By David Ingram
NEW YORK (Reuters) - Nike Inc may be able to avoid U.S. charges over any involvement in bribery payments to win soccer sponsorships, but could face penalties if U.S. prosecutors decide to clamp down on the global sportswear giant, lawyers with expertise in the subject said.
Although Nike has not been named or charged with any wrongdoing, the company was swept into the corruption scandal that engulfed soccer's governing body FIFA when a U.S. indictment released on Wednesday described apparent kickback payments linked to a landmark 1996 Nike deal in Brazil.
In a statement on Thursday, Nike said that the charges did not allege that it engaged in criminal conduct or that any Nike employee was aware of or took part in a bribery scheme. On Wednesday, in another statement, it did not confirm or deny that it was the company in the indictment, but said it was cooperating with authorities.
The description of the $160 million, 10-year deal signed by "Sportswear Company A" matched exactly the details of Nike's agreement to become the footwear and apparel supplier and sponsor of the world's most successful national soccer team.
Still, the U.S. Justice Department is likely to take a tougher stance against those who solicited bribes than those who paid them, especially if a company did not have a long history of paying bribes, said former U.S. federal prosecutor Michael Volkov.
"Where the case is going, it's not focusing as much on the people who were shaken down as it is on the people doing the shaking," Volkov said.
While the 14 defendants in the indictment are being charged with crimes such as money laundering and wire fraud, the United States has normally prosecuted U.S. businesses for foreign bribery under the 1977 Foreign Corrupt Practices Act (FCPA).
That law's anti-bribery provisions apply to dealings with governments and government officials and may not be of much use in the soccer world because soccer associations are typically not government agencies. The Brazilian Football Confederation (CBF), which signed the 1996 deal with Nike, is a private organization.
"The FCPA does not prohibit private bribery," said Homer Moyer, who specializes in FCPA cases at the law firm Miller & Chevalier in Washington.
If Nike is thought to have paid bribes by transferring funds from a U.S.-based account, the Justice Department might consider charging the company with "international promotional money laundering," said a former official with the Justice Department's money laundering section.
While seldom used in the past, prosecutors have made increased used of this charge in recent years, said the source, who spoke on condition of anonymity due to his private sector work.
Prosecutors could employ a provision of the FCPA that requires companies to keep accurate accounting records. If the sportswear company in the Brazil deal disguised or hid wrongdoing in its books, it may have violated the law, lawyers said.
The indictment came less than three weeks after U.S. President Barack Obama co-opted Nike's "just do it" slogan in a speech promoting a Pacific free-trade deal at the company's headquarters in Beaverton, Oregon.
The charge sheet said that "Sportswear Company A" agreed to pay an additional $40 million in "marketing fees" that were not in the initial contract to the Swiss bank account of an affiliate of Brazilian sports marketing firm Traffic.
Traffic's founder Jose Hawilla, whose guilty plea to U.S. corruption charges was revealed at the same time as the indictment, agreed in 1996 to pay half of everything he made from the deal to an unidentified senior member of the CBF, according to the Department of Justice.
That amounted to "millions of dollars, as a bribe and kickback," the indictment said.
U.S. prosecutors have used the FCPA to extract massive settlements, often with foreign businesses.
In 2009, the U.S. engineering company KBR Inc agreed to a $579 million settlement over bribes paid to Nigerian government officials.
Separate from the FCPA, foreign and U.S. banks have paid billions of dollars in settlements with U.S. authorities over sanctions-busting activities and anti-money laundering failures in recent years. A number of non-banks have also been targeted by regulators or the Justice Department over anti-money laundering failures.
The indictment also alleged that a New Jersey-based "Sports Marketing Company A" paid bribes to the head of South American soccer association CONMEBOL in exchange for gaining exclusive marketing rights to the Copa Libertadores tournament.
Asked Wednesday if companies that had won soccer marketing rights faced criminal liability or were being investigated, Attorney General Loretta Lynch said she could not comment on specific investigation targets.
(Additional reporting by Brett Wolf.; Editing by Noeleen Walder and Stuart Grudgings)