidity into the system, from which the criminals may draw their winnings—sometimes with dire consequences for the patriotic bettor, who is not in on the fix. Once again, the criminal entities profit from the manipulation of the emotions of an uninformed consumer: the sports fan.

  When a young student placed his bet in the African Cup of Nations that Angola21 would defeat Mali, the bet seemed a safe one: Angola was winning 4–0, with eleven minutes left in the game. He wagered his entire student loan funding of £4,400 on the outcome, and—against the odds—lost, as Mali made an incredible comeback over Angola. The kid lost it all. Such stunning against-the-odds-and-the-clock comebacks are just the sorts of events that spark the interest of sports integrity investigators.

  Not only do bookmakers take bets on actual matches, they also take bets on “ghost matches”—matches that have not actually been played. Yet major legal bookmakers post odds and results and pay out winnings, while their onsite data operative reports confirm the match and the stats.22 These operatives are the key to the ghost matches. With so many matches being played in so many places around the world at so many different levels, the lower-level games have scouts dispatched to them. They may be paid as little as $50 a game, and are easily bribable by some crime syndicate representative who wants their help in reporting the details of a match that never took place so that the syndicate can take bettors’ money and/or launder its own. It could hardly be simpler, really.

  CAN MATCH-FIXING BE FIXED?

  Ultimately, though, money talks—specifically: the money of corporate sponsors. In early October 2015, Coca-Cola, Visa, McDonald’s, and Anheuser-Busch InBev (AB InBev) grew tired of the tarnishing of their brands by being seen as patrons of corruption, and called for Sepp Blatter to step down23—particularly when the investigation turned to his own personal corruption. By early December 2015, Coca-Cola had penned an open letter to FIFA, urging it to embrace reforms and create an independent oversight committee, and posted the letter on its Web site.24 Adidas, AB InBev, McDonald’s, and Visa also signed it. In the end, though, everyone’s outrage faded and the corporate sponsors went back to business as usual.

  People’s appetite for gambling, though, is not going to go away. Making it illegal does not work: it only makes the gambling “dark.” One proposed solution is to make it more legal and regulated, and thus more transparent. As for league corruption and match-fixing, the solution lies with consumers—sports fans: they have to demand that their sport and their sporting heroes be returned to them. They must pressure the leagues to eliminate corrupt players and boycott corporate sponsors who fund crooked leagues.

  Chris Howard explained the multifarious interests, from the top down in sports and sports betting, thus:

  Well, the government sees it two ways. It sees it as a piece that unifies a country—sport is a process of bringing people together. So it always wants to make sure … If football is the number one game in your country, you as a Prime Minister or President, you want to make sure that there is [sic] games being played, and people like a good outcome. So there are some people who use it in that way. Taxation, and also, kickbacks. There are some governments that use it for the sports betting market and the market has a way of funding. So, to some degree, it works for the government. And also, it’s a protection thing: if you really don’t want the police to look at it, you should just own the government, and the government will say to the police: “Turn a blind eye.” And in some cases, the government doesn’t want to recognize this, because, I’ll tell you what, the government says, uh, sitting around the table, what problem is this? You go to the prime minister and you say: is it a sport problem? Or is it a police problem? Or is it a gambling problem? Or is it a cyber-crime? Where did this money come from? Or is it the sporting federation? It is such a complex piece that people pull back.

  NEW TEAM

  In the summer of 2015, I had to clean house in my business. It was Chris who first realized that three of my key personnel were betraying me, by stealing corporate property and trying to steal clients. I acted swiftly and decisively.

  “Can you take over running my intelligence operations?” I asked Chris, showing him some of the work we did. He perused some briefs containing personal identifying information of smugglers, routes, political facilitators, and their associated crimes.

  “That’s so hot, babe. You’re so badass. It’s so sexy.”

  I asked again. “Can you take over running my operations?”


  “Absolutely. I can do it with my eyes closed. It’s what I’ve been doing for twenty-five years.”

  “Great. You’re hired.”

  “Get on the next flight to D.C.,” advised Chris, “and cut them off at the pass.”

  That’s exactly what I did, and my clients stayed with me. I then signed a new contract to map and disrupt a crime-terror pipeline from Eastern Europe through Iraq and Syria and into Turkey, where Chris’s expertise in corruption and money laundering and competing tribalism would be invaluable. Unsurprisingly, even though we were working the problems of a different industry, some of the money was laundered through sports teams and gambling operations with which Chris was familiar. Now every time I see a Knicks game, I wonder how much dark money is flowing, and to whom, and whether the fan merchandise is real or counterfeit, and if it’s funding some Islamist in Panama.

  10

  Trading in Sickness and Violence

  MALARIA AND ISLAMISM

  I carved gently into my aller retour steak—“come and go,” for a steak whose two sides have touched a searing pan but is otherwise raw. In early September 2015, I was having lunch at La Grande Armée, in Paris’s posh 8th arrondissement, with Jean-Luc Moreau, a former French spy from the DGSE (Direction Générale de Securité Exterieure, the French CIA), whose private sector transition was to head corporate security at pharmaceutical behemoth Novartis. Pharmaceutical companies hire a lot of spooks. It was during that lunch that Jean-Luc, a genteel roué whose rumpled expression tells you he has seen more than he cares to discuss, first told me about the Coartem case, where pharmaceuticals given to NGOs were diverted to fund corruption, criminality, and religious radicals thousands of miles from their intended recipients.