FIFA graft probe threatens new scrutiny of Qatar’s World Cup3 min read . Updated: 27 May 2015, 09:06 PM IST
Swiss prosecutors open criminal proceedings related to the awarding of the 2018 and 2022 editions in Russia and Qatar respectively
Dubai/Doha/Calgary: Already struggling to silence allegations of abusing migrant workers, Qatar’s $200 billion plan to host the 2022 football World Cup faces renewed scrutiny.
The gas-rich country is indirectly embroiled in a probe into alleged corruption in the world’s football governing body, FIFA. Swiss prosecutors said they had “opened criminal proceedings" related to the awarding of the 2018 and 2022 editions in Russia and Qatar respectively. Separately, the US said nine FIFA officials were indicted for racketeering, wire fraud and money laundering conspiracies.
The two governments have denied any wrongdoing and FIFA said the venues won’t change. Qatar’s benchmark index for stocks dropped the most in almost two months.
Qatar “will fight to the end, but it’s not going to be an easy fight", said Ghanem Nuseibeh, founder of Cornerstone Global Associates, which advises clients on risk in West Asia. “What happened increases the risk that the Qatar bid will be under even greater scrutiny," he said.
The world’s biggest liquefied natural gas exporter is spending about $200 billion on infrastructure before hosting the world’s most-watched sporting event. The plan includes at least eight new stadiums and a $35 billion metro and rail system. New highways are being laid and a city for 200,000 people is rising north of Doha, the capital.
FIFA awarded Qatar the right to host the tournament five years ago at a ceremony in Zurich, beating out Australia, Japan and South Korea and the US.
The only host candidate that FIFA ranked “high" in operational risk because nearly all the facilities for the event needed to be constructed from scratch, Qatar outspent rivals and hired former French World Cup-winning midfielder Zinedine Zidane and former Barcelona player Josep Guardiola to endorse its bid.
The benchmark QE Index for stocks fell 1.5% in Doha, the most since 1 April.
“Investors have the right to be nervous about the recent corruption allegations," said Tariq Qaqish, a fund manager at Al Mal Capital PSC in Dubai. However, he said that “Qatar remains a solid story even without hosting the World Cup."
The economy is set to expand 7.1% this year, powered by non-oil industries, according to International Monetary Fund (IMF) estimates. That’s faster than any other country in West Asia, IMF data show.
“There are lots of foreign firms working on the projects, but essentially the investment is all coming from the Qatari government," Crispin Hawes, managing director of research firm Teneo Intelligence in London, said by phone.
In the US investigation, the immediate “procedural, legal, logical implications are very limited for Qatar, at the simplest level", he said. Still, “If there is an additional investigation that is specifically targeting 2022 or 2018 awards, then it’s not going to die down."
Swiss authorities seized electronic data and documents during an early morning raid at FIFA’s headquarters in Zurich.
The Swiss probe comes at a time when Qatar is seeking to dispel accusations by human rights groups that the government is failing to improve the lives of migrant workers. The country was ranked among the worst places to work by the International Trade Union Confederation last year.
“Little has changed in law, policy and practice for the more than 1.5 million migrant workers in Qatar who remain at the mercy of their sponsors and employers," Amnesty International said this month. In response, the government said “significant changes have been made over the last year to improve the rights and conditions of expatriate workers."
Abdullah bin Saleh Al-Khulaifi, minister of labour and social affairs, said in an interview that an amended sponsorship law may be enacted this year.
The most visible improvement so far is in migrant workers’ housing, which the government showcased to international news organizations earlier in May. While the majority live in tight quarters, sometimes eight or more in 25 sq. m rooms, better facilities are popping up on the outskirts of Doha and around the country.
A government-financed, 3 billion riyal ($824 million) compound known as Labor City, which can house 70,000 people is preparing to receive tenants. Workers there can walk to a nearby mall, movie theatre and cricket stadium with 24,000 seats, amenities that are unheard of in existing worker housing.
“It’s too late to change the 2018 and 2022 World Cups because it would take a long time to prove corruption in court and then declare the contracts void," Sylvia Schenk, who leads Transparency International’s research on FIFA, said in a phone interview from Germany. “The issue now is that Qatar should improve conditions for migrant workers." Bloomberg