ZURICH (Reuters) - A privileged existence in Switzerland for some of the largest sports organizations in the world and their top executives including Sepp Blatter, president of world soccer’s governing body FIFA, may be coming to an end.
Responding to years of corruption allegations, lawmakers are poised to pass a set of laws known as "Lex FIFA" that would tighten oversight of the approximately 60 sporting bodies based in Switzerland.
The first of the new laws, which is expected to be approved by parliament next Friday, would treat Blatter and other top executives such as International Olympic Committee head Thomas Bach as "politically exposed persons" - a term justice officials use to define those in positions that could be abused to launder money.
This would by necessity increase financial scrutiny of sports officials because Switzerland's banks are legally required to ensure funds are not of suspicious origin before they accept them.
The campaign to increase oversight of major sports bodies has been led since 2010 by lawmaker Roland Buechel, who says he is concerned that negative headlines around these organizations are tarnishing Switzerland's image.
The latest scandal involves allegations of corruption - denied by those concerned - in the bidding process for the right to host the 2018 and 2022 soccer World Cups, awarded to Russia and Qatar respectively.
FIFA is based in a $250 million mostly underground headquarters in Zurich atop what is known locally as "dividend hill" – so called because residents of the exclusive suburb overlooking Lake Zurich are reputed to be sufficiently wealthy to live solely off annual payouts from stocks and bonds.
Since 2010, eight members of FIFA's decision-making Executive Committee have been banned for various lengths of time by FIFA's ethics committee for corruption, or have resigned while under investigation.
Housing sports organizations carries financial benefits for Switzerland despite despite their favored tax status.
As non-profit associations, sports bodies pay a far lower tax bill than private-sector corporations. That legal status puts FIFA, which posted nearly $1.4 billion in revenue last year, on an equal footing with community projects, for example.
At the same time, FIFA is credited by Zurich officials with creating hundreds of jobs and boosting tourism with events like the Ballon d'Or award ceremony, which last year drew football greats Cristiano Ronaldo and Lionel Messi to the city.
Swiss public opinion, however, has hardened against FIFA and its head Blatter, a Swiss native. Ninety-five-per-cent of those who took part in a recent online poll conducted by Swiss daily 20 Minuten said that he should accept responsibility for FIFA's recent troubles and step down.
"It has started to be embarrassing, it's really bad for the country and it's not necessary," Swiss parliamentarian Buechel told Reuters.
The first test comes on Dec. 12, when lawmakers are expected to pass the law defining top sports officials as politically exposed persons.
The second prong of Lex FIFA is to make FIFA and other sports bodies subject to new money-laundering laws drawn up by the Paris-based Financial Action Task Force. Currently Swiss-based sports bodies are exempt.
This draft law is set for committee and then parliamentary debate next year and, though it enjoys government backing, is unlikely to enter force before 2017 due to the slow nature of the Swiss lawmaking process, according to Berne lawmakers. A third proposal to tackle match-fixing is likely also years off, according to these people.
In a statement to Reuters, FIFA said it supports measures to protect football's integrity and tackle corruption.
"As an international sports organization based in Switzerland, FIFA is following current political discussions with interest and is available to answer any questions from legislators."
A spokeswoman for the IOC said it welcomed efforts to make corruption in sport a criminal offense.
Transparency International, a governance group, backs the draft law but has also criticized it, saying it doesn't give Swiss prosecutors enough legal leeway to pursue wrong-doing in sports vigorously.
Other sports organizations based in Switzerland include the World Anti-Doping Agency, or WADA, and the International Cycling Union, or UCI.
Reporting By Katharina Bart. Additional reporting by Brian Homewood in Berne; editing by Janet McBride