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By Simon Evans and Mark Hosenball
ZURICH, Oct 9 (Reuters) - FIFA President Sepp Blatter's loss of control of soccer's world governing body had been evident to staff in its hilltop glass headquarters here well before Thursday's announcement by FIFA's Ethics Committee that he had been suspended.
The Swiss national who has won five successive elections to dominate FIFA for 17 years had become increasingly isolated in the months following the U.S. indictment of 14 soccer officials and sports marketing executives on corruption charges in late May, according to sources with knowledge of the situation. The power had shifted to FIFA's lawyers and some external advisers.
The disclosure on September 25 by the Swiss authorities that Blatter was the subject of criminal proceedings on suspicion of mismanagement and misappropriation was a further big blow, prompting major FIFA sponsors, such as Coca-Cola and McDonald's to call for his immediate departure.
Blatter, who has not been charged and has denied any wrongdoing, was set to step down anyway in February, when a new president is due to be elected. Now, the 90-day suspension means the 79-year-old won't be able to represent FIFA in any capacity during most of the rest of his remaining time, and may well mark the end of the Blatter era.
"People have got used to the idea that Blatter is FIFA," said a source within the soccer body. "But the reality now is that Blatter is not FIFA and FIFA is not Blatter."
According to sources familiar with the situation, many important FIFA decisions are now being initiated by its own attorneys, led by head of legal affairs Marco Villiger, who has been in the job for almost nine years. They are being advised by the U.S. law firm Quinn Emanuel Urquhart & Sullivan.
The legal team has pushed FIFA to cooperate with U.S. and Swiss corruption investigations, tried to calm the concerns of corporate sponsors and supported the efforts of reformers who want permanent change within FIFA, the sources said.
Heading the in-house anti-corruption drive is another Swiss lawyer, Cornel Borbely, who is the chief investigator of FIFA's Ethics Committee. He runs his own law firm and says he resists any pressure from FIFA headquarters.
He is among a small group of reformers who have taken so-called "independent" roles at FIFA in recent years. They also include Domenico Scala, a Swiss businessman who is chairman of its Audit and Compliance Committee and is trying to spearhead reforms of FIFA's structure and rules.
U.S. crisis communications and advisory firm Teneo is also involved. It has been hired "to work across operational and reputational priorities" according to a FIFA statement in July.
The new reality at the 'Home of FIFA' was illustrated when the organization's lawyers recently pressured Blatter to stop using FIFA outlets to issue statements in his own defense, the sources said. In practice that means FIFA's public relations staff have no longer been responding on Blatter's behalf to media queries about allegations he faces, and he cannot post a response on FIFA's website.
Blatter's diminished status was clear to staff when he gave them a 15-minute speech in FIFA's spacious reception hall on September 28. Usually Blatter finishes these occasional pep-talks with some light-hearted exchanges with staff, a joke or two, or a little chat about the previous night's soccer scores.
This time, though, not only was Blatter in a more somber mood but he headed off to his office immediately after his speech, said a person with knowledge of the meeting. For the first time since he became leader of global soccer in 1998, he was the warm-up act rather than the headliner.
When Blatter left the room, Villiger took the floor and gave a very clear message to the assembled employees. They needed to understand that Blatter's view was no longer necessarily FIFA's, Villiger said, according to this person.
Blatter's lawyers said in a statement on Thursday that he is disappointed that FIFA's ethics committee did not speak with him before suspending him, and said the decision was based on a misunderstanding of the actions of Swiss Attorney General Michael Lauber. The lawyers said Blatter, who has denied any wrongdoing, was looking forward to presenting evidence that will prove he did not engage in any misconduct.
The transformation in who is calling the shots at FIFA in the past few months has been extraordinary. Traditionally almost all the power has been held by the president, the secretary general, and the executive committee, which is nominated by the six regional soccer confederations.
However, Secretary General Jerome Valcke - who was Blatter's second-in-command - had already been suspended and put on indefinite leave by FIFA on September 17. Valcke faces an investigation into accusations he was part of a scheme to sell 2014 World Cup tickets at a marked up price. His U.S. lawyer, Barry Berke, says he "has unequivocally denied the false allegations against him."
Valcke's deputy, Markus Kattner, has taken over day-to-day operational duties.
It is too early to say whether the lawyers will retain their influence for an extended period after a new president is elected to replace Blatter by FIFA's 209 member associations at a special congress in February in Zurich.
The election is itself facing headwinds as the Ethics Committee also on Thursday suspended Michel Platini, the head of the European soccer body UEFA, who had been seen as a frontrunner to replace Blatter. If Platini, who has denied any wrongdoing, cannot overturn his 90-day suspension he won't be able to stand.
The Swiss Attorney General's office said on Sept. 25 it had opened a criminal investigation into Blatter. It concerned a Caribbean television rights deal and a 2 million Swiss francs ($2.06 million) payment from FIFA to Platini in 2011, nine years after Platini completed a spell working for Blatter as an advisor. The office has said it regards Platini as somewhere "between a witness and an accused person" in the case.
U.S. authorities have so far said that FIFA and other soccer governing bodies are victims, but that could change at any time and the aim of FIFA's lawyers is to make sure that it stays that way and that the soccer body doesn't itself become an institutional target for prosecutors, according to sources familiar with the strategy. If FIFA itself were to be criminally charged, sponsors and other partners might be wary of the risks of doing business with it.
Blatter's power began to slip away on May 27 when the U.S. Department of Justice announced it had indicted 14 people, including several current or former FIFA executive committee members, on a range of money laundering, wire fraud and racketeering charges.
Blatter was reelected president two days later but soon after announced he would be stepping down because he said he had lost the mandate from much of the world of soccer.
He had still been arriving at the FIFA HQ by 7 a.m. most mornings and often staying for 12 hours, according to a source at FIFA. He had been attending meetings of visiting soccer officials and planning for the election and the 2018 World Cup, but crucially, he had not been engaged in any of the legal or ethics discussions inside FIFA, two sources said.
Normally a frequent traveler on FIFA business, he has only taken one overseas trip since the indictment. Legal experts say it is likely that his attorneys have told him to reduce his legal risks by not going to countries that have extradition agreements with the United States.
Sources have told Reuters that the FBI has been looking at Blatter's behavior as part of its investigation, though the U.S. authorities have not accused him of wrongdoing.
The impact the turmoil is having on FIFA's financial performance isn't yet clear. Its next big money event is the World Cup in Russia in 2018 so it does have some time to get its house in order. But while no major sponsors have quit since the May arrests, in July Valcke told reporters that the scandal is making it difficult to attract new sponsors. FIFA will also likely be facing legal and other costs as it deals with the investigations.
It has been a difficult time for the approximately 400 FIFA staff in Zurich. The weeks since the May arrests have been "disorientating", according to one source who is close to the employees.
Swiss MP Roland Buechel, who has been the most vocal Swiss parliamentary critic of FIFA and Blatter, said that several FIFA staffers have phoned him in recent weeks to offer to provide him with documents as evidence of the problems at FIFA. (Reporting by Simon Evans and Mark Hosenball; Additional reporting by Brian Homewood, David Ingram, Mica Rosenberg and Joshua Franklin; Editing by Martin Howell)