Infront has vowed to contest the termination of its contracts with the German Football Federation (DFB) after the sport’s governing body in Germany moved to sever its ties with the international sports marketing agency in the wake of an investigation into allegations of corruption.
The DFB decided to end the contracts following a meeting of its executive committee yesterday (Wednesday) after assessing the findings of a commissioned report delivered by Esecon, the Berlin-based investigative agency.
The allegations pertain in part to a contract awarded to Infront in 2013 to sell perimeter advertising for Germany’s national team matches, along with a deal to sell sponsorship and advertising rights at matches of the DFB Pokal, Germany’s national knockout clubs tournament.
Infront has said it “firmly rejects” the corruption allegations and “will do everything it can to combat them”.
The DFB’s relationship with Infront has been under the microscope since details of an ‘LED scam’ conducted by a former executive at the agency first emerged in May 2019. The executive in question faces a criminal investigation in Switzerland and the case has been the subject of an investigation by Infront with the agency having commissioned external lawyers.
The move by the DFB to end the contracts comes after a report in German magazine Der Spiegel on Friday claimed the Esecon findings unearthed €40m ($45m) of financial damage caused at the federation.
It is alleged that Infront was awarded the national teams contract despite a competitor having offered €18m more and that the DFB Pokal pitchside advertising sales contract was awarded under questionable circumstances. Among other allegations are that the son of then DFB secretary general Helmut Sandrock was given a job at Infront at the same time that the agency was granted the national teams contract.
Infront responded to the report in Der Spiegel by saying that Esecon’s reported allegations are “not only highly construed but are above all unsubstantiated through any evidence” and represent “purely allegations for which Esecon provides no reliable evidence”.
Infront no longer sells perimeter advertising at Germany’s national team matches but still holds the contract to sell pitchside advertising at DFB Pokal matches. The DFB has now moved to discontinue this contract and cancel Infront’s services contract for the delivery of the LED boards. Infront is also the long-standing international media rights adviser for the DFB Pokal.
Announcing its decision yesterday, the DFB stated: “The DFB, which had obtained evidence of possible damaging actions of Infront towards the DFB in May 2019, is now presented with the results of an investigation by the Berlin-based consulting firm Esecon. This has resulted in various acts in recent years which, for the DFB, constitute clear irregularities in connection with the realisation and delivery of Infront’s contractual services, as well as unlawful influence on DFB representatives.”
In response, Infront said: “The German Football Association (DFB) informed Infront today that it will end its very successful and lengthy partnership with Infront and terminate or discontinue with immediate effect all existing contracts. Infront contests the validity of this cancellation and insists on the full completion of the current contracts with the DFB. Infront has severe doubts about the methods and motives of the investigative agency Esecon, on whose interim report the DFB is basing this proposed cancellation.
“The DFB said it based its decision on allegations of ‘potentially damaging activities’. The interim report of Esecon – which Infront has not been given access to – apparently accuses Infront of gaining undue benefits from improper gifts to DFB employees.
“Infront firmly rejects these allegations of ‘potentially damaging activities’ and will do everything it can to combat them. There is no reason for the intended termination of the contract and Infront will do everything to enforce its rights under the existing contracts with the DFB. Infront has always met its contractual obligations in full and will fulfil existing obligations, for example for the DFB Pokal.
“The extensive and exhaustive investigation commissioned by Infront with external lawyers on this matter concluded that Esecon’s allegations which go beyond the already known and addressed issues are either demonstrably incorrect or not verifiable and thus are ultimately invalid. Esecon was given these results together with mitigating arguments but these do not appear to have been reflected in the interim report sent to the DFB.”
Infront went on to say that it has “considerable doubts” about Esecon’s “methods and motivation”, including the “reversal of the burden of proof and the use of dubious sources of information, including demonstrably falsified documents”.
The agency continued: “In fact, all there is are allegations for which Esecon has so far not provided any reliable evidence. We have considerable doubts about the seriousness of the investigation commissioned by the DFB, which has led to a damaging prejudgment of Infront, especially in light of all the forwarding of one-sided, preliminary investigation results to the media and the resulting one-sided reporting referencing, among other things, proven forged documents.”
The statement concluded: “Infront will now protect its interests with all the means at its disposal given that a mutual solution that Infront always proffered has failed. In particular, Infront insists on the mutual fulfilment of the contracts with the DFB.
“Overall, we look forward to any judicial assessment of the matter with composure and are very confident that the allegation of any ‘potentially damaging activities’ will prove to be unfounded.”
With regards to the initial LED case that emerged in May 2019, Infront stated at the time that it had “discovered fraudulent activities that are presumed to have been committed by one of its former senior employees” as the agency “applied to constitute itself as a victim” in criminal proceedings undertaken in Switzerland.
The scam related to the sale of reduced minutes to DFB sponsors and advertisers with the time freed up then sold to other brands with the unnamed executive allegedly diverting the funds into a private account.
In addition to the LED scam, Infront said at the time that it had learned that “gifts, at Infront’s cost, were provided by the former employee to employees of at least one of Infront’s clients that exceeded reasonable and customary values”. On June 7 last year, the prospectus for the Nasdaq IPO of Wanda Sports revealed Infront had offered to repay clients a total of €6m.