World leaders in volleyball threatened by Brazilian corruption scandal

If the world community of volleyball thought that their beloved sport had left corruption behind when the flamboyant Mexican Rubén Acosta quit the FIVB presidency in 2008 with at least 33 million USD of volleyball’s money on his private bank account, they may now wake up to a grim reality.

In the past weeks the investigative journalist Lúcio de Castro from the Brazilian branch of ESPN has uncovered what seems to be a spectacular corruption scandal in the Brazilian volleyball federation CVB (Confederação Brasileira de Voleibol).

The scandal goes beyond Brazil and can have dire consequences for the two Brazilians currently leading the volleyball’s world headquarters in Switzerland, the Fédération Internationale de Volleyball (FIVB), namely its president Ary Graça Filho and general director Fábio André Dias Azevedo.

According to articles and documents published on ESPN’s websites and reproduced all over the national media, the Brazilian federation CBV has made two contracts worth 10 million Reais (approx. 4.2 million USD) with companies owned by present or former top officials of the federation.

The contracts were made to honour services for renewing the agreement with CBV’s main sponsor since 1991, Banco do Brasil, the largest bank in Latin America.

However, both Banco do Brasil and CVB have confirmed that the contract in question, covering five years from 2012-2017, was negotiated directly between the two parties and does not foresee any kind of payment to agents or intermediaries.

Nevertheless, the CBV contracted two companies to that end in 2011 and 2012, at a time when Ary Graça was not yet elected FIVB President, but still had his full mandate at the CBV and signed its accounts.

One of the beneficiaries were “SMP Logística e Serviços”, owned by Marcos Pina, who has served various functions at the CBV and from 2013 served as its general manager until a few days ago when he retired as a consequence of the scandal.

The other company is even more interesting from an international perspective: “S4G Gestão de Negócios” is owned by Fabio Azevedo whom Ary Graça brought to Lausanne as General Director of the FIVB after Graça took office as world volleyball president in 2012.

Whatever the motive was for the CVB and Graça to sign up with S4G, it could not have been the company’s experience: The S4G was established by Fabio Azevedo 12 April 2011, only three days before it signed two contracts worth five million Reais each with the CVB.

Graça resigns as Brazilian volleyball president
The revelations have led to numerous reactions apart from the retirement of Marcos Pina, the administrative head of the Brazilian federation CBV.

In a letter to the CBV congress last Friday 14 March, Ary Graça finally retired from his post as CBV President, from which he had taken temporary leave when elected to the FIVB presidency.

Ary Graça denies any connection between the scandal and his resignation. In a press release he claims that the letter of resignation was written already 20 December 2013, but only made public now.

He does admit, though, that payments were made to various companies in relation to the negotiations with Banco do Brasil, although he says that the total of commissions were only 3-4 per cent of the total sponsorship value – the exact figures remain undisclosed.

He also confirms  that there was no direct involvement of go-betweens in the negotiations with Banco do Brasil, but without being explicit about how the companies then were involved, he tries to justify the payments:

“We must clarify that the amounts paid refer to two years of extensive negotiations […] It is the largest contract in its [the CBV’s] history, excellent for both parties and enabling the continued growth and success of Brazilian volleyball.

Like all major contracts this also required complex negotiations, with big prospects for the CBV on the Brazilian sports marketing market, contact with various other sponsors and many other negotiations conducted until the result was achieved,” Ary Graça writes.

State auditors will scrutinize volleyball
In a society with growing awareness about corruption and increasing popular protests against the ruling classes, the public outrage and the stakeholder response has been dramatic for volleyball.

Banco do Brasil has threatened to end its long-lasting sponsorship with volleyball and demands that all wrongdoings are corrected and the involved persons sanctioned.

The new president of the CBV, Walter Pitombo Larangeiras, has promised clarification, suspended all contracts signed until 2012 and hired external auditors to review the disputed contracts.

But the worst news for the CBV and in particular Ary Graça is that the much respected public state auditors CGU (Controladoria-Geral da União) have decided to investigate Brazilian volleyball. This investigation is likely to scrutinize all major financial transaction of the CBV, not only in recent years, but as far back as the CGU pleases.

It may even involve cases brought up already in the 1990’ies where the CBV was presided by another controversial figure – Carlos Nuzman, today’s head of the Brazilian Olympic Committee and of the Local Organising Committee of the Rio Olympics in 2016.

If the investigation brings about more documents it may have the potential to undermine Ary Graça’s position at the FIVB further. The FIVB website remains so far silent on the issue.

But the investigation may not stop at the desk of Ary Graça. Some observers are already calling for an extension of the investigation into other sports and into the way the Ministry of Sport handles its public grants to sports federations:

“Olympic sport needs a rigorous overhaul […] also with the participation of the Federal Police,” writes the respected journalist José Cruz on his blog.

“Without exaggeration elite sport hides highly suspicious business affairs worth millions, and this happens all over the world. However, in Brazil, the federal government does not care about this reality,” Cruz writes, arguing that since the government has paid public money to federations even when knowing about scandals, also the actions of the Ministry of Sport should be investigated.

“The ball of yarn is unwinding,” writes the investigative journalist Lúcio de Castro in his articles on the volleyball scandal atespn.com.br.

Ary Graça and many other sports leaders in Brazil cross fingers that it won’t roll in their direction.