The Justice Department unsealed a 47 count indictment against 14 defendants in the FIFA bribery scandal yesterday. The DOJ charges are for racketeering, wire fraud and money laundering. I’ve already been asked this morning by one of our contacts if this is the sort of thing that might lead to a whistleblower reward. Since we know that there is a FIFA whistleblower, it’s a great question.
The Justice Department doesn’t have a catch-all incentive program for whistleblowers. Frequently, cases prosecuted by the DOJ relate to fraud against the government and are brought against corporations by relators through the False Claims Act. The FCA provides specifically for rewards, and the DOJ pays out hundreds of millions a year under it. But this isn’t a False Claims Act case.
That’s not the end of the analysis, however. There are other aspects of the case that might eventually lead to a reward or bring this action within the scope of a reward program.
There’s definitely potential for an FCPA penalty to arise from the allegations. The complaint alleges bribes paid in connection with the Brazilian National Soccer team by a major U.S. sportswear company. The media has reported that this unnamed company could be Nike based on the details that have been released. If the SEC or DOJ determines the bribes were paid to any officer or employee of an instrumentality of a foreign government, then it would fall within the purview of the SEC and its whistleblower program.
If the SEC were to fine Nike for FCPA violations, then this could obviously be the subject of a reward. And this isn’t the only way for the case to move into the realm of the Securities & Exchange Commission. The DOJ is also reportedly investigating the banks involved for their role in the money laundering. Although this sort of investigation need not lead to an SEC investigation, because they are not per se violations of the federal securities laws, there are aspects of it that could implicate SEC rules, such as the record keeping requirements.
If the SEC were to fine any of the players involved, then the DOJ prosecution would become a related action as it is defined by the SEC whistleblower rules. It’s also possible that the Justice Department prosecution would be considered a related action even if there is no SEC fine. The scope of a related action under the Dodd-Frank programs has not been fully tested yet.
Update: The research that I have seen suggests that the Brazil soccer team is a private entity and not government sponsored. However, some have suggested that given the high profile nature of the case, an action might still be brought against Nike for a violation of the internal controls provisions of the FCPA.