Some US$1.2 million in what were initially called loans granted to the Cayman Islands Football Association in 2013 have been described as “graft” in a lawsuit filed in U.S. federal court.
The December 2015 lawsuit alleges that the money represented bribe payments given indirectly by two companies – Cartan Tours and Forward Sports – to former CIFA President Jeffrey Webb. The suit alleges Cartan paid the bribe money in exchange for a lucrative business arrangement with CONCACAF, world football’s regional governing body for the Caribbean, North and Central America.
That arrangement resulted in CONCACAF paying tens of millions of dollars between 2012 and 2015 to Cartan, a suburban Los Angeles travel and accommodation planning company, the court records allege.
In documents filed Dec. 21, CONCACAF sued Cartan and two of its principals, David G. Elmore and Daniel L. Gamba, for a minimum of US$50 million in damages over a contract the regional football governing body claimed it did not need because it already had another firm handling its travel and event planning.
The suit alleges that a significant amount of money paid to Cartan was redirected in kickbacks to Webb and former CONCACAF general secretary Enrique Sanz, who are named in the lawsuit, but who are not listed as defendants in it. The civil suit filed in U.S. District Court for the Central District of California does not allege criminal wrongdoing, but seeks the recovery of tens of millions of dollars on CONCACAF’s behalf.
CIFA’s 2015 audits revealed that the pair of US$600,000 matching loans from Cartan and Forward Sports, totaling US$1.2 million, had been “converted” to gifts.
“Cartan never provided any material amount of services to CIFA, nor did Cartan widely publicize its fictitious charitable gift – which is what typically would be expected of a corporate sponsor,” the lawsuit alleges. “That is because it was not a gift at all, but yet another form of graft and illicit dealing between [the lawsuit defendants] and Webb.”
The 2013 payment to CIFA was among “secret payments” made by Cartan in order to maintain the business deal with CONCACAF, of which Webb was president at the time, the lawsuit alleges.
The filing alleges that it was shortly after an October 2013 CONCACAF summit meeting when Cartan made the “mysterious” US$600,000 loan to CIFA. The suit notes that Webb was also president of the Cayman Islands Football Association at the time and that his close business associate, Canover Watson, then served as CIFA’s treasurer.
According to the lawsuit, the US$600,000 was dispersed in an unsecured loan from a Panamanian bank account on Dec. 31, 2013. The loan agreement between CIFA and Cartan International Management Inc. was signed by attorney Bruce Blake on behalf of CIFA, court records state. Mr. Blake was the vice president of CIFA at the time and now serves as its acting president.
“Defendant Elmore made this payment via Cartan at the request of Webb and Watson,” the lawsuit alleges. “This payment was arranged in part to ensure that defendants’ scheme [referring to the business arrangement between CONCACAF and Cartan] with Webb and Sanz would continue into the forseeable future.
During the 2015 CIFA audit, Mr. Elmore was asked about that company’s loan or “gift” to the local football association.
“Elmore admitted to the auditors that Cartan made a charitable donation of US$600,000 to CIFA in 2013, but … denied any affiliation with Cartan International, a company incorporated in Panama on May 23, 2013,” the lawsuit states. Mr. Elmore also indicated that Cartan Tours does not have an account or office in Panama and said the money for the CIFA donation was wired from a U.S. bank account.
Forward Sports, whose representatives also attended the CONCACAF summit in October 2013, is alleged to have extended its US$600,000 loan to CIFA on the same day as Cartan. The same individual signed the loan on behalf of Forward Sports as had signed on behalf of Cartan International, court papers allege.
The Cayman Compass contacted representatives of Forward Sports in Germany during January, but received no response to our questions regarding the California lawsuit.
The lawsuit further alleges that the loan documentation for the US$1.2 million was “altered” in December 2014 to create “some kind of sponsorship,” eventually referred to as a gift, for the construction of a National Training Center on Grand Cayman. The National Training Center, in George Town’s Prospect neighborhood and often referred to locally as the Centre of Excellence, comprises a small office building and an AstroTurf football field.
The Cayman Compass has previously reported that a matter involving CIFA was referred to the local Anti-Corruption Unit for investigation.
Watson’s lawyers were contacted for comment regarding this story in late December and again last week. In late December, the attorneys applied for and received a temporary court injunction prohibiting the publication of the story until the end of Watson’s criminal trial in Cayman, which was unrelated to the events described in the California lawsuit. Following Thursday’s verdict in that trial, Grand Court Justice Michael Mettyear rescinded the injunction.
Bruce Blake’s response
Acting CIFA President Bruce Blake responded in detail when asked in December regarding how CIFA handled the US$1.2 million loans in 2013. His response is printed here in full:
“I did sign the loan agreements as they were expressed to me to be loans to CIFA to assist with paying down on the CIFA loan with Fidelity Bank.
“Prior to the loans being made, FIFA [world football’s governing association] had implemented a policy that any national association’s FIFA Goal Project could not have a charge placed on it. As the CIFA Centre of Excellence had a standing charge placed on it by Fidelity Bank in or around 2008, the charge had to be removed in order to satisfy the new FIFA requirement.
“The loans were made to CIFA to pay down the loan with Fidelity Bank; therefore, removing the charge and satisfying the FIFA requirement.
“The corporate benefits to CIFA were that a secured loan was replaced with unsecured loans and CIFA was now in compliance with the FIFA requirement. The loans went directly to pay down on the Fidelity Bank loan. I was not part of the negotiations with regards to the new loans; however, I did sign the loan agreements on behalf of CIFA.”
The $50M “cash cow” scheme
CONCACAF’s lawsuit alleges that the regional football association was used as a “cash cow” by Cartan Tours, which was contracted to provide travel, accommodation and event planning services to CONCACAF’s many international events and meetings.
Webb and Sanz, it is alleged, awarded Cartan an “exclusive” arrangement to provide these logistical services without the benefit of any bid process or even the involvement of CONCACAF staff members who were familiar with event planning. No approval from CONCACAF’s executive council was ever obtained for this contract, the suit claims.
The lawsuit recounts various instances during 2013 and 2014 when CONCACAF employees sought to obtain a copy of the contract for the Cartan Tours deal, but it is alleged that Webb and Sanz “orchestrated their scheme” to prevent CONCACAF staffers from having any understanding of the business relationship.
“Cartan directed its agents to never discuss the full extent of their fees with CONCACAF … and financial reports to the executive council were scrubbed to avoid providing any detail that could have otherwise raised suspicions,” the lawsuit alleges.
Those fees included an 18 percent “management fee” charged to every dollar CONCACAF spent on logistics for travel, accommodation and the like, the suit states. In some cases, those fees were raised to 21 percent or even 27 percent. The previous event planner used by CONCACAF had charged a flat rate for services regardless of the amount spent on travel arrangements.
“No rational business would have tolerated this … arrangement with Cartan,” the lawsuit states. “There is only one reason Cartan was able to continue this scheme: It had a secret deal with Webb and Sanz to pay them off.”
Cartan Tours said in January that CONCACAF’s claims in the December 2015 lawsuit were baseless and “an effort to weave a tale that has no basis in fact.”
Essentially, Cartan alleges that CONCACAF, now regretting the financial commitments it made to the California company during the Webb-Sanz era, is seeking to pressure Cartan into renegotiating its contract.
“Cartan had no involvement in making any secret loans nor did it have an interest in the Panama corporation referenced in the complaint,” the Cartan statement sent to the Compass read. “While the responsible thing to do would have been to ask Cartan to provide information to disprove these claims, which it most certainly would have done, CONCACAF instead chose to air these irresponsible and unfounded allegations in a public forum.
“There will be a price to pay for this.”
It is alleged in the lawsuit that Cartan Tours began its relationship with CONCACAF when Daniel Gamba, then a company employee, met Bruce Blake and Canover Watson in a “hospitality tent” Cartan had set up at the site of the 2012 Olympics in London.
After this meeting, Mr. Gamba is said to have “persistently emailed” Watson to discuss a partnership with Cartan and its chairman, Mr. Elmore. It is also stated that Watson and Webb met with Mr. Gamba at a London hotel during the Olympic games.
“As a result of this secret meeting, Cartan was on its way toward securing all of CONCACAF’s travel arrangement business … for every major CONCACAF event and competition for the foreseeable future,” the lawsuit states.
Mr. Blake, in his statement to the Compass, confirmed the accounts about meeting Mr. Gamba in London: “I was introduced to Daniel Gamba during the lead up to the Olympic Games in London. I was the assistant to the Chef de Mission for the Cayman team and Cartan was one of the official service providers for the Olympics. Upon learning that CONCACAF was looking for a service provider, I contacted Daniel and made the introductions, as this is the area that Cartan specializes in.”
In December 2012, Watson is said to have facilitated a meeting between Webb, Mr. Elmore and Mr. Gamba to discuss terms of the deal between CONCACAF and Cartan before “moving forward.”
Later that month, the lawsuit alleges, Sanz informed CONCACAF staff that Cartan had been appointed as the new agency to deal with all travel and accommodation needs. “At this point there was no written agreement in place and Sanz never explained to anyone why this new agency was being appointed,” the lawsuit states.
A copy of the purported agreement between the two entities was not given to CONCACAF staff members until September 2014, following repeated requests.
“The scope of Cartan’s alleged fraud cost CONCACAF not less than a remarkable US$10 million in wrongful and abusive charges over two years, an amount that ultimately will be determined at trial,” the lawsuit states.
Compass journalists James Whittaker and Michael Klein contributed to this report.
Editor’s note: Forward Sports’ response was received after press time and is included in this follow-up article in The Cayman Islands Journal.