Loans, gifts and graft: CIFA and CONCACAF’s Panama connections

The $600,000 loan agreement between Forward Sports and the Cayman Islands Football Association was ostensibly concluded to assist with the construction of the National Training Center. - Photo: Matt Lamers
The $600,000 loan agreement between Forward Sports and the Cayman Islands Football Association was ostensibly concluded to assist with the construction of the National Training Center. - Photo: Matt Lamers

A Panamanian company set up by Canover Watson that was allegedly used to receive a $1.1 million bribe payment from Traffic Sports to Jeffrey Webb is the same entity that had a controversial $600,000 loan agreement with the Cayman Islands Football Association, documents reveal.

Forward Sports International Management Inc. granted a $600,000 unsecured loan to CIFA, according to the loan agreement dated Dec. 31, 2013.

The agreement, which was signed by Bruce Blake on behalf of CIFA and nominee company secretary Irina Abrego de Espinosa on behalf of Forward Sports International, included a seven-year repayment plan at an interest rate of 1 percent above U.S. prime, or 4.25 percent.

In 2015 the loan was controversially re-designated by the Cayman Islands Football Association as a “gift” from Forward Sports. As a result, CIFA’s audit firm Rankin Berkower refused to sign off on the football association’s financial accounts and reported the case to police.

Pakistan-based Forward Sports is one of the largest manufacturers of footballs in the world and maker of the Brazuca, the football used in the 2014 World Cup Finals.

Shakeel Khawaja, who at the time was a global sales manager for Forward Sports (pvt) Ltd., Sialkot, Pakistan, told The Cayman Islands Journal that Watson had helped set up a company in Panama under the Forward name with the objective of using the entity as a distribution company for Forward Sports products in Central America and the Caribbean.

However, Khawaja says he was not aware until late 2014 that in addition to Forward Sports Inc., Watson had created a related entity, Forward Sports International Management. Khawaja claims he never made a payment to CIFA and was not aware of such a payment. He also says he never had signature authority over the company’s bank accounts.

Emails from Watson to Asiaciti Trust, the corporate service provider that set up the companies, show that Watson instructed the Panamanian nominee directors of the entities and received their invoices. Watson is also named on Asiaciti’s internal company application form for Forward Sports as the main contact person, but his name does not appear as a director or shareholder.

Instead, stock certificates show the shareholders of Forward Sports Inc. are Shakeel Khawaja (51 percent) and Green Day Foundation (49 percent), an entity that Khwaja says he was unaware of until he requested the company’s constituting documents from Watson in November 2014.

An organizational structure generated by service provider Asiaciti shows Green Day Foundation was created using two Asiaciti entities, Latam Foundation Services Inc. and Latam Council Services, respectively, as founder and foundation council, presumably in an effort to preserve the anonymity of the owner or owners.

However, Watson informed Khawaja in a phone conversation in August 2015 that he [Watson] is the owner of Green Day, Khawaja claims. He says, until then Watson had acted as if he was representing the interests of other investors.

Traffic Sports alleged bribe for Jeffrey Webb

Panama-based company Forward Sports appears also to be implicated in the indictment of former CONCACAF president Jeffrey Webb, as the entity that received a $1.1 million bribe payment for Webb from Traffic Sports.

The superseding indictment of Webb alleges he instructed former CONCACAF General Secretary Enrique Sanz to solicit a bribe from Traffic Sports for the award of a $15.5 million contract for the exclusive worldwide commercial rights for the 2013 edition of the Gold Cup and the 2013-14 and 2014-15 seasons of the CONCACAF Champions League.

When Webb and Sanz discussed the best ways to effectuate the bribe payment, the indictment alleges, Webb decided to use an overseas company that manufactured soccer uniforms and soccer balls. It noted a close associate of Webb, co-conspirator #24, had a connection to “Soccer Uniform Company A.”

“Webb eventually instructed [Sanz] to submit a false invoice to Traffic USA for $1.1 million to be paid to Soccer Uniform Company A, which [Sanz] did,” the indictment alleges.

“On or about December 4, 2013, the $1.1 million bribe payment for Jeffrey Webb was made by wire transfer from Traffic International’s account at Delta National Bank & Trust in Miami, to a Wells Fargo correspondent account in New York, New York, for credit to an account in the name of Soccer Uniform Company A at Capital Bank in Panama City, Panama.”

Forward Sports (Panama), which was created on the instruction of Watson, had an account with Capital Bank, according to an organizational structure diagram generated by Asiaciti.

Co-conspirator #24 is described in the indictment as a high-ranking official of one of FIFA’s national member associations, an official of FIFA and CFU, and a businessman. Watson was the treasurer of the Cayman Islands Football Association at the time Forward Sports in Panama loaned $600,000 to CIFA. He was also a vice president of the Caribbean Football Union and a member of FIFA’s Audit and Compliance Committee.

Football connections

Khawaja says he met Watson and Blake, the CIFA vice president at the time, in May 2012 after the FIFA Congress in Budapest. Both Watson and Blake “showed great interest” in purchasing footballs, shirts and other sporting goods from Forward Sports for the grassroots programs of CIFA and the Caribbean Football Union.

At a presentation later that year in London set up to inspect samples of the customized products, Watson and Blake wanted to arrange free deliveries in the form of sponsorship agreements with CIFA and CFU, Khawaja claims.
When he informed them that the company’s finances would not allow for that, Khawaja says, Watson promised orders of $750,000 per year from CFU and Blake promised $150,000 in purchases of goods per year from CIFA for the period of the sponsorship agreement.

“These promises were not kept,” Khawaja says.

Instead of the $2.7 million the company budgeted for over the three years, it made only $800,000. According to unaudited accounts for Forward Sports Inc., which was renamed Gol Sports Management in July 2014, the company did pay more than $150,000 in cash sponsorships and more than $200,000 in equipment sponsorships between July 2013 and October 2014 to various football associations across the Caribbean, including Cayman.

For instance, Forward Sports entered into a $100,000 cash sponsorship with the Central American Football Association (UNCAF) on the recommendation of Watson, the company’s former sales manager says. This sponsorship agreement further included the supply of sportswear and sporting equipment for a retail value of $120,000 per year.

According to Khawaja, Blake and Watson put Forward Sports in contact with a local company to sell football shirts of the Cayman Islands National Team, footballs and other fan merchandise on island to generate extra revenue, and Watson later became involved in setting up companies under the name Forward Sports.

He says, “In October 2012, Mr. Watson suggested to establish a distribution company in Cayman under the name Forward Sports to distribute CIFA and CFU replica products to Cayman and the entire Caribbean region. Because we did not have the financial means for the startup, I asked Mr. Watson if he could find an investor who would be a partner and 49 percent shareholder, as well as managing director for the company.”

Watson promised he would take care of it, and during Khawaja’s next visit to Cayman in 2012, he was presented with photocopies of the memorandum and articles of association and the certificate of incorporation of a Cayman company named Forward Sports International. He also received the minutes of the first meeting of the board of directors, the register of directors and officers and the register of members.

The problem, according to Khawaja, was that the constituting documents were drafted without his consent and knowledge. When he inspected the documents, he found that in addition to himself, Joscelyn Morgan was named as a company director and shareholder. “This happened without my consent or knowledge,” Khawaja says.

“The constituting documents were compiled without my consent and knowledge. I was not aware that a certificate of incorporation had been issued. The minutes of the meeting were compiled without my knowledge or consent. There is no date on the document. It mentions incorrectly that I had participated in a telephone conference. That was not the case.”

When he complained about these issues to Watson, Khawaja says, Watson assured him that he “need not worry” because it was “only necessary for the paperwork” and “had no legal implications for [Khawaja].”

Forward Sports Cayman was incorporated on Nov. 15, 2012, with its registered office at Admiral Financial Centre – Canover Watson’s office. One day later, Forward Sports signed a sponsorship agreement with the Caribbean Football Union, the organization for which Watson acted as a vice president.

The sponsorship agreement with the Cayman Islands Football Association was concluded one month earlier in October 2012.

The whereabouts of Joscelyn Morgan, the director of Forward Sports International (Cayman), are unknown. He left the Cayman Islands in 2014 and is wanted for questioning by police in connection with an investigation into Advanced Integrated Systems Ltd., another Cayman company, which prosecutors allege was a front for Watson’s and Webb’s interests in a

Cayman Islands public healthcare contract known as CarePay.
Watson and Webb were accused of jointly siphoning millions of dollars from the CarePay contract.

In the CarePay case, it was alleged that Morgan and another close Webb associate, Eldon Rankin, were used as “sham” frontmen to cover up the involvement of Webb and Watson in AIS Cayman.

Watson informed Khawaja in an email on Nov. 3, 2014, that “Forward Sports Cayman Islands was not active – never started operations as we decided to set up in Panama instead.”

Khawaja acknowledges that the Panamanian entity was set up as a distribution company for Forward mainly to sell UNCAF replica products in those markets, but he says that he did he know anything about the loan agreement with CIFA until he was informed about it by the company’s auditors last year, nor does he know where the $600,000 for the loan to the Cayman Islands Football Association came from and whether the amount of the loan was actually paid out.

The loan scheme

The Forward Sports loan mirrors a similar $600,000 loan by another Panamanian company, Cartan International Inc. This loan had the same terms as the Forward Sports loan and was signed on the same day, Dec. 31, 2013, by the same people – Blake on behalf of CIFA and Abrego on behalf of Cartan.

The companies Forward Sports Inc., Forward Sports International Management, Green Day Foundation, Cartan International Inc. and Cartan International Management Inc. were all set up at the same time, around May 23, 2013, using the same organizational structure and the same nominee directors.

CONCACAF sued Cartan’s parent company Cartan Tours and related entities Elmore Sports Group and iSports Marketing, as well as the company’s owner, David Elmore, and former sales manager and executive vice president Daniel Gamba in December 2015. CONCACAF alleged that Cartan obtained a contract to arrange all of the football confederation’s travel and event logistics at inflated prices because “it had a secret deal with Webb and Sanz to pay them off.”

Panama’s company register reveals that Gamba and Elmore are named as directors of Cartan International but not of Cartan International Management, effectively replicating the setup of Forward Sports that saw Khawaja as a director of Forward Sports Inc. but not of Forward Sports International Management Inc.

According to the CONCACAF writ, “Elmore admitted to the auditors [of CIFA] that Cartan made a charitable donation of $600,000 to CIFA in 2013, but apparently denied any affiliation with Cartan International, a company incorporated in Panama on May 23, 2013.

“Elmore further stated that Cartan does not have an account or office location in Panama, but that the money was wired from a U.S. bank account,” CONCACAF stated.

Neither the Cartan nor the Forward Sports sponsorship was ever publicized, as would be typical in these circumstances.

CIFA’s financial statements also did not name the companies that extended the loan, even after the loan was re-designated as a gift, mentioning only “two private companies” that are “strategic partners.”

In its writ, CONCACAF claimed “that is because it was not a gift at all, but yet another form of graft and illicit dealing between defendants and Webb.”

In Forward’s case, another possibility could be that the $600,000 loan to CIFA was related to the $1.1 million alleged bribe payment from Traffic to Webb that, according to the U.S. indictment of the former CONCACAF president, was allegedly paid to the Panamanian soccer uniform maker.

In February, CONCACAF and Cartan settled their lawsuit out of court. Webb pleaded guilty to racketeering conspiracy, three counts of wire fraud conspiracy and three counts of money laundering conspiracy in November 2015. He is awaiting sentencing in the United States.

The loans to CIFA are still under investigation by the Anti-Corruption Unit of the Royal Cayman Islands Police Service.

Watson was sentenced to seven years in prison in February after he was found guilty of five of six criminal charges in connection with the CarePay hospital contract investigation. He has filed an appeal in the case.