5 Min Read
(Adds more detail about the investigation)
By Karen Freifeld and Joshua Franklin
NEW YORK/ZURICH, June 8 (Reuters) - Julius Baer executives have told U.S. prosecutors that a former employee acted alone when he allegedly helped funnel kickbacks and bribery payments to a soccer official in the Americas, people familiar with the investigation told Reuters.
The former banker, Jorge Arzuaga, is expected to plead guilty over his role in the corruption related to FIFA, the governing body for soccer, one of the people said.
A lawyer for Arzuaga declined to comment, while Arzuaga did not respond to requests for comment. The U.S. Attorney's office for the Eastern District of New York, which is prosecuting the FIFA case, also declined to comment.
More than two years after FIFA officials were arrested at a five-star Zurich hotel, Julius Baer is trying to minimize the fallout over its connection to the scandal as it wants to ensure that a deferred prosecution agreement (DPA) is not jeopardized.
Switzerland's third-largest private bank agreed to a DPA in 2016 after running afoul of the U.S. Department of Justice over helping wealthy Americans dodge taxes.
A spokesman for Julius Baer said it fired an employee in 2015 "after he had admitted having violated applicable laws and internal policies".
But the employee, who sources told Reuters was Arzuaga, "never told anyone at the bank that any account was being used as a conduit for bribes and that indeed he denied having such knowledge", the spokesman added.
The bank has been cooperating on the FIFA investigation and there is no indication it will impact its DPA, which requires Julius Baer to steer clear of wrongdoing for three years to ensure that charges are dismissed, the spokesman said.
Gustavo Raitzin, Julius Baer's head of Latin America, and Marc Sulser, a regional team leader, have met prosecutors from the U.S. Attorney's office in New York in recent months, sources said.
The two bankers, who the Julius Baer spokesman said declined to comment, told the prosecutors they were unaware the bank was allegedly being used as a conduit for bribery.
Switzerland's Office of the Attorney General said on Thursday it is investigating a former bank employee linked to the FIFA probe but the bank is not under investigation.
A source familiar with the matter said the person is Arzuaga and the Swiss investigation could be resolved next week.
Arzuaga, an Argentinean national who worked in Zurich as a private banker, handled accounts for sports marketing executive Alejandro Burzaco, several people familiar with the matter said.
Burzaco, the former CEO of an Argentine sports TV company pleaded guilty in 2015 to money laundering, racketeering and wire fraud conspiracies, admitting to bribing soccer officials for a decade in exchange for marketing rights to tournaments.
Burzaco, a former Citigroup investment banker, avoided arrest in Zurich but later turned himself in and is due to be sentenced in November. His lawyer declined to comment.
Citi said last year it had received a subpoena from prosecutors relating to the FIFA probe and was cooperating with authorities. A spokesman declined further comment.
Arzuaga told Raitzin that he was worried about the accounts he was managing for Burzaco after the May 2015 arrest of seven FIFA officials in a raid on a Zurich hotel, one source said.
Julius Baer advised him to get a lawyer and began an inquiry, firing him not long after the raid, the source said.
Arzuaga is cooperating with U.S. officials and, two sources said, has told them that Raitzin and Sulser were aware of an account at the bank holding money for Julio Grondona, the number two official at FIFA who died in 2014.
An account for Grondona at Julius Baer held millions of dollars, one of the sources said, but was affiliated with Burzaco, the person said.
Raitzin and Sulser have denied Arzuaga's allegations, two people said. The bank knew that Burzaco was a client, but not Grondona, one of the people said.
Arzuaga is under investigation in Switzerland over whether he tried to conceal that Grondona was the beneficial owner of an account, the person said.
Arzuaga has admitted he received hundreds of thousands of dollars from Burzaco's sports TV company, the person said.
After initially concentrating on FIFA officials and sports executives, U.S. prosecutors are now focusing on the role of banks, sources said, including UBS which said this year it was cooperating with inquiries and Israel’s Bank Hapoalim.
A UBS spokesman declined comment, while a spokeswoman for Hapoalim declined to comment on "any dialogue between the American authorities and the bank's representatives."
Accounts Arzuaga handled for Burzaco at Credit Suisse, his previous employer, are also under scrutiny, one source said.
Credit Suisse, which acknowledged U.S. and Swiss investigations in its 2016 annual report, declined comment. (Editing by Carmel Crimmins and Alexander Smith)