FIFA Corruption Scandal: How will it End?

• By: Staff Editor
• Date: June 21, 2015

FIFA Corruption Scandal: How will it End?

FIFA is in the news yet again. Unfortunately, this time around it’s for all the wrong reasons. The scope for corruption in a platform as vast as FIFA’s is huge. The officials caught in the latest scandal seem to have understood this all too clearly. Backed by an I-won’t-get-caught-mentality, the proportion of bribes and kickbacks offered to them has grown exponentially over the years. The regulatory authorities have stepped in hard this time around in an effort to arrest corruption but it seems to be a tough battle considering the number of nations and international sports authorities involved.

The U.S. Department of Justice (DOJ) was the first to accuse FIFA officials on charges of racketeering, wire fraud, money laundering and other criminal activities. It was alleged that FIFA officials took more than $150 million in bribes from sports marketing executives while awarding FIFA media and sponsorship rights to world cup tournaments. Specifically, former FIFA executive Chuck Blazer admitted to accepting bribes during the process of awarding the 1998 World Cup to France and the 2010 World Cup to South Africa.

Merely hours later, the Swiss government cracked down on FIFA officials concerning the bidding process for the 2018 World Cup to be held in Russia and the 2022 World Cup to be held in Qatar. Switzerland's Office of the Attorney General (OAG) suspects that irregularities occurred in the allocation of media, marketing and sponsorship rights for the 2018 and 2022 soccer tournaments. With the chain reaction that these investigations have set off, Swiss officials are now investigating FIFA executive committee members who were part of the bidding process back in 2010.

Other countries including Costa Rica, Australia and Colombia have set-up separate investigations on FIFA executives for corruption as well.

Since the story broke out, FIFA president Sepp Blatter resigned his post just days after winning re-election. He was accused of bribery and corruption including an allegation that suggest that he used FIFA development money to promote soccer in poor nations so as to ensure support in re-elections. The elections for Blatters’ successor will be held sometime between December and March.

The allegations of corruption against FIFA executives are widespread and deep-rooted. For years, FIFA officials have blatantly taken advantage of their positions accepting bribes and kickbacks from marketing and media conglomerates, and in other instances, for personal gains. Former FIFA president Joao Havelange resigned after an investigation revealed he took bribes totaling £1m between 1992 and 2000 from a sports marketing firm International Sport and Leisure (ISL). In yet another case in May 2011, Mohamed bin Hammam, president of the Asian Football Confederation, was accused of offering Caribbean officials $40,000 as cash bribes for buying votes and was later banned for life from FIFA by the ethics committee.

Amid these charges of corruption and bribery lies the question of the strength of FIFA’s anti-corruption and anti-bribery policies and corporate governance practices. Does it address remedial measures for non-compliance with anti-bribery laws for top executives? Does it facilitate immediate action against such officials? And all the other barrage of questions that lead up to answers to how unlawful activities of these proportions go unaccounted for till it becomes breaking news overnight.

Regulatory agencies across the world have been ramping up on such instances of corporate bribery in sports including Common Wealth Games (CWG) held in India in 2010. The headlines making fines and charges of those found guilty of violating the anti-bribery and anti-corruption laws have made it clear that these corporations can no longer afford to turn a blind eye to instances of corruption or bribery. Organizations need to understand global anti-corruption laws and should implement strong anti-bribery policies.

Here is a list of major global anti-corruption laws:

• Foreign Corrupt Practices Act (FCPA)
• UK Bribery Act 2010
• OECD Anti-Bribery Convention

Foreign Corrupt Practices Act (FCPA)

Under the FCPA there are two types of violations – bribery and inaccurate accounting records. Bribery is paying or promising to pay anything of value to a foreign official to influence his/her decision to award business to, or give you or your company a competitive advantage.

Inaccurate accounting and records violations occur when internal accounting controls and books do not accurately and fairly reflect the transactions of the corporation in reasonable detail.

The five elements necessary for the government to prove a bribery violation include:

• Who is covered by the Act
• Corrupt intent
• Payment or promise to pay
• Foreign official is recipient of bribe
• Purpose of bribe is to obtain or retain business or obtain a competitive advantage

UK Bribery Act

The UK Bribery Act 2010, which came into force on July 1, 2011 has been called the toughest anti-bribery legislation in the world. The Act makes it a crime to bribe another, be bribed, bribe a foreign official or in the case of commercial organizations, fail to prevent bribery.

The UK Bribery Act 2010 applies to any commercial organization that is:

• A body or partnership incorporated or formed in the UK irrespective of where it carries on a business, or
• An incorporated body or partnership which carries on a business or part of a business in the UK irrespective of the place of incorporation or formation

OECD Anti-Bribery Convention

• The convention requires that those nations which have signed it enact laws that:
• Prohibit bribery of foreign officials
• Prosecute businesses suspected of bribery of public officials abroad
• Establish liability of legal persons on bribery
• Set up effective and safe whistle-blowing mechanisms
• Monitor the convention’s implementation as well as the implementation of its recommendation
• Ban tax deductibility of bribes paid to foreign public officials

Violations to these laws can be criminal, punished by jail time and or civil, punished by high fines and penalties.

Internal Control Checklist

• Key internal controls to ensure effective compliance programs:
• Effective investigations of any reported compliance issue
•  Appropriate oversight and responsibility of senior management
• A substantive written anti-corruption compliance code of conduct
• Anti-bribery policy should cover ambiguous areas of the various laws
• Periodic risk assessments and risk reviews
• Suitable due diligence and management of third party contractors and business partners
• Enforced disciplinary action against employees in all capacities who infringe anti-bribery and anti-corruption policies.

Anti-bribery policies within organizations need to be stringent enough to not allow room for corruption and the I-won’t-get-caught-mentality. Understandably a huge task, given the number of organizations and personnel involved in FIFA’s case, but a necessity nevertheless.