Shareholders claim they lost "hundreds of millions of dollars" as a result of Televisa's alleged scheme.
Mexican media giant Televisa has been sued by shareholders for allegedly participating in a corruption scheme to win broadcast rights to the FIFA World Cup through millions of dollars in bribes.
The lawsuit, filed late Tuesday in federal court in New York, alleges that Televisa paid bribes through a subsidiary in exchange for rights to the 2018, 2022, 2026, and 2030 editions of the enormously popular soccer tournament. It also “cooked its books for years” to hide the fact that it was paying bribes to win those rights, according to the complaint.
Participants in the Colleges of Applied Arts & Technology Pension Plan, which owns shares of Televisa traded on the New York Stock Exchange, claim they were defrauded and that investors lost “hundreds of millions of dollars” as a result of the scheme. They are seeking class-action status, as well as compensation for their losses.
Mexico City–based Televisa did not immediately respond to a written request for comment, and repeated calls to the company’s media center were not answered.
The lawsuit was filed by San Diego law firm Robbins Geller Rudman & Dowd, which specializes in shareholder suits. Rachel Jensen, the lead attorney for the plaintiffs, could not be reached for comment.
According to the suit, Televisa used a Swiss-based subsidiary, Mountrigi Management Group, to pay bribes to high-ranking FIFA officials to win the coveted rights to the tournament, which Televisa executives have described as “an event that we have to have” in calls with investors and analysts.
For example, the suit alleges, Televisa in 2013 conspired with Brazilian media giant Grupo Globo and Argentine firm Torneos y Competencias to pay a total of $15 million in bribes to former FIFA executive Julio Grondona for rights to the 2026 and 2030 World Cup throughout Latin America. For its share, Televisa used Mountrigi to pay $7.25 million to Torneos, which then paid the money to Grondona.
Grondona, a longtime IFA vice president and president of Argentina’s soccer federation, died in July 2014.
The lawsuit is the latest fallout from an ongoing US criminal investigation of global soccer corruption that has to date netted more than two dozen convictions. Details of the 2013 bribe, for example, first emerged late last year when Alejandro Burzaco, the former chief executive of Torneos, provided testimony about the scheme during a six-week trial in the case. Burzaco was indicted in May 2015 and pleaded guilty later that year, agreeing to cooperate with the investigation.
Torneos, for its part, entered into a deferred prosecution agreement in late 2016.
News of the Mountrigi subsidiary first emerged in October 2017 in a New York Times article about the company. Within hours of it appearing, the chief executive of Televisa, Emilio Azcárraga III, and its chief financial officer, Salvi Folch, resigned.
Then in late January, Televisa submitted a filing with the Securities and Exchange Commission noting “material weaknesses in the company’s internal control over financial reporting,” an unusual admission that plaintiffs in the case believe relates to the World Cup rights bribery scheme.
In July, Televisa announced it had terminated its auditor, PwC, and had hired another, KPMG Cardenas Dosal. According to the plaintiffs, this could indicate that the original auditor “had material disagreements about Televisa’s accounting practices and accounting systems and was unwilling to turn a blind eye to Televisa’s failure to comply with required internal controls and laws prohibiting bribes.”
Starting in October, Televisa shares have suffered sharp declines based on the allegations of corruption related to its acquisition of World Cup rights, losses that the plaintiffs claim cost investors “hundreds of millions of dollars.”