December 12, 2015 / 9:00 AM / 2 years ago

Scotiabank comfortable with CONCACAF progress but reserves right to end ties

3 Min Read

TORONTO (Reuters) - Canada's Bank of Nova Scotia is comfortable with progress CONCACAF has made after pushing the regional soccer body to make several changes but reserves the right to pull its sponsorship if it does not see complete transparency, a source familiar with the company's thinking said on Friday.

The comments come after the arrest last week of acting CONCACAF president Alfredo Hawit, and the May arrest of former president Jeffrey Webb on corruption charges. CONCACAF controls soccer in the Caribbean, North America and Central America.

Since the first indictments, Scotiabank, as Canada's No. 3 bank is known, has called on CONCACAF to work with advisers, improve its financial systems, disclose more information and make changes in its corporate governance practices, said the source, who spoke on condition of anonymity because of the sensitivity of the matter.

"We can’t forget the fact that they need to clean up their processes," the source said. "Organizationally, their turnaround is incomplete. They are still in the early days of the turnaround."

Scotiabank is pushing CONCACAF to have audited financial statements, the source said.

"Our point of view is very simple. It is nonnegotiable," the source said. "They need to be completely transparent about how they operate their business or we don’t want to be part of it."

Scotiabank recognizes there are still many unknowns, the source said, adding that "more could come out."

Another concern weighing on Scotiabank is reputational risk, which banks say are a big issue for them.

The Canadian lender revamped its sponsorship contract over the summer and eliminated marketing agency Traffic Sports USA from the new agreement, which involves only Scotiabank and CONCACAF.

Traffic Sports' president was among 14 marketing officials and executives from FIFA, the governing body of international soccer, who were indicted in May on bribery, money laundering and wire fraud charges.

"We are getting more comfortable with that management process," the source said. "We believe CONCACAF is moving in the right direction."

Earlier this month, soccer bosses from across South and Central America were among 16 people charged by the U.S. prosecutors with multimillion-dollar bribery schemes for marketing and broadcast rights.

The fresh charges will not put an end to Scotiabank’s partnership with CONCACAF, the source said. "Our relationship with CONCACAF wasn't compromised by the latest situation."

A Scotiabank spokesman said the bank was 'satisfied' with the reforms underway at CONCACAF and had had no interactions with interim head Hawit. CONCACAF did not immediately respond to a request for comment.

Miami-based CONCACAF has been working with U.S. law firm Sidley Austin LLP and turnaround consulting company Alvarez & Marsal to tackle the organizational and reputational challenges.

The next CONCACAF Congress will see a much more transparent, open voting process, the source said.

Reporting by John Tilak, Euan Rocha and Mica Rosenberg; Editing by Diane Craft

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