POLITICS/SPORT-BRAZIL: Congress and Gov’t Open Football’s Black Box

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Nov 22 2000 (IPS) - Brazilian football’s flaws are many: falsification of passports and birth certificates, evasion of taxes and social security payments, and trafficking in adolescents – just some of the charges now under congressional and government inquiry.

Two Parliamentary Investigative Commissions (CPI), one made up of senators and the other of deputies, were established a month ago to look into the activities of Brazil’s football industry, prompting the media to follow suit. In addition, fiscal and banking authorities and the police are investigating irregularities.

The clubs dominating professional football here have evaded social security contributions valued at 218.5 million ‘reais’ (114 million dollars) in the last few years, Waldeck Ornelas, Social Security Minister, testified before the Senate CPI.

With non-profit business status, the clubs enjoy a fixed contribution level that is lower than that paid by other companies, but have used various ploys to avoid paying what they should, charged Ornelas. For example, they do not report the high salaries paid, he said.

Under these conditions, tax evasion is believed to be widespread. Many famous football players, like Romario, the striker who was decisive in Brazil’s 1994 World Cup victory, and coaches apparently owe millions to the fiscal coffers.

Another area in which million-dollar sums disappear is the transfer of footballers to clubs overseas. In this case, Brazil’s Central Bank is taking action because it involves money that should be in the reserves of a country whose foreign accounts suffer difficulties.

The sums the clubs declare to authorities are much less than what they report to the sports media, which generally provide more detailed and precise information about the football world to the sports-crazed public. The press has become a source to help financial officials identify irregularities.

The Central Bank is now investigating more than a hundred Brazilian players transferred abroad from 1992 to 1997 for suspicions that not all the profits from the transactions were reported to government authorities. In many cases, the funds were detoured through tax havens in the Caribbean.

Fraud totals could reach hundreds of millions of dollars, suspects the president of the Senate inquiry commission, Alvaro Dias. In one transaction, the 1997 “sale” of forward Denílson to the club Betis in Spain, 30.5 million dollars changed hands.

Given the European Union’s ban on any one team putting more than three foreign players on the field, some intermediaries have taken to falsifying Brazilian players’ passports. With documents from Portugal, for example, the Brazilians could get around the restriction.

But the crime was not perfect. Fraudulent documents were revealed earlier this year when one player – sold to the British club Arsenal – was not allowed to disembark in Great Britain with his Portuguese passport, and he had to return to Brazil.

Since then, at least seven more cases were uncovered, triggering expulsions and lawsuits. In attempts to untangle the web, Brazil’s Federal Police are questioning intermediaries, such as Uruguayan Juan Figer, a resident of Brazil, and players and officials of the clubs involved.

The potential for major profits led to the proliferation of a new type of entrepreneur: the football talent scout, who takes advantage of the informality reigning in the sports world. Some are owners of the players’ transfers, a link whose profits are based on the talents of each footballer.

In Brazil, there are just 19 intermediaries accredited by the Federation Internationale de Football Association (FIFA), but there are at least 300 working illegally, affirmed Leo Rabello, one of the accredited agents, in his testimony before the CPI.

The irregular agents are committing a serious crime, a sort of trafficking in minors, by promoting the emigration of promising young players to train with European teams. It is a crime that must be investigated, stated Rabello.

The expectations of fame and fortune in the wealthy European football market attract many adolescent boys, but failure and subsequent marginalisation are much more frequent, and that is what concerns the authorities.

FIFA will initiate a ban on any international transfer of players under age 18, announced the federation’s president, Joseph Blatter, of Switzerland.

The Chamber of Deputies CPI is focussing its attention on a contract that awoke suspicions – the role of the transnational sportswear and footwear giant, Nike, as a sponsor of the Brazilian national football team.

Nike is paying the team almost 400 million dollars over 10 years, beginning in 1996, to advertise its products. In exchange, the company holds rights over 50 matches during the decade, not including official tournaments.

Brazilian football officials had to negotiate a reduction in the number of games because the original terms of the contract would have meant an excessive effort by the team this year and next. The national team is caught up now, for example, in the South American classification series for the 2002 World Cup.

What most worries the lawmakers on the Chamber of Deputies CPI is Nike’s interference in the team’s activities. For example, the agreement stipulates that certain players who personally hold endorsement contracts with Nike must play in specific matches.

One such example would be Ronaldo, now a member of Italy’s Inter club and recovering from a serious knee injury. Many in the world of sports journalism suspect that Ronaldo was forced to play in the final game of the 1998 World Cup in Paris by heavy pressure from Nike.

The Brazilian team’s star had suffered convulsions just hours before the final game, but he joined the line-up on the field to take on France, which won the World Cup on its home turf.