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4-Traders Homepage  >  Equities  >  Nasdaq  >  Twenty-First Century Fox    FOXA

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Twenty First Century Fox : Witness Says Fox Sports Joint Venture Is Tied to Bribes Around Soccer Events

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11/15/2017 | 02:36am CET
By Rebecca Davis O'Brien 

An executive with a joint venture partly owned by Fox Sports signed a phony contract in January 2008 with an Argentine media company to facilitate $3.7 million in bribes to Latin American soccer executives, according to testimony and evidence presented Tuesday in the FIFA corruption trial in New York.

The alleged bribes were intended to secure -- for Fox and an Argentine partner -- the lucrative television rights to two FIFA tournaments in South America, the Copa Sudamericana and the Copa Libertadores, according to the testimony of Alejandro Burzaco, a government witness.

The testimony took place in the federal court in Brooklyn on the second day of the racketeering trial of three former South American soccer officials, who are charged with receiving or soliciting bribes in connection with media and marketing rights for various FIFA tournaments.

From 2006 to 2015, Mr. Burzaco served as chief executive of Torneos y Competencias, an Argentine sports media company. He was arrested in May 2015 as part of the U.S. prosecutors' initial wave of corruption charges against FIFA officials and sports marketing executives.

Mr. Burzaco pleaded guilty, admitting to paying millions of dollars in bribes to FIFA executives. He is now a cooperating witness for the government, and in his testimony has described himself as an insider at Conmebol, FIFA's South America's soccer confederation, with an ability to broker deals between companies and Conmebol officials.

In 2000, Torneos joined with Traffic, a Brazilian company, in a joint venture known as T&T, according to evidence and Mr. Burzaco's testimony. In 2002, a joint venture formed by Fox and others called Fox Pan American Sports took over Traffic's 50% stake in the partnership with Torneos. In 2005, Fox increased its ownership to 75%, according to Mr. Burzaco.

A lawyer for Traffic couldn't immediately be reached for comment. Traffic Sports USA and Traffic Sports International pleaded guilty to wire fraud conspiracy in 2015. Two Traffic executives also have pleaded guilty in the case.

Mr. Burzaco testified that Fox's "main interest" was expanding Fox Sports' reach throughout the Americas, in the form of TV rights to events with increasing popularity.

Mr. Burzaco said T&T paid hundreds of thousands of dollars worth of bribes to more than a half dozen top Conmebol officials every year, from 2006 through 2015, in exchange for continued support and contract extensions. Some officials were paid through Swiss bank accounts, while others received bags of cash or money wired to accounts in what Mr. Burzaco called "exotic" locations in the Middle East and Asia.

Fox hasn't been accused of wrongdoing in the case, and no Fox executives were charged in the matter. (Fox Sports parent 21st Century Fox and Wall Street Journal parent News Corp share common ownership.)

A Fox Sports spokeswoman said: "Any suggestion that Fox Sports knew of or approved of any bribes is emphatically false. Fox Sports had no operational control of the entity which Burzaco ran."

Asked by Assistant U.S. Attorney Samuel Nitze which business partners T&T "kept informed" about these alleged annual bribes, Mr. Burzaco answered Fox Pan American Sports.

In 2008, T&T paid at least $3.5 million in what Mr. Burzaco called "special bribes" to five Conmebol executives to extend contracts with Conmebol to broadcast the two tournaments from 2012 through 2018.

Through the extensions, Mr. Burzaco said, Fox Sports, via the joint venture, "gained leverage and rights to broadcast and distribute its signal from the U.S. to Argentina for four more years," along with other benefits.

Mr. Nitze then showed Mr. Burzaco another contract, a "private agreement" between T&T and Somerton, a company that according to the contract was based in Turks & Caicos.

Mr. Burzaco said Somerton was "an intermediary vehicle" used by T&T to "generate bribes and redirect payments" for the contract extensions. "It is not a real contract," Mr. Burzaco said.

He identified a signature on the back, dated January 21, 2008, as belonging to James Ganley, the former chief operating officer for Fox Pan American Sports. A lawyer for Mr. Ganley didn't respond to requests seeking comment.

According to the agreement, T&T would pay Somerton $3.7 million. Mr. Burzaco said Tuesday that the intended recipients of that money were the five Conmebol executives.

In a full day of testimony, Mr. Burzaco described the "royal treatment" enjoyed by top Latin American FIFA officials -- Mercedes-Benz escorts, shopping trips for spouses, allowances, cruises on the Danube River -- and the millions of dollars in bribes he helped provide them.

Mr. Burzaco also recounted dinners at which bribes were discussed, fights among soccer officials about payments, and one hostile encounter in a Zurich bathroom between three top FIFA officials about rigged votes for World Cup hosting responsibilities.

--Joe Flint contributed to this article.

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