Financial irregularities in African football exposed by audit

AP – Financial irregularities across African football have been unearthed in a confidential audit of the continent’s governing body that raises concerns about the legitimacy of millions of dollars of cash payments that were distributed to executives and national associations with sparse records.

The Associated Press (AP) last Saturday obtained a copy of the private forensic review of the Confederation of African Football that found “possible abuse of power” and reported “potential fraudulent adjustments” in accounting records that are “unreliable and not trustworthy”.

The report by financial services firm PwC, which is more than 50 pages long, covers the period 2015-19 and the Presidencies of Issa Hayatou and successor Ahmad, who remains in power despite an ongoing ethics investigation that predates this audit. The review was undertaken last year when FIFA was effectively running the troubled African confederation.

The auditors had to grapple with limited documentation to account for payments at CAF worth millions of dollars that raised doubts about the nature of contracts, the need for family members of executives to receive payments, and raised the prospect of kickbacks and tax evasion attempts.

The lack of paper trail related to financial transactions before 2015 has already been highlighted as an area needing further investigation, according to separate recommendations from a joint FIFA-CAF taskforce in another document obtained by AP.

The group, which includes political and legal figures from across Africa, has urged due diligence checks on payments from FIFA and CAF to the 54 member associations on the continent.

There was particular investigation of USD10 million of FIFA development funds for Africa which amounted to 40 payments between 2015 and 2018.

PwC found USD4.6 million from 14 payments had “no or insufficient supporting documentation to determine the beneficiary, purpose, and benefit for CAF”.

President of the African Football Confederation Ahmad speaks at a press conference in Marrakesh, Morocco. PHOTO: AP

The auditors said they could not find the purpose of the payment, the ultimate beneficiary or evidence the cash had been received in some cases. Another USD3.6 million accounting for 21 payments was “considered unusual or deemed higher risk”, the report said. Only five payments of those scrutinised — amounting to USD1.6 million — had “sufficient documentation” and were said to have been used for the purpose intended.

“Based upon the procedures performed and documents reviewed, several red flags, potential elements of mismanagement and possible abuse of power were found in key areas of finance and operations of CAF,” the PwC auditors said in the report.

“Given the serious nature of certain findings and red flags identified from the preliminary due-diligence, we cannot rule out the possibility of potential irregularities.”

The large number of cash payments concerned PwC, which said they resulted in “little or no audit trail to verify if the cash has been spent legitimately or not.”

It noted a round sum of USD215,000 spent during a general assembly meeting in Ethiopia in March 2017.

“Lack of key financial controls and absence of segregation of duties in day-to-day financial operations was observed during the review,” PwC found.

“Often a single employee would have the authority to, and have executed, conflicting duties such as approving expenditure, receiving of goods and services, and approving payments.”

The report outlined payments to members of the CAF executive committee from the governing body for gifts, donations and even a funeral.

“No supporting documents could be provided for review,” the report said.

The report found that CAF appeared to pay around USD100,000 for 18 people including its President Ahmad and federation heads to travel on an Umrah pilgrimage to Mecca and Medina in Saudi Arabia.

“CAF stated that the cost of travelling of 18 people between their home countries to Egypt was booked as ‘official expense’ towards organising a meeting at Egypt and the cost of travelling between Egypt and Saudi Arabia was taken by CAF’s President personally,” the report said.

“However, CAF could not provide any documents to support that an official meeting was organised in Egypt during this time. It is to be noted that the presumed costs of travel between Egypt and Saudi Arabia is in the range of USD20,000–USD30,000 higher than the actual reimbursement made by CAF’s President.” Ahmad declined to comment in detail on the audit’s findings.

The audit raised concerns that “several large procurement transactions” were handled by the executive committee or management while cutting out specialist staff like the marketing department for a deal with French-based company Tactical Steel.

PwC found its main business appeared to be in design, manufacturing, sales and gym products but received USD4.4 million from December 2017 to December 2018 to supply football equipment including referees kit and footballs. Purchases were arranged through email exchanges rather than with contracts and full invoices documenting the deals.