The Webb arrest: Dealing with the reputational fallout

Since becoming an offshore financial center in the 1960s, the Cayman Islands has suffered severe reputational setbacks because of proven, alleged, or fictional criminal conduct.

There was the failure of Sterling Bank and Trust and the rest of Jean Doucet’s banking empire in the Cayman Islands in 1974; there was the 1991 collapse of BCCI and its international network of banks being used to launder drug money; and there were the scandals involving Enron (2001) and Parmalat (2003), both of which used Cayman Islands companies to conceal their nefarious activities.

Then of course there was the 1993 movie “The Firm,” which portrayed the Cayman Islands as a money laundering haven. The fictional Hollywood perceptions have lingered, and the Cayman Islands has become synonymous in film and fiction with offshore financial shenanigans.

Now, with the arrest in Switzerland of Caymanian Jeffrey Webb and six others on corruption and racketeering charges on FIFA-related matters, the Cayman Islands faces reputational damage which may exceed anything the country has experienced to date.

For the record, according to the 47-count indictment, FIFA officials, including Mr. Webb, used their positions to solicit more than $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

We should point out that Mr. Webb and his colleagues are, at this point, only accused of wrongdoing. If they are successfully extradited, they will face trial for their alleged crimes in the United States.

But regardless of the outcome of that trial, the damage done to the reputation of the Cayman Islands has already begun.

Almost instantaneously, news of Mr. Webb’s arrest in a dawn raid at a posh hotel in Zurich, Switzerland, appeared in more than 3,000 stories on the Internet. Non-stop coverage on the world’s leading television networks, including CBS, NBC, ABC, and the BBC, highlighted Mr. Webb’s role and prominently identified him with the Cayman Islands.

Likewise, The New York Times, The Washington Post, The Wall Street Journal, the Financial Times, and literally hundreds of other newspapers are leading the news with the scandal. The Cayman Compass has already been contacted by multiple international news organizations seeking photos and background information on Mr. Webb.

At a Wednesday morning press conference convened by U.S. Attorney General Loretta Lynch and televised around the world, Mr. Webb took top billing.

Precisely because football is the world’s sport, the eyes of the entire world are on this scandal and, to some degree, on the Cayman Islands. Unlike the cases of BCCI, Enron and Parmalat, which were of interest primarily to those in international finance, the FIFA scandal has far greater interest.

As president of CONCACAF, vice president of FIFA, and, locally, as president of the Cayman Islands Football Association, there is no doubt that Jeff Webb has brought much attention (up to this point favorable) and considerable largesse to the Cayman Islands.

Now that his name and nationality have been associated with high-level corruption and racketeering charges involving the world’s most popular sport, there is no doubt that the Cayman Islands, unfair though it may be, will pay a considerable reputational price as this legal battle continues to unfold.

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  1. As a former resident may I make the following comments. Mr Webb is "innocent until proven guilty" is true, but it is clear that he will now be far too busy defending himself to effectively carry out his job as president of the Cayman Islands FA. For that reason alone he should immediately be suspended from his position. The Cayman Islands government, the Caymans Islands FA and financial institutions in the islands should immediately declare their intention to cooperate fully with the FBI in this investigation. Cayman cannot defend its reputation by brushing corruption under the carpet and hoping that the bad news is simply forgotten. There must be a clear commitment to transparency and the rule of law.

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  2. Never to condone what Mr. Webb is accused of doing, but the leaders and people with money of this Island need to accept for a long time we have a big bully that is always towering over the Cayman Islands and any other other places which come into the limelight. Ever wondered what ISIS is all about? Do this, don’t do that, go there don’t go there, you can’t have this, because only our country suppose to have super power, and all the money, or we can do and will do this to you. We just not looking at the big picture hanging in the hallway name which says "You may run but you cant hide."
    Still this kind of behavior by Caymanians and foreigners alike is still going on, it is just that The love of money is the root of all evil and too much of it makes you feel invisible.
    Are we so fool to think that there is not more to this arrest than meets the eye? Yes there is; but as the old people would say these words, "Ye naw whaan hear, den ye mus feel."

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  3. @Twyla. Have a chuckle, listen to the young South African comedian Trevor Noah on sports in America, on America policing the world, etc. Available on youtube. Your opinion is as valid as everybody else’s.

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  4. It gets worse. I was watching the BBC’s coverage yesterday morning, they had an ‘expert’ on from one of the universities he managed to say that it was likely that the funds were laundered through Cayman.

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  5. Twyla
    Agreed.
    The Cayman Islands should be rooting out and prosecuting corruption.

    Hopefully a criminal prosecution of all Cayman-based alleged wrongdoers will be announced.

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  6. Ms. Vargas,

    I absolutely agree with you!

    There is more to this investigation than meets the eye. International soccer (and FIFA) is probably not the only game/group plagued by corrupt practices. The U.S.A. athletics associations have turned a blind eye to doping suspicions for decades, until recent times.

    I smell international strategies to cripple Russia (coming from the Ukraine mess).

    FIFA and soccer are not traditionally American so there is no reputation risk to the U.S. by investigating corrupt practices. Therefore, they can safely use FIFA to get to Russia, just like they have set up subtle embargoes on Russian trade in order to get back at Putin.

    Now, Cayman needs to be careful. Despite the negativity of this situation, everyone knows that offshore banking has been Cayman’s bread and butter for years. There are other interest groups who have stakes in the islands’ banking sector, and if you all go inviting FBI, CIA and everyone else… well, the true fall-out is ahead.

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  7. Just wondering,

    So FIFA is a global organisation, its income stream is from all over the world, Africa, Europe, South America.

    If this all pans out as per the allegations, we can expect seizures of assets and fines, maybe in the billioins.

    In that instance, does the US redistribute the resulting cash back to the world at large – or does Uncle Sam just keep it?

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