Nike Suspected of Playing a Role in Bribery Scandal

Shoemaker and megabrand Nike (NKE) found itself caught up in a scandal late last week. The issue is no longer over whether or not private companies bribed FIFA officials in Brazil -- they did. The issue is currently over who contributed to the bribes, and how much did they contribute.

Nike, which made multiple big deals with FIFA and the Brazilian soccer authorities around the time that the alleged bribery took place, is the prime suspect moving forward. There is still one American company who hasn't been named publicly for their role in the bribery scandal, and the timeline of events matches up well.

Complicated Indictment Moving Forward

The indictment itself was hugely complicated, and brought forward through the Brazilian legal system.
It alleges that companies used bribery and other forms of undue influence in order to receive favorable ad placement and other bonuses from FIFA. Many companies are being charged separately, and some have already plead guilty to the charges.

Company is Cooperating with Government Probe

As of this writing, Nike is said to be cooperating fully with the Brazilian probe looking into the bribery scandal. They have turned over documents potentially related to the case and issued multiple press releases about the situation. Nike is still claiming complete and total innocence.

Nike (NKE) Flatly Denies the Allegations

A spokesperson for Nike issued a statement to the press Thursday night, saying that, "the charging documents ... do not allege that Nike engaged in criminal conduct. There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme."

Of course, that isn't exactly the same thing as denying that Nike never contributed funds to the sports promoter Traffic Sports, the company which is alleged to have carried out the bribe, potentially using funds given to them for the purpose by Nike. The Traffic Sports company has plead guilty to wire fraud just a few weeks ago.

If Not Nike, Then Who?

The fact is, there aren't too many other companies who fit the facts as we currently know them. Nike was doing business in Brazil at the time that the alleged bribes took place, and did contribute millions of dollars to their soccer team. Right now, Nike is the most plausible company to have been involved with the FIFA scandal, although the shoemaker has repeatedly denied the accusations.

The Potential Fallout is Huge

Only a few other companies have been caught red-handed trying to bribe a foreign government or agency, and it never works out well for them. Nike, if it is in fact guilty of bribery, would have to pay large penalties to the government of Brazil and may lose their marketing toehold on the World Cup and other FIFA events.
Published on May 30, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2020. Content published with author's permission.

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