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Quest Means Business
FIFA Officials Charged With Corruption; Sponsors React to FIFA Corruption Charges; FIFA Officials Accused of Taking $150 Million in Bribes; US Markets Rebound; European Stocks Rally
Aired May 27, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Makers of baby clothes Carter's celebrating 150 years. That baby is going to do well, bearing in mind the Dow Jones is up
more than half a percent, a gain of 121 points. Let's see.
(GAVEL POUNDS)
QUEST: All right, I officially declare that a wimpy gavel on Wednesday, the 27th of May.
Tonight, the FIFA empire is crumbling, with stunning corruption charges being filed in the United States. We have all the details.
We're going to be talking about the sponsors' backlash begins. FIFA's partners saying we want answers.
And the view from the top of the tower. A tour of the new World Trade Center skydeck here in New York.
I'm Richard Quest. I mean business.
Good evening. The beautiful game has been hijacked. Those are the words tonight as FIFA is in crisis following top officials being charged
with corruption. The United States attorney general called a campaign of briberies and kickbacks "rampant, systemic, and deeply-rooted."
For an organization that has been mired in controversy for so many years, now this organization, FIFA, is facing two investigations, possibly
of the gravest seriousness for its members, its employees, its executives, and the game of football.
And those investigations are on two separate continents. In the United States, this sweeping bribery, corruption indictment centered on
money laundering over the provision and broadcast rights. And in Switzerland, a criminal investigation looking into the highly-controversial
awarding of the 2018 and 22 World Cup awards to Russia and Qatar respectively.
Now, take all these together, and FIFA insists the presidential election, when Sepp Blatter is standing again to be appointed as president,
will go ahead as planned. And that's despite a strong warning from Europe's influential football body, UEFA, that the proceedings risk turning
into a farce.
FIFA in the past few hours is an organization in crisis. Alex Thomas has been following the day's events from Zurich, where there were charges
and where there was searches.
(BEGIN VIDEOTAPE)
ALEX THOMAS, CNN SPORTS CORRESPONDENT (voice-over): A rude awakening for FIFA and, quite literally, for the seven officials from world
football's governing body forced to rise from their beds at this Zurich hotel after an early-morning raid by Swiss police.
Later, in Miami, Florida, US federal investigators entered the offices of CONCACAF, the part of FIFA that runs the sport in Central and North
America and the Caribbean. Football has never seen anything like this: two separate criminal investigations targeting officials at the highest
level of the sport. Although FIFA president Sepp Blatter is not one of those indicted.
RICHARD WEBER, INTERNAL REVENUE SERVICES CHIEF: This really is the World Cup of fraud, and today, we are issuing FIFA a red card.
THOMAS: The US Department of Justice news conference was particularly damning, detailing allegations of fraud, racketeering, and money laundering
that sounded like a Mafia movie script. It was claimed that bribes helped secure the first-ever World Cup held in Africa.
Among those arrested in Zurich, CONCACAF president Jeffrey Webb, touted as a potential future FIFA president. World football's governing
body tried to put on a brave face.
WALTER DE GREGORIO, FIFA SPOKESMAN: This for FIFA is good. It's not good in terms of image, and it's not good in terms of reputation, but in
terms of cleaning up, in terms of everything what we did the last four years, in terms of the form process, this is good.
THOMAS (on camera): On an astonishing day, perhaps the most extraordinary aspect of all is the timing of the raids, coming 48 hours
before more than 200 global football bosses vote in the FIFA presidential election.
At the age of 79, Sepp Blatter's still the overwhelming favorite to retain his post. Although with US Justice officials promising to continue
their investigations, his fifth term in office could be even more scandal- ridden than the previous four.
Alex Thomas, CNN, Zurich.
(END VIDEOTAPE)
QUEST: As you would expect, CNN is covering this story on both sides of the Atlantic. Evan Perez is here with me in New York, and we'll be
discussing the latest charges.
[16:05:01] First, though, we go to Nic Robertson, who is live for us tonight in Zurich. Let's rattle through this, Nic. Is it likely that they
will postpone the vote for the presidency, or are they going to brazen it out?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: You know, UEFA has spoken. They've called for a delay. But it does seem at the moment
that they're a lone voice.
And certainly having heard what we've heard from Sepp Blatter, FIFA president, this evening saying that he welcomes this, that it was them that
set the Swiss authorities on this track, handing them a dossier late last year, that he welcomes the investigations by both the Swiss and the US
authorities, it does sound rather like at the moment that it is on track for the congress to go ahead and on track for the election.
QUEST: And we have these two very distinct investigations. I'm guessing at the moment, the criminal proceedings in the US are probably of
the more serious nature because they will involve potentially extradition.
ROBERTSON: Absolutely. The seven people that were arrested here, one of them has indicated to Swiss authorities, they say, that he is willing to
go ahead with a sort of a simple and potentially quick extradition to the United States. The other six appear to be digging their heels in.
Now the Swiss say it's up to US authorities within 40 days to submit more details and to begin what could be a much more lengthy extradition
process.
So, these are certainly the charges that are going to get most light and most attention in the short term. But the investigation the Swiss
authorities are doing is one that goes to the heart of every football fan, the questions over the selection of Russia for the 2018 World Cup and Qatar
for the 2022 World Cup.
So, that, for the fans, is also going to draw a lot of attention. And of course, no one's saying at the moment that there's likely to be any
change in those venues.
QUEST: Nic Robertson in Zurich for us this evening. US Justice officials say today's indictments are the beginning of the investigation.
Remember, you have that concerning on the award of the World Cup. Here it is corruption.
Let's join CNN's Justice Department correspondent Evan Perez. You were there as the charges were being read out. So, again, a lot of ground
to cover. Why is the US focusing on the television rights, these other issues, when most people are talking about the award of the games to Russia
and Qatar?
EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, this is what gives them, Richard -- this is what gives them legal jurisdiction in this case. And
according to what this indictment that was filed in Brooklyn today, a couple of things that they were focusing on, in particular, the awarding of
the 2010 World Cup to South Africa.
Again, one of the biggest moments -- one of the -- frankly, one of the great successes of FIFA and the World Cup, bringing the first World Cup to
Africa. And that has now been marred.
QUEST: But what were they alleged to have done?
PEREZ: Well, according to this indictment, according to the Justice Department, that was the result of bribery. That was the result of --
(CROSSTALK)
QUEST: The award?
PEREZ: The award of the hosting of the World Cup in South Africa was the result of corruption, as was the 2011 FIFA presidential election, which
Sepp Blatter has won, as he has in the last four.
QUEST: And the whole thing's mired in television rights as well.
PEREZ: Right, exactly. The US is still the largest market -- the US television networks pay more money toward the awarding of FIFA television
rights than anyplace else.
QUEST: One final -- to make clear to viewers with us this evening, now the Justice Department has started this process.
PEREZ: Correct.
QUEST: This isn't just going to go away, is it?
PEREZ: It is not going to go away. They say that there are still looking at individuals, at companies that were involved in some of this
bribery, the alleged bribery. So this is, again, the beginning. We notice Sepp Blatter, the focus of a lot of people's attention, was not among those
who were charged today.
QUEST: Thank you, sir.
PEREZ: Thank you.
QUEST: Now, talking about Sepp Blatter and not being amongst those arrested, officials did say an investigation into Blatter is continuing.
He's selected by members from FIFA's six members associations. Executives from the North and South American confederations are amongst those
indicted.
Jeffrey Webb is a vice president of FIFA and also head of the governing body for North America and the Caribbean. The 50-year-old was
born in the Cayman Islands and also works for one of that country's largest banks.
Jack Warner is Webb's predecessor on CONCACAF as president. He was also a FIFA vice president until he resigned following corruption
allegations in 2011.
[16:10:03] And Jose Maria Marin is a former head of the Brazilian Football Confederation. He headed FIFA's 2014 World Cup committee and
served as a governor of Sao Paulo in the early 1980s.
Joining me now is Chris Eaton, FIFA's former head of security and today's executive director of the International Centre for Sport Security.
Well, what does one say? "Rampant, systemic," corruption, and bribery is how the US prosecutors put it about. Do you agree?
CHRIS EATON, FORMER HEAD OF SECURITY, FIFA: It's absolutely accurate. I mean, this has been around and well-known in the football circles, an
open secret, if you like, in football circles for decades now. And certainly, it's reached a paramount amount in the last ten years.
QUEST: So, the decision -- to go down this road by the United States, what do you think finally prompted them? It's obviously been an
investigation over some years. But what would you say, from your knowledge, finally prompted them to go and start the arrests?
EATON: The scale of the results they had from the results they had from their early investigations. I think probably, undoubtedly, the
evidence of Chuck Blazer, when he first came across and gave them insider information about what had occurred. I think maybe even the US
investigators were shocked about the reality.
But they've done a very painstaking in a four-year investigation, and they've done something that no other police organization or other region
has done so far on FIFA.
QUEST: And that's the crucial point here, because they are not just talking about the 2018, 22 World Cup in Russia in Qatar. They are talking
about the South African, they are talking about the presidential election, and they are talking about the provision and the awarding of television
rights. Was it always believed that the television rights, contracts, and deals smelt to high heaven?
EATON: Look, it's been around as an allegation for a long time, and there's certainly been some substance to them in the past. The fact is,
there's been no jurisdiction that was able to take a report or to take action or to coordinate a global action such as the US has done today.
We knew it -- we're seeing for the first time a very powerful jurisdiction take action against a very powerful, opaque organization,
FIFA. Now, FIFA means business just like you do, but FIFA is not always as visible as you are. Now they have been looked upon very strongly, very
focused. They are now very visible.
QUEST: And if we take the fact that the Swiss have now also got involved, looking at the awarding of 18 and 22, I'm tempted to say a little
-- the Americans have a great phrase, a dollar short and a day late. It's a bit rich, X number of years after, when there's been more smoke than
flames to the conflagration. So, what do you make of the Swiss deciding to get involved now?
EATON: Perhaps they've realized that with one jurisdiction getting serious, they'd better get serious, too. They are, after all, the home of
almost the largest amount of sport governing bodies in the world.
So, Switzerland has a responsibility to take some action here, when we've had allegations against sport governing bodies here for decades. And
Switzerland has been very soft on this.
They've loved to have them in their jurisdiction, they've had the power of FIFA, the power of the IOC. It's time for these organizations to
act like the businesses they are, be accountable, responsible, and transparent the way they should be.
QUEST: Chris Eaton, a man who certainly knows his onions when it comes to his football. Thank you very much, sir, for joining us tonight.
When we return, it's all about money. Think about the profits that FIFA made on the last World Cup, some $2 billion. So, will the sponsors
decide it's time to ring the bell --
(RINGS BELL)
QUEST: -- on FIFA?
(COMMERCIAL BREAK)
[16:15:44] QUEST: FIFA calls the World Cup the most effective international marketing platform on the planet. And while there are many
sponsors, there are just five company partners. They are Visa, Adidas, Coca-Cola, Gazprom, Kia, and Hyundai.
Now Hyundai and Visa both came out with statements today saying no comment. We already have Kia, as well, and Visa. Visa did express concern
over migrant workers' conditions in Qatar last week and said it was "troubled" by reports coming from Qatar, and called on FIFA to remedy the
situation.
As for the latest arrests and allegations, Adidas says, "We expect the highest standards of ethics from our partners." A short while ago --
perhaps even a slightly stronger statement from Coca-Cola: "Controversy has tarnished the mission and ideals of the FIFA World Cup."
And arguably the strongest statement of all comes from McDonald's, who says, "Whilst McDonald's is not an official FIFA partner, it is a sponsor
for the 2018 World Cup."
And it goes further, saying the words, "McDonald's takes matters of ethics and corruption very seriously, and the news from the US Department
of Justice is extremely concerning. We are in contact with FIFA on this matter, and we will continue to monitor the situation very closely."
Put all of this together, and you've got to wonder what on Earth the sponsors are now thinking. Peter Shankman is a branding and social media
expert, and he's going to help us make sense of it all. The author of "Zombie Loyalists: Using Great Services to Create Rabid Fans." Tell me.
PETER SHANKMAN, BRANDING AND SOCIAL MEDIA CONSULTANT: Now we've got a story.
QUEST: Tell me, good sir, you are one of these five sponsors. You've known something's happening. But now this has happened.
SHANKMAN: Yes, that's the key. You --
QUEST: What do you do?
SHANKMAN: Well, you've canceled your dinner plans. You've canceled any summer trips you might be taking. You're not going to the opera
tonight. Essentially what has happened now with the Justice Department, all of a sudden, it's become an American story. OK?
There's US dollars involved, there's bribery involved, there's everything -- it's one thing to be able to hide human rights violations.
It's in Qatar, most people in America don't know soccer, let alone know where Qatar is, OK?
Once you start bringing in companies that people know -- McDonald's, Budweiser, soda brands, Adidas, shoes, sneakers, things like that -- all
of a sudden, it becomes an issue that the American people can relate to. That tarnishes the reputation of very, very important brands.
QUEST: And once there is an indictment and an extradition proceeding underway, the Justice Department -- look, we can argue about whether
they've been too soft on white collar crime with banks.
SHANKMAN: Right.
QUEST: But they don't go away, the Justice Department.
SHANKMAN: Exactly. They --
QUEST: It ends badly for someone.
SHANKMAN: It ends badly for a lot of people. Not only do they not go away, but now they have the authority and the ability to say, OK, you know
what? We want it, this is your indictment, now we want to see the records of everyone who's been involved.
And all of a sudden, these brands are saying, wait. You're going to sequester -- you're going to look at us? You're going to ask for our
information as well? That's where it starts to get really scary for these brands.
QUEST: So, what do they do?
SHANKMAN: Well, it's a good question. If -- while it won't go away, at the end of the day, soccer is a religion. Football as it is is a
religion. And you're not going to take away from the fans who are enjoying the game.
What is going to happen is when it starts to affect money, when it starts to affect profits, when it starts to affect --
QUEST: Right.
SHANKMAN: -- quarterly bottom line, you're going to look at brands saying, you know what? Maybe this isn't something we want to be involved
in. Now, you have to realize, you have to separate FIFA from soccer. OK?
(CROSSTALK)
QUEST: Yes, OK, no --
SHANKMAN: It's two completely different things.
QUEST: Right, but I think we can all do that. I think we can all sort of say, no one complains about the soccer, the quality --
SHANKMAN: Right.
QUEST: Unless their team's losing.
(LAUGHTER)
QUEST: But people can separate it. But at the end of the day, if you are sponsoring --
SHANKMAN: Exactly.
QUEST: -- the World Cup, you're --
(CROSSTALK)
SHANKMAN: At this point --
QUEST: -- you are sponsoring a FIFA. Because they have wrapped themselves in the World Cup.
SHANKMAN: Exactly. If I'm Adidas right now, I have my entire crisis management team in a room, I'm bringing them food, and I'm not letting them
leave until we have a scenario where this is resolved.
Because if you continue this -- down this road, and if more indictments are coming -- forget about the election, if more indictments
are coming, you're looking at companies that are now sponsoring companies that are indicted, sponsoring an event that is under indictment by the US
Department of Justice. That's not OK.
QUEST: So at what point do you --
SHANKMAN: All these --
QUEST: -- take the -- do you -- I mean, Emirates has already decided --
SHANKMAN: Yes.
QUEST: -- after 14 it's not doing any more.
[16:20:00] SHANKMAN: All of these companies do have clauses in their contract that say you know what? If anything really goes bad, and there
are indictments or there are lawsuits, things like that, we have the power to pull out.
They're not going to do that right away. But over the next couple of days, next couple of weeks, it's going to be very interesting to see what
companies do say good-bye.
QUEST: Thank you, sir, good to have you.
SHANKMAN: My pleasure.
QUEST: Now, Nike-y -- or Nike, depending on your pronunciation -- has released a statement after he DOJ raised questions over the sponsorship of
the Brazilian national team. The DOJ says bribes and kickbacks may have been paid in connection with the sponsorship of the CBF and, by quote, "a
major US sportswear company."
Nike has said, "Like fans everywhere, we care passionately about the game, and are concerned by the very serious allegations. Nike believes in
ethical and fair play in both business and sport, and strongly opposes any form of manipulation or bribery." On it goes. "We've been cooperating and
will continue to cooperate with the authorities."
The FIFA officials are accused of conspiring to manipulate one of the world's biggest revenue streams. It's the rights to tournaments like the
World Cup, the most lucrative broadcasting and marketing rights.
Now, FIFA sells those marketing rights to sports and marketing companies. This is the way it goes. From FIFA to the sports marketing
companies. The companies -- these are them -- they act as the middle men, who then sell the rights on to the various TV networks and to the various
corporate sponsors.
These contracts -- these -- it's this bit here -- that generates the money. Almost three quarters of FIFA's revenues. Rights to the 2014 World
Cup in Brazil were at around $4 billion. FIFA quickly announced it has banned 11 people connected with the investigation from football. But this
is the architecture with which they are dealing.
Jonathan Calvert joins me now from Zurich, the Insight Editor for "The Sunday Times" and co-author of the book on FIFA corruption. Sir, good to
see you. Thank you for joining us. And I suspect --
JONATHAN CALVERT, INSIGHT EDITOR, "THE SUNDAY TIMES": Hello.
QUEST: -- like everybody else, you are not necessarily surprised that this has happened, but you're aghast at the depth at which it's taken.
CALVERT: Well, I suppose I am surprised that this has happened, because we've been banging away at FIFA for several years, reporting
scandal after scandal, and nothing ever happens. And so, it's quite remarkable that today, you get not one, but two criminal investigations
into FIFA.
QUEST: What's your gut feeling for why now?
CALVERT: Why now is -- I suspect that this has been timed because the FIFA president, Sepp Blatter, is standing for reelection on Friday. I
think it's been coming for a long time. And we know that the FBI began investigating sometime around about spring 2011. And we've always wondered
how far the investigation would go.
And this is sort of -- this -- they've obviously been cooperating with the Swiss authorities. And there was a big investigation by FIFA's own
investigators into the Qatar 2022 and the Russian 2018 World Cup bids. And out of that, there was a complaint made --
QUEST: Right.
CALVERT: -- to the Swiss authorities. And these two things have come together at this time. But I don't think it's a coincidence that Blatter's
up for reelection this week.
QUEST: OK. So, the only issue, then, really, becomes how does the rest of football -- we know what UEFA has said tonight, and they are
considering whether they will even turn up to the congress.
But Blatter still has his supporters, and how will the rest of football -- will it view this as Yankee Doodle Dandy against the rest of
the world? The Yanks are trying to tell them how to run football?
CALVERT: I think that that football is tremendously divided. There are countries, such as Africa and Asia, and also the Caribbean, and also
South America, who are very, very firmly behind Sepp Blatter and don't accept that he's ever done anything wrong.
On the other hand, there are countries in Europe, America, Australia, who are just horrified by some of the things that have gone on on his
watch.
QUEST: Finally -- and I won't hold you to your answer, depending on how the week works out -- but does that vote for the presidency go ahead as
planned?
CALVERT: I would guess it probably does, because that's the way that FIFA normally do these things. They normally put their hands -- their
fingers in their ears, don't listen to the criticism, and just get on with it regardless.
QUEST: Sir, thank you for joining us this evening from Zurich. We appreciate it. QUEST MEANS BUSINESS --
CALVERT: A pleasure.
[16:24:59] QUEST: -- on a very busy day. The markets -- what a strong rebound there was. The Dow opened sharply higher and it never
looked back, and we'll tell you why after the break.
(COMMERCIAL BREAK)
QUEST: Down one day and a strong recovery the next. Look at the numbers: up 121 points, the rebound after heavy losses. We need to put
some perspective onto this. Paul La Monica is with me. Sir, what happened --
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Thank you.
QUEST: -- and why?
LA MONICA: It's really been a crazy two days, people coming back from the holidays. We had good economic data on Tuesday, the market freaked out
because everyone's worried, oh no, maybe the Fed raises rates in September after all, which is just --
(CROSSTALK)
QUEST: This is -- this is --
LA MONICA: It's silly.
QUEST: This is --
(LAUGHTER)
QUEST: I don't -- they never looked back. It just sort of went --
LA MONICA: No, it was a great day. I think investors were encouraged by the rally --
QUEST: Right.
LA MONICA: -- in technology stocks. Apple was one of the leaders. That's always a good sign. There are less concerns today about Greece and
the eurozone. We'll see what happens tomorrow, because that story is dramatically changing all the time.
QUEST: You were telling me, one of the largest losers.
LA MONICA: The biggest loser on the Dow today was the little company called Nike. Whether or not it's because of the FIFA scandal, hard to say.
It was only down less than 1 percent, but almost everything else was up.
QUEST: Putting the -- those together, markets -- individual stocks will feel the effect of this FIFA assault, won't they?
LA MONICA: I think it's safe to say they will. We're going to have to see what happens to a company like Adidas, and obviously, Nike as well.
You already noted how McDonald's and Visa seemed to be having some concerns as well.
There's a video game company, Electronic Arts, 15 percent of their revenue comes from their FIFA video game. Not sure if they're going to see
any real pullback. I think most gamers probably won't blink an eye at the scandal. They're going to buy FIFA 16 when it comes out later this year.
But we'll be talking about this for weeks, obviously.
QUEST: Thank you very much, sir.
LA MONICA: Thank you.
QUEST: European stocks also staged a solid rally. And you can tell it was fairly solid. Look at Greece, the Athens General, up 4 percent,
down 3 percent, up 3 percent. And the Greek government is telling officials and told CNN that the work has started on a draft agreement with
the IMF and ECB and the EU, a so-called memorandum of understanding.
In a moment, we'll give you the new details about a big data breach at the internal revenue service, the IRS, the tax authority in the US.
[16:29:05] (COMMERCIAL BREAK)
[16:31:22] QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment when we're going to take you to the top of
the World Trade Center and its observation deck which has opened to tourists.
And a foreign threat to the IRS - U.S. authorities have tracked down the culprits in last night's data breach. Before you hear those stories,
this is CNN and on this network the news always comes first.
The FIFA president Sepp Blatter said that he welcomes the actions and investigations by U.S. and Swiss authorities in his words, "To root out any
wrongdoing in football." That statement came after U.S. officials released details stunning corruption indictment case of a total of 14 FIFA officials
and corporate executives.
Those arrested and named in the indictment will face charges including racketeering, money laundering and wire fraud.
(BEGIN VIDEOCLIP)
LORETTA LYNCH, U.S. ATTORNEY GENERAL: Now in many instances the defendants and their co-conspirators planned aspects of this long-running
scheme during meetings held here in the United States. They used the banking and the wire facilities of the U.S. to distribute their bribe
payments.
And they planned to profit from their scheme in large part through promotional efforts directed at the growing U.S. market for soccer.
(END VIDEOCLIP)
QUEST: CNN sources say a security breach that allowed criminals to access the tax returns of more than 100,000 people in the U.S. That breach
originated in Russia. The IRS says organized crime syndicates used personal data stolen from other websites to access tax information. They
then filed $50 million-dollar claims in fraudulent claims.
Around 20,000 residents in the German city of Cologne had to be evacuated from their homes after the discovery of a one-ton bomb left over
from World War II. Cologne was a regular target for the Allied Bombers during the war. Seventy years on, unexploded bombs are still discovered
during construction work.
(BEGIN VIDEOCLIP)
WOLFGANG WOLF, ARMS AND MUNITIONS DISPOSAL SERVICE: The special thing about this find is that the bomb is very large with a weight of 1,000
kilograms. Of that, 50 or 60 percent of that weight is explosives. If it were to explode, a large area would be affected by thrown material and so
on.
(END VIDEOCLIP)
QUEST: Tony Blair says that he'll resign as the international envoy of peace in the Middle East next month. He has worked in the role for
eight years, representing the U.S., Russia and the United Nations and the European Union.
Mr. Blair took the role shortly after resigning as British prime minister.
Thirteen people are still missing after severe storms in the U.S. state of Texas. Houston got more rain today and even more is in the
forecast. The storm systems killed more than 30 people in Texas, Oklahoma and Northern Mexico.
Engineers believe a dam that authorities had feared would fail will now hold.
Now, information about the data breach at the IRS - the U.S.'s tax authority. Sources telling CNN that the IRS believes the theft of more
than 100,000 tax records originated in Russia. Chris Frates joins me from Washington with more.
What was the motive?
CHRIS FRATES, CNN CORRESPONDENT: Well we don't know the motive yet, Richard, but what we do know is that the IRS believes that these breaches
originated in Russia.
Now remember, about 100,000 taxpayers had their tax forms taken by what the IRS says was a criminal syndicate who had personal information
that they had gathered elsewhere - so things like social security numbers, addresses - they were able to use that information to access these tax
returns on the IRS website and then use the information inside the tax return forms to file fraudulent tax returns.
[16:35:17] The IRS says that there were about $50 million in returns that were filed before they were able to catch on to this scheme. Now,
it's important to remember that the IRS says they are investigating, they have their criminal unit looking into this, the inspector general for the
Treasury Department's also looking into it and they've -
QUEST: Right.
FRATES: -- notified the U.S. Department of Homeland Security. So the other thing to know here, Richard, long history of the IRS being criticized
and warned for not protecting its data. Now lawmakers on Capitol Hill want some more answers.
QUEST: OK. But is - the issue is obviously more complex than this because if somebody goes gets personal numbers - social security numbers,
access or pin codes - whatever you like. Can the IRS be blamed for this if people have managed to get the correct information?
Because what I'm thinking about here, Chris, is you and I want to access our tax records without having 15 passwords and a partridge in a
pear tree.
FRATES: (LAUGHTER). Well you know and certainly the IRS made the point that there were a lot of pieces of information that these criminals
had to have - social security, addresses, even some of those personal questions that you ask like what high school did you graduate from or what
was the color of your first car? Some of those questions designed to make it difficult for hackers to get in were also bypassed and they were able to
get through.
So it's a great question, Richard, and it's part of the reason why you don't necessarily call it a hack because this wasn't something -
QUEST: Right.
FRATES: -- the system was hacked into, rather it was information that was, you know, probably stolen elsewhere, sold and then given to these
criminals who used it to get even more information.
But the thing also here, Richard, is that taxpayer information is so sacred. You have to give it over to the U.S. government. It's one of the
few areas in life where you have to file all of that information with the government or you go to jail.
So there is a higher bar I think and many lawmakers want to know how do you protect that information because we're all forced to give it up.
QUEST: Very good point. Chris Frates joining me from Washington this evening.
To our top story tonight and the investigations into corruption at FIFA. The investigations throw doubt on the host of the next two World
Cups as well as the bidding process for previous tournaments. Shares on Qatar's main index fell 0.5 percent - the most in two months - over fears
that the 2022 tournament could be relocated.
Qatar was busy spending $200 billion on infrastructure in preparation. The Russian sports minister will be questioned by Swiss authorities
concerning that country's 2018 bid. The Russian government says the U.S. is acting illegally by targeting FIFA.
And the U.S. Department of Justice is also investigating how South Africa was awarded the World Cup in 2010. There were accusations of
bribery when deciding the location of that particular tournament. Stefan Szymanski is the author of "Soccernomics" and a professor of sports
management at the University of Michigan. He joins me from Ann Arbor in Michigan.
Sir, thank you. The whole question is just mindboggling when you're now talking about how South Africa got its World Cup - a World Cup that was
noted for being monumental in the world of soccer.
STEFAN SZYMANSKI, AUTHOR, "SOCCERNOMICS": Yes, and I think this is going to be a big issue going forward about how FIFA is going to respond to
this. Really FIFA is run by Congress which are the 209-member associations. And if too many of them feel they're going to be threatened
by a U.S. Justice Department investigation, then they may start to clam up and enthusiasm for rooting out corruption may start to diminish.
QUEST: And yes, well the other side of that - the other side of that - is that they've come up now against a critic, against an enemy, against a
protagonist if you like, that's in a different league to sort of UA for making noises or the English FA saying they don't like this or just some
grumblings from some NGOs.
The U.S. DOJ is not to be sniffed at.
SZYMANSKI: No indeed but bear in mind we - international sports organizations have been through this before. So when the Salt Lake City
bid was opened up for corruption investigation, the DOJ went through a process and in the end the IOC reformed itself quite happily.
And perhaps noteworthy the - those - accused in the scandal were actually ultimately acquitted.
QUEST: Of all of these allegations - the TV rights, the awarding of the games in 2022 and 18 and (inaudible),-- what, sir, -- help us
understand - what for you is the most serious allegation now being leveled against FIFA?
[16:40:15] SZYMANSKI: Well, I think really the most serious thing is the wrongdoing of individuals. You can bring individuals to book for
engaging directly in corrupt practices. And that's ultimately how you can dislodge individuals like Blatter.
Find his hand in the till and then you can prosecute and get him out of the organization. When you go after processes though, like the awarding
of a World Cup, I think you're in more difficult territory because ultimately you're talking about judgments which could have been influenced
by many, many different things. And it's very hard to decide in a court of law that it was -
QUEST: Right.
SZYMANSKI: -- this one bribe that really made the difference.
QUEST: And finally, just give me a feeling - help our viewers understand - in a sentence, sir, how serious is the crisis facing FIFA
tonight?
SZYMANSKI: I think it's a terribly serious crisis and I think the world of soccer and the World Cup may never be the same again. But I think
also things are not going to turn out quite as smoothly as perhaps some people are imagining today.
There are many twists and turns on this road.
QUEST: Stefan Szymanski joining us from Ann Arbor in Michigan. We appreciate it, sir.
There's a new eye in the sky over New York and you're going to get a view from the Freedom Tower's new observation deck. From "Business
Traveller."
(COMMERCIAL BREAK)
QUEST: This week thousands of tourists will get their first look at the New York skyline from the top of the Freedom Tower. The observation
deck on the 100th floor opens to - this is a live picture too coming to you. That's what it looks like - cloudy day here in New York.
It's 1,776 feet. It is the highest building in the Western hemisphere - 1,776 - 1776 Independence - you get the significance of course. CNN's
Claire Sebastian went to take a tour for this weeks "Business Traveller."
(BEGIN VIDEOCLIP)
CLAIRE SEBASTIAN, CNN PRODUCER: The numbers tell part of the story. Twelve hundred and fifty feet above the ground, views stretching 50 miles
on a clear day. Almost a decade of rebuilding.
And yet once you're up here, even on a cloudy day, those numbers give way to feelings which are quite frankly difficult to describe.
The rumor has it that when it's clear, you can see the curvature of the earth from this point. And it's certainly true that you can feel the
weight of recent history.
DAVE CHECKETTS, CEO, LEGENDS: The construction of this building and the observatory are a fist pump for going forward, for moving forward, for
saying there is a future and we embrace it.
[16:45:11] SEBASTIAN: Dave Checketts is the man in charge of the day- to-day running of the observatory. Architect TJ Gottesdiener helped design the structure itself.
TJ GOTTESDIENER, MANAGING PARTNER, SKIDMORE, OWINGS AND MERRILL: Really it pulls at you when you're up there and you start to - you look
down, you can see the memorial, you have that sense of remembrance.
SEBASTIAN: It's not just about the views. The 47 second elevator ride comes complete with a 500-year time lapse of New York skyline.
CHECKETTS: And now you get a brief view of the World Trade Center on this side - just for just a moment and then it disappears.
SEBASTIAN: And then the view itself is revealed gradually behind automatic screens. In a city crowded with skyscrapers, One World's Trade
Center has serious competition.
How many visitors a year?
ANTHONY E. MALKIN, CHAIRMAN AND CEO, EMPIRE STATE REALTY TRUST: Last year we had 4.3 million.
SEBASTIAN: The Empire State Building's observatory brought in revenues of $111 million last year.
MALKIN: New York City is represented to so many people in the world by the Empire State Building.
SEBASTIAN: Few would dispute One World Trade Center now shares that status. And with a predicted 3.8 million visitors a year to the
observatory, it could well match that success. For those involved in the projects though, it already has.
GOTTESDIENER: When I walk by the building now, it feels right.
SEBASTIAN: And do you think when people stand and look from the 100th floor out, they'll get the same feeling?
GOTTESDIENER: I think they'll have a very powerful feeling - yes I do. I think they'll feel like this was the right thing.
SEBASTIAN: Clair Sebastian, CNN New York.
(END VIDEOCLIP)
QUEST: Twenty-four hours ago Sepp Blatter was cruising towards a fifth term as the FIFA president. Now the future football's top official
has been cast into doubt. (Inaudible).
(COMMERCIAL BREAK)
QUEST: On a day when the dark side of football has dominated the headlines, now some actual football news that you will be interested in.
Sevilla has won the Europa League soccer title with a 3-2 win over the Ukrainian team Dnipro.
Unfortunately, back to the other side of soccer. Today's arrest in Zurich comes just two days ahead of FIFA's planned presidential election.
Now, Europe's top soccer body is calling for it to be put off. The UEFA's warning that the whole process could turn into a farce. FIFA
insists that the vote will go ahead.
So, Sepp Blatter is the incumbent obviously and he was the favorite to win a fifth term. He remains very popular inside FIFA, particularly with
the developing countries. The only challenger still standing has been relatively inexperienced - Prince Ali of Jordan.
Prince Ali said today that the current crisis cannot continue but he wouldn't go further than that. Those who've pulled out include Luis Figo,
the Portuguese footballer who pulled out last week. In a statement today, he slammed FIFA's transparency for what it all meant.
So, basically it's Blatter or Prince Ali. Joining me now, we need to hear the views of CNN's Don Riddell. Don, I need - you and I have talked
about this before, but the events of today are a see change for the whole issue. Give me your perspective please.
[16:50:05] DON RIDDELL, CNN "WORLD SPORT": Well it's really quite extraordinary, isn't it, Richard? I mean, it's been felt for some time
that the only people who'd be able to make any difference to this are FIFA's sponsors and corporate partners.
But for so long many of them really just paid the whole thing lip service, rather buried their heads in the sand. Because of course they all
want to be associated with the World Cup and what's actually happening on the field of play.
But they've kind of been caught up in this today now and we've seen the full might of the American justice system. And wasn't that just an
extraordinary press conference this morning with the IRS -
QUEST: Right.
RIDDELL: -- the attorney general, the Feds all getting involved. Quite incredible and a hugely important day regarding FIFA's future.
QUEST: All right. Twitter questions now. We've been - you've been - seeking questions. Now, sir, it's your turn to answer. "Will Gold Cup and
Copa America still take place if FIFA assets and accounts are frozen?" asked Felipe Savalia (ph).
RIDDELL: It's a bit early to really know for sure. I mean, let's start with the Copa America as the attorney general Loretta Lynch honed in
on next year's events, stating that investigators have found $110 million in bribes linked to the planning of that tournament which is taking place
here in the U.S. for the first ever time.
Both the Copa America and the Gold Cup which is mainly taking place in the U.S. this July were mentioned by U.S. prosecutors earlier on but we
will have to wait and see if there are any significant developments surrounding those tournaments, Richard.
QUEST: Next question - "What do the" - it's from #youthinspire - "What do these investigations mean for SAFA, South African Football in
connection to the 2010 World Cup Bid?"
Now here, what is the allegation first of all - in a sentence - about the South Africa bid and what do these investigations mean for it?
RIDDELL: Well they've been today - Loretta Lynch sure (ph) -- referring to the fact that bribery did play a part in the awarding of that
tournament which is a huge deal. It was the first-ever World Cup to be played in Africa, and by and large it was a success.
The South African F.A. has responded to today's news by stating that the charges of racketeering, conspiracy and corruption which implicate that
tournament as Africa are not to do with the actual events - SAFA Communications manager -
QUEST: Right.
RIDDELL: -- Dominic Chimhavi said quote, "At the moment the details are sketchy but the charges mainly pertain to the service providers and
broadcasting rights." He went on to add that people need to note that the charges also implicate several other World Cups and FIFA events and not
just the World Cup in South Africa.
QUEST: Don Riddell, thank you for that. In a word though, does the vote take place for - as planned? In word.
RIDDELL: FIFA does what it wants, so yes.
QUEST: Thank you. Don Riddell. The former Formula 1 star Juan Pablo Montoya has made more than $2 million by winning last weeks' Indy 500. He
got to celebrate by ringing the opening bell at the New York Stock Exchange.
(BEGIN VIDEOCLIP)
(NYSE BELL RINGS)
(END VIDEOCLIP)
QUEST: Sunday's victory is Montoya's second Indy 500 win. It comes after - 15 years after - he won it as a rookie. The gap between wins is
the longest in history. Maggie Lake spoke with Juan Pablo Montoya earlier and asked him how it feels to have a second win after 15 years.
(BEGIN VIDEOCLIP)
JUAN PABLO MONTOYA, INDY 500 WINNER: It feels good, you know. And it's funny when people say 15 year gap - oh my God, he just finally got
another one.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: (LAUGHTER).
MONTOYA: But if you really look at what I've done, you know, I went to Formula 1, I went to NASCAR. I only done the Indy 500 three times and I
won it twice. So it's a hell of a record and I'm really excited. You know, you know being involved with Verizon and Verizon involved with Sears and to
actually win with the Verizon (Tower) is really special for me.
LAKE: It was and it was a very close race. You had a lot of competition from your teammates - you're teammate Will Power. How did it
feel coming from behind? How do you think you were able to do it?
MONTOYA: Although really it was a lot of patience. You know, we got hit from behind really early on, we had to come in fix the car and to start
from 30th is like, OK, just take it one by one, see what you can do, let's make the car better and see what happens at the end.
LAKE: Patience, patience pays off. You mentioned that you've done Formula 1 - you have. Not many others have. You've raced in NASCAR and
Formula 1 in cart. What do you attribute your success in those different venues to?
MONTOYA: I don't know. I worked really hard at it, you know what I mean? I think I got a lot of the occasion and I think I wanted more than
anybody else. I just want to win so badly every week, and I work hard for it.
LAKE: Now you have Detroit next, what's it going to take to win there? Are you on a streak?
MONTOYA: Oh, I hope so. You know, I always say that when you win the 500, the next weekend is a disaster. So my fingers are crossed I'll have a
really good one.
LAKE: (LAUGHTER). You're hard-working and very optimistic I can see about your prospects. I'm curious while we have you - I mean, you know -
you yourself are an athlete. I'm sure you're also a fan of football. You saw the headlines today. Any reaction to what's happening in FIFA?
[16:55:06] MONTOYA: It's bad when you're a sportsman and whether you're a soccer player or whatever you are - a race car driver - and
whatever you're doing, the attention is not actually what happens in the field or on the racetrack - it happens off the racetrack.
So it's just bad press overall, you know. It's bad what's happening but, you know, I believe you just want to have good news for the series,
you know. I think IndyCar right now is going in a really good way and I think we showed this weekend, you know, with that race and the intensity of
that race how good we can race and show people how good an IndyCar is.
LAKE: You're off to Detroit next. Longer term, what are your plans? Any talk of retirement in the future?
MONTOYA: I don't know. Right now - no - I'm really happy where I am. I just want to win, you know? Give me another race, I want to win more.
(END VIDEOCLIP)
QUEST: Retirement. Retirement, retirement - what's that? "Profitable Moment" Next. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." After years of allegations of corruption, bribery, miscreant behavior swirling FIFA, trust the Americans
to finally get to grips with it and bring the important indictments against those involved and made the allegations.
The Europeans have said there'd been something wrong for years, the Swiss have said it, many people have said it. But it took the FBI, the IRS
and the U.S. attorney - the Department of Justice - to actually get things moving.
And there's one big difference now than before. A process has begun and you don't really take on the U.S. Department of Justice because
eventually you'll probably lose.
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope
it's profitable. Let's get together tomorrow.
END
