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The Truth behind Corinthians Millions

Corinthian's have spent over $50 million attracting some of South America's best players to Brazil. But where did all this money come from and how can they possibly hope to make a profit on their investment? Samba Foot investigates truth from rumour in the Corinthian's story.
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A massive drama is unfolding in Brazil right now and for once it’s not involving the latest Globo soap opera. No, this time it’s domestic football that has all the action, intrigue and mystery of the infamous Brazilian soap operas.

At the end of 2004 Brazil’s second most supported football team Corinthian’s decided the time was right to allow foreign investment into the club. The club had huge debts, high player wages and a under performing team. It supporters were disillusioned, its board in disarray. Then along came an Iranian man called Kia Joorabchian. Joorabchian claimed to be the front man of a sport investment agency called MSI (Media Sports Investment Ltd) and was interested in creating a partnership with the club. The board had little or no choice but to discuss MSI’s proposal, despite the supporters’ fury.

Joorabchian persuaded the board and the fans in the same way Joan La Porta (of Barcelona fame) won over the supporters in Catalunya by banding about major players names. MSI started issuing a potential wish list Carlos Tevez, Carlos Alberto, Kleberson, Vagner Love and the list went.

Now as I’m sure most readers will realise Brazil has a history of exporting the world’s finest footballers. But importing? You must be kidding right? For Corinthian’s board members the offer was simply too good to refuse. Sure they didn’t know quite who they were dealing with but it seemed like a win, win deal to them. However the xenophobia of ex-players and supporters surfaced in a furious board meeting which ended in a full scale riot as the board approved MSI’s investment and accepted the deal.

True to his word Kia Joorabchian returned a few weeks later from Buenos Aires with the news that he had an agreed deal with Boca Juniors, Carlos Tevez would be moving to Brazil for $20 million! Suddenly the football world sat up and took notice. Tevez had long been a target of Europe’s largest clubs and had just been top scorer in the Athen’s Olympics. How on earth could MSI/Corinthians afford to purchase and sustain the likes of Carloz Tevez at Corinthians in Brazil?

The Brazilian press was sceptical about the whole MSI purchase and started asking questions of the origins of the money. Just who is financing MSI? What do they hope to gain? As most bankers will tell you owning a football team is not something you do for the profits. But Joorabichian appears to think otherwise stating “My ideal would be to create the Real Madrid or Manchester United of Brazil — an international brand”.

The Brazilians press started to dig a little deeper into MSI, Kia Joorabchian and his unknown past. Where are the head quarters of MSI ltd? Well it turns out that the official registration of MSI is at Accountancy firm in Central London (this is just about legal in the UK).

Kia Joorabchian’s background proved just as interesting. Born in Iran and educated in Britain, Joorabchian first appears in the UK’s media in 1999, when he and a partner bought an 85% stake in the Moscow newspaper ‘Kommersant’ using an investment fund based in the British Virgin Islands. He soon sold it to the Russia Oligarch (ultra rich and powerful business men) - Boris Berezovsky.

The Kommersant deal started the speculation about Berezovsky's involvement, which appeared strengthened by comments in the Brazilian press attributed to Alberto Dualib, the Corinthians president. In transcripts of a tape recording, he said that on a recent visit to the UK with Joorabchian the two had “visited Berezovsky's home near London”.

In February Joorabchian gave an interview to the London Times newspaper. He denied any links to Berezovsky or Roman Abramovich although confirming he has had business dealings with both men before. “I did business with Roman and Boris seven years ago, but have had no contact since”. “Boris is a close friend of mine, but he is not an investor and has no links to Corinthians.”

Another unusual (suspicious to the Brazilian press) fact uncovered is that in the register of directorships at Companies House (The UK’s business registration company) Joorabchian gives two different dates of birth - both make him 33 - and two different nationalities, Canadian and British.

While the media went wild with allegations, MSI kept buying players and announcing targets. So far the players signed list reads like a top European team. Javier Mascherano (joining in the summer), Carlos Tevez, Carlos Alberto, Marinho, Marcelo Mattos, Hugo, Sebastian Dominguez, Gustavo Nery and the latest to date is Roger from Benfica.

So, good as their word MSI have created their South American ‘Galaticos’. Only Kleberson (set to sign in summer) and Vagner Love slipped away. So the question, regardless of whom is financing these purchases, is what do MSI possibly hope to achieve with Corinthians? In Joorabchian’s words “We are not unrealistic — no matter how big a club you are, ultimately every player in the world will want to move on, but we want to turn this club into a force in international football.”

The 10-year deal between MSI and Corinthians stipulates that the company will provide $35m cash, of which about $20m will pay off debts, in return for 51% of future profits while covering any losses. The transfer of Tévez is extra, considered a "gift" by Joorabchian to the club. Even Joorabchian with his lack of footballing knowledge must have realised that most European teams barely make a profit, let alone a South American club.

The most obvious answer to the Brazilian (tabloid) press anyway, was they must be money laundering, whether from arms dealers or organised criminals located in ex-Soviet republics. This conspiracy theory is primarily based on Boris Berezovsky involvement, his shady past and known involvements with Joorbachian. Would this make sense? Why launder money through a football team?

Well at first glace this would seem like an obscene suggestion, but then think about it. Buy the best players from South American (where bureaucracy can easily be brown enveloped away) sit on them for a season or two then sell them on to Europe. Suddenly your money is clean and you’re ready to take the profits and run.

The costs of laundering such huge amounts of money are massive. Money laundering is surprisingly complicated in this day and age. If you have $20 million of dirty money and want to put it in your bank account, then prepare to be asked questions. So the criminals pay people to clean up the money and make it appear legitimate. This is a very expensive and complicated business. So if you did it with football players buying a player for $10 million (with dirty money) and selling them for only $5 million – to a European team for example - would be considered a good return.

However I personally would seriously doubt large scale money laundering is behind the MSI move, but it is possible some seriously wealthy people are trying to move the location of their assets. This is believed to be one of Abramovich’s reasons for buying Chelsea, to move his finances out of reach of Russia and all its problems.

In January, the Brazilian government told Joorbachian that he didn’t actually have the necessary paper work to do business in Brazil. MSI quickly reacted by putting Corinthians vice president Paulo Angioni on their board giving him the title ‘Director of MSI Brazil’.

Given the allegations flying around, Brazil’s anti–organised crime task force summoned a confused Angioni to answer the allegations and to prove once and for all where the money was coming from. In a bizarre 4 hour testimony Angioni disclosed little in the way of information. “He didn’t help in any way, shape or form” said District Attorney Jose Carneiro. “He displayed a complete ignorance of both his precise role in the company and the workings of an investments fund”. “There are certain indications of money-laundering, but also a lot is still to be investigated…I can’t give a deadline for closing this case”.

Carneiro therefore appeared to confirm the rumours on Brazilian television and in the broadsheets that he is a front man for Kia Joorabchian with no real control of MSI. Indeed the District Attorney questioned if he (Angioni) even knew where the money is coming from.

Now this whole story may sound a little familiar to our English readers. Chelsea was involved in a very similar ownership situation in the pre-Roman Abramovich era. The then chairman Ken Bates was a ‘front man’ for an unknown group of (Middle-Eastern?) business men who didn’t want their names revealed.

So where does all this leave Corinthians? Well, their future is in the balance. As I write this article Corinthian's have announced Daniel Passarella as Coach - His salary, $100,000 a month. Any one investing such large sums of money will eventually expect a return on it. Failure will simply not be an option. We don’t really know just how big MSI’s financial might really is, should the team not perform this year can we expect another round of big spending? Will MSI pull out and take their players with them to Europe? Who is really driving the club? Why aren’t they buying any Brazilian players based in Brazil? One thing is for certain this year the Brazilian National championship just got a whole lot more interesting.

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