DISCUSSION FIFA – did we expect anything else?

by Bobby Reddy _______28th May 2015
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The FIFA scandal is “the World Cup of Fraud” and “we are going to give FIFA the red card” – Richard Weber, chief of the Inland Revenue Service criminal investigation.  It is even more difficult to write that statement than it was to listen to it given its fundamental corniness, but it is apt given the tawdry nature of the whole saga.  Perhaps more pertinent, is the declaration by Loretta Lynch, the new US attorney general, that, “Corruption is systemic and deep-rooted.”  If a culture of corruption and misfeasance is inherent within an organisation, is it no wonder that so many persons within such an organisation treat corrupt practices as part of the job?

The Futures Project, to be published by Tomorrow’s Company, will outline the importance to a company or other establishment in having a clearly defined purpose and vision beyond mere profit generation.  However, it is also imperative that such companies ingrain the appropriate culture within the organisation and actually act in accordance with it.  After all, FIFA’s goal, as enshrined in its statutes is “the constant improvement of football”.  There is clearly a stark juxtaposition between that goal, and the purported comments by Jack Warner, former Vice President of FIFA and President of CONCACAF[1], when challenged by an official of his confederation on alleged illegal bribery payments: “There are some people here who think they are more pious than thou.  If you’re pious, open a church, friends.  Our business is our business.”[2]

Who is responsible for instilling such a culture?  At any company, the responsibility for engendering the appropriate ethos must lie squarely with the board.  A top down philosophy that applies equally to the most senior and most junior employees must pervade.  With FIFA, the buck, literally and figuratively in this case, must stop squarely at the door of Joseph S. Blatter.  His position at FIFA must now be completely untenable – he has not, yet, been accused of any wrong-doing, and it is quite likely that Sepp Blatter was not complicit, or involved, in any of the corruption allegations surrounding his current and erstwhile colleagues; however, at best, Blatter has been incompetent and asleep at the wheel.  Moreover, I would opine that by not creating an environment of transparency, ethical behaviour and good business practice, he has failed in the primary requirement of any president or CEO.

The influence that leadership has on the fabric of an organisation can not be downplayed.  Is it any surprise that FIFA has been found to be rotten to its core when the president’s contribution on gay rights in Qatar consisted of: “I’d say they [homosexual fans] should refrain from any sexual activities.”[3] When speaking about women in football: “Let the women play in more feminine clothes like they do in volleyball.  They could, for example, have tighter shorts.”[4]  Globally, more women play football than any other sport.  Just as corrosive are FIFA’s tax policies.  In 2010, the BBC revealed FIFA’s, confidential obviously, tax requirements of World Cup bidding nations[5].  In essence, any country hosting a World Cup must commit to amending its tax laws in order to provide comprehensive tax exemptions for FIFA and further parties involved in the hosting and staging of the event.  It is difficult to envisage how not permitting, say Brazil, to collect a fair share of tax revenue during the 2014 World Cup, is conducive to “the constant improvement of football” as FIFA extolls.

Invoking Jack Warner, however, we should be careful not to be too “pious” when judging FIFA.  It is all too easy to blame FIFA for such moral deficiencies without looking closely at those parties so intrinsically entwined with FIFA.  Numerous sponsors, amongst them some of the most well-known and profitable entities around the world, are only now remarking upon their “disappointment” with the controversy engulfing FIFA.  Solid rumours of corruption have been circulating for years, yet the FIFA gravy train is too lucrative to step off.  As of today’s date, no sponsor has yet withdrawn its support of FIFA, even though termination provisions covering exactly the sequence of events that has taken place are ubiquitous in sponsorship agreements.  A number of sponsors have also shared in FIFA’s tax exemptions during World Cups[6].  Even more insidious is where private entities have implicitly approved, or even worse, partaken in, FIFA’s practices.  The Bribery Act[7] in the UK and the FCPA[8] in the US both legislate against private entities bribing foreign officials.  However, what we seem to be seeing is a systemic network of bribery through intermediaries, agents, and marketing entities often, eventually, benefiting some incredibly high-profile corporations.  Even though the eventual beneficiaries may not have technically breached the provisions of the relevant legislation, such a “bury your head in the sand” approach does not tally with the ethical methodologies by which some of these corporations claim to operate.  That’s not to mention the potential investigation into the role of banks in laundering the money passing through the FIFA community[9].  It is either time to strengthen the legislation in this area, or for corporations to place ethical behaviour at all levels of the business chain above profits.  Momentum in this area will lead to the former if the latter is not instigated by the business community.

There is a feeling that the FIFA scandal is just the tip of the iceberg, not only in relation to FIFA specifically, but also the operations of other conglomerates, and public and sporting bodies.  Such a clean-up should be encouraged; it’s just a shame that poor leadership has such considerable consequences, and that it is has taken a US federal investigation to stimulate change in a globally operating organisation based in Switzerland.

[1] The Confederation of North, Central American and Caribbean Association Football

[2] “Bribe upon bribe upon bribe: how Fifa and its cronies carved up football” by David Conn – The Guardian, 27 May, 2015 (http://www.theguardian.com/football/2015/may/27/fifa-executives-charges-jack-warner)

[3] Sepp Blatter speaking in Johannesburg in December, 2010

[4] Sepp Blatter speaking in January, 2004

[5] “World Cup: To tax or not to tax?” by Ian Pollock – BBC, 11 May, 2010 (http://www.bbc.co.uk/news/10091277)

[6] “Brazilians will pay heavily for FIFA’s “obscene” tax abuses” – Tax Justice Network, 31 May, 2014 (http://www.taxjustice.net/2014/05/31/brazilians-will-pay-heavily-fifa-tax-abuses/)

[7] Bribery Act 2010

[8] The Foreign Corrupt Practices Act of 1977

[9] “Banks face US investigation in Fifa corruption scandal” by Gina Chon and Ben McLannahan – The Financial Times, 28 May, 2015 (http://www.ft.com/cms/s/0/97f147f2-04ab-11e5-adaf-00144feabdc0.html#slide0)

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