http://www.smh.com.au/world-cup-2010/world-cup-news/tortuous-trail-of-our-world-cup-bid-20100630-zmtn.html
Tortuous trail of our World Cup bid
July 1, 2010
Australia's efforts to host the 2022 World Cup may have involved some questionable use of taxpayer money, Richard Baker and Nick McKenzie reveal.
When it comes to the world of sports politics, Jack Warner may be the most scandal-tainted man with whom Kevin Rudd has ever posed. In the last decade, the FIFA vice-president and Trinidad and Tobago football boss has repeatedly been accused of abusing his position as an international football official to enrich himself and his family.
The scandals include acquiring lucrative sports broadcasting rights for a pittance and allegedly stealing sponsorship funds from his home nation's soccer team.
In 2006, the Warner family travel company, Simpaul, was found by auditors to have made more than $1 million scalping World Cup tickets. An official FIFA file from March 2007 states that Simpaul was ''ordered to donate'' these improperly gained profits to charity.
But last year, as Rudd clasped Warner's hand and smiled for the cameras at the Commonwealth leaders meeting in Trinidad and Tobago, the scandals seemed old news. For Warner is a man Australia is assiduously courting with a firm eye on the future. On 2022 to be exact.
As one of 24 on FIFA's executive committee (Exco), Warner in December will help decide which nations will host the 2018 and 2022 Cups. As a contender for 2022, Australia is counting on Warner's support in the later rounds of the FIFA ballot.
Assisting Australia to court Warner is Football Federation Australia's highly paid lobbyist, Peter Hargitay, who helped arrange the Warner-Rudd meeting.
It is understood that Hargitay was also involved in arranging, at Warner's request, the sponsorship by the FFA of a trip for the Trinidad and Tobago under-20 men's football team to a training camp in Cyprus last year.
The trip would have cost the FFA - presumably using Australian taxpayer money - tens of thousands of dollars. The Warner family's travel company, Simpaul, was involved in arranging part of that trip, however, the FFA said yesterday all its dealings with the Trinidad and Tobago soccer team were through a separate and unrelated travel company.
It is also believed Hargitay was involved in, or at least knew of, a trip to Australia offered by the FFA to Warner supporter and a South American FIFA Exco member, Rafael Salguero, and his wife in December, as well as other gifts given to Exco members by Australia.
Hargitay says he had ''no'' knowledge of any gifts and that giving them ''is against FIFA regulations''.
The fact the Australian government has given $45.6 million to the FFA's bid campaign, and is backing it publicly, raises questions about how much due diligence has been done on the funding of grants, consulting fees and gifts.
Hargitay is not the only international soccer lobbyist on the FFA payroll. So too is Fedor Radmann, a German businessman who speaks four languages, loves opera and mountaineering, and, who from 1979 to 1989 was managing director of sports marketing company ISL. He is also a man rich in apparent conflicts of interest between his business interests and sporting associations.
The European company has been embroiled in a long-running Swiss court case over alleged bribes to FIFA and other sporting officials. The case was settled earlier this month after key participants agreed to make big payments. A Swiss prosecutor affirmed comments from a judge that ISL had made improper inducements. Radmann's name was not aired in the court hearings and the Herald has no evidence, and is not suggesting, he was party to any of ISL's allegedly corrupt activity.
But there is documentary evidence tying Radmann to other questionable dealings. In 2003, German media (and later the BBC) aired allegations he was engaged in highly unconventional business dealings to win favour with FIFA officials.
At the time, Radmann was working with legendary German footballer turned administrator Franz Beckenbauer as he led Germany's bid for the 2006 Cup. In 2000, shortly before the FIFA officials voted, Radmann was tied to a scheme to channel large payments, involving broadcast rights to matches, to ''trust accounts'' associated with at least three FIFA officials.
In an associated deal, $1 million in consulting fees were sent to a Lebanese racehorse owner, Elias Zaccour, who was very close to leading FIFA officials.
The German media suggested these payments were sweeteners to impress key FIFA officials. Radmann and the FIFA executives allegedly involved dismissed the claims, despite the evidence. Radmann has not responded to the Herald's questions.
Also in 2003, the German media focused on a series of lesser scandals involving Radmann: that while he worked on Germany's Cup organising committee, he was also working for businesses that stood to gain from the committee's work. A media uproar saw Radmann stand down, although Beckenbauer kept him on as an adviser.
In 2005, Radmann popped up in the media again, when the Financial Times revealed he had sat on a tendering panel that had awarded a lucrative contract to a German graphic designer, Andreas Abold.
The Times said Abold, a highly respected and successful designer specialising in big event marketing and publications, was a good friend and business partner of Radmann when the contract was awarded.
Indeed, Abold and Radmann had worked together on Germany's 2006 World Cup bid. When the FFA came knocking, the men were still close.
Not that the FFA wanted anyone to know. Australian press reports arranged by the FFA that mentioned the recruitment of Abold did not mention Radmann.
As secret FFA documents from 2009 reveal, Abold was awarded two Australian government-funded contracts after being appointed early in 2009. These were handed out in confidential deals, involving no or minimal competitive tendering.
The first contract is worth $3.2 million and is labelled ''Abold 1: Bid Book Production and Advice''. It requires Abold to help design and produce Australia's bid book, a crucial marketing document that promotes the nation's case to host the Cup. The second is more mysterious. Worth $3.7 million , it is labelled ''Abold 2: International Relations/ Advocacy''. But it may be more accurate to label it the Abold and Radmann contract. For, as other confidential FFA documents make clear, the Abold 2 contract actually goes, at least partly, towards financing Radmann's duties.
It also includes a very hefty bonus to ''FDR'' (Radmann) should Australia pull off a World Cup win. So exactly what is Radmann doing for Australia?
FFA documents indicate Radmann's role is to help identify and profile FIFA Exco members who may vote for Australia, and to set up meetings with them. Despite an internal document stating Radmann is to help manage the FFA bid's international ''strategy'', the man doing a similar task, Hargitay, tells a different story.
Hargitay told the Herald Radmann's role was limited to ''extending technical advice [mainly pertaining to the bid book] to the FFA''.
Sources close to the government confirm Hargitay and Radmann are both working on strategy and lobbying. But Hargitay stresses that his dealings with Radmann are minimal. ''I have met Mr Radmann several times in that technical function,'' he says. However, the Herald understands that Radmann's perceived utility, both in Australia and overseas, is his closeness to FIFA Exco members, including Beckenbauer. Indeed, this relationship may have helped the Australian bid win public backing from Beckenbauer, who in December described the FFA's bid as ''perfect''.
While Radmann did not respond to questions about his work for Australia, the Hungarian-born Hargitay is more forthright about his own activities.
In 2002, Hargitay worked as adviser to the FIFA president, Sepp Blatter, and began building his relationships with FIFA officials. Before that, he had a colourful past as a public relations man who had twice been acquitted of drug trafficking charges in the US and Jamaica. He now has a letter of apology from the Jamaican government.
The FFA chairman, Frank Lowy, and Hargitay were reportedly introduced several years ago, when Hargitay was still working for Blatter and had offered to use his lobbying skills to propel Australia's ultimately successful campaign to join the Asian Football Confederation in 2006.
Hargitay was recently quoted on the relationship: ''I have maximum respect for him [Lowy], I love him, actually; he is one of the few people who understand where I am coming from.''
Hargitay recently told a sports journalist that while in South Africa for the World Cup, he has a daily coffee with Asian football boss and Exco member Mohamed Bin Hammam. Earlier this month, he told a Herald journalist that he also spoke regularly with Blatter and had ''his trust''.
Some who follow football politics closely believe Hargitay's FIFA influence is overstated. One is journalist Andrew Jennings (who has worked for the BBC's respected Panorama program), who dedicated two chapters in his book about FIFA, Foul , to Hargitay. Jennings questions whether Hargitay is worth the taxpayer dollars the FFA is paying him. ''When you look at what he has actually delivered for Australia, it is hard to see anything concrete,'' he says.
For his part, Hargitay says Jennings is obsessed and has repeatedly threatened to sue him, although has never done so.
But other journalists also recently questioned Hargitay's value to Australia after Bin Hammam declared - in a statement that appeared to take the FFA by surprise - that he would not support Australia's bid to host the Cup in 2018. A short time later, the FFA said it would drop its 2018 bid and focus on 2022.
Australia's overseas lobbyists also face the reality that while there are FIFA figures seemingly open to persuasion, many FIFA bosses have wealth and connections that make them difficult to influence.
For their troubles, Radmann and Hargitay stand to pocket up to $11.37 million in taxpayer funds. Hargitay is being paid $1.35 million and his success fee is $2.542 million, while Radmann's payment, made via the Abold consulting firm, is $3.491 million (it is not clear if a portion of this will go to Abold). Radmann will pocket a $3.99 million success fee if Australia's bid is successful.
On Monday, Hargitay refused to disclose to the Herald the size of his bonus but said that the FFA paid his firm just under $44,000 a month for ''a team of three consultants and support staff''.
The Gillard government has yet to give a detailed explanation about whether it knows of and supports the manner in which the FFA is spending its money. The Minister for Sport, Kate Ellis, indicated yesterday any suggestions of wrongdoing would be investigated.
Confidential FFA spreadsheets from mid-2009 suggest the federation chose not to disclose to the government specific details of the payment structure for Hargitay and Radmann, or its plans to give $6.5 million in taxpayer funds to football bodies in Africa, Asia and Oceania.
Curiously, the same spreadsheet shows the government was given different - mostly inflated - figures than those given internally to the FFA's managers about how much public money would be spent on public relations, community relations and the preparation of Australia's bid book.
The FFA insists everything is above board and that its accounting practices are exemplary and independently audited.
''Consistent with standard management practice, FFA maintains a more comprehensive breakdown of expenditure and forecasts for day-to-day internal management purposes and accountability,'' says the chief executive of FFA, Ben Buckley.
On the question of whether overseas lobbyists should be earning large tax-payer funded fees and bonuses from Australia, Buckley is resolute.
''However you may choose to portray these consultants or regurgitate unsubstantiated stories written by others in the past, these consultants have been and remain invaluable assets to our bid,'' he says.
The FFA believes the Australian government, and public, agrees with this. The last word should be left to Hargitay, who recently stated that Australia's bid had a special obligation because it is taxpayer funded: ''This means that every single thing must be above board.''
