The Brazilian federation distributed gift bags with the expensive watches at the pre-World Cup Congress, FIFA said in a statement. They were distributed to 28 executive committee members, an official with each of the 32 teams, and representatives as well as members of the South American soccer confederation.
FIFA did not say if President Sepp Blatter, an executive committee member, accepted the gift or has already returned the watch.
The Brazilians obtained the watches from sponsor Parmigiani for $8,750 each. But after launching an investigation into the gifts in June, FIFA ethics committee investigators discovered the watches had a market value of 25,000 Swiss francs ($26,600).
FIFA's ethics code says football officials cannot offer or accept gifts that have more than "symbolic or trivial value."
"Those who received gift bags should have promptly checked whether the items inside were appropriate and, upon discovering the watch, either returned it or, like the football officials referred to above, reported the matter to the investigatory chamber," FIFA said in a statement.
But FIFA said officials will avoid ethics proceedings if the watches are returned by Oct. 24 "in an effort to resolve this matter expeditiously."
After the deadline, the watches will be donated to an "independent non-profit organization or organizations committed to corporate social responsibility projects in Brazil," FIFA said.
English Football Association chairman Greg Dyke said he found the watch had been left in his Sao Paulo hotel room by the Brazilians, but insisted he already planned to donate it to charity.
"I had no idea of the value and it has been left untouched in my office since returning to England," Dyke said. "We are already taking steps to return the bag and its contents, which are still in their original packaging.
"I welcome FIFA's investigation on the matter, including their intention to donate the items to good causes back in Brazil. The fact that gifts of great value are being handed out randomly and often with the recipient unaware shows up a culture in need of change. I had actually set the bag aside in my box of items to donate to charity."
FIFA also acknowledged that secretary general Jerome Valcke asked ethics officials for permission to give two watches from Hublot to each of the 28 executive committee members as a gift as part of the sponsorship deal. Valcke was told the gifts would violate the ethics code, FIFA said.
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