​Red Card for Corruption

A FIFA audit committee member pleads guilty to bribery charges.

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​Global soccer governing body FIFA has suspended a member of its audit and compliance committee for 90 days following his guilty plea to U.S. charges of bribery, Reuters reports. Richard Lai, a U.S. citizen who is president of the Guam Football Association, admitted to taking almost $1 million in bribes to gain his influence with FIFA. Prosecutors noted that FIFA's audit and compliance committee should play an important role in combatting the corruption that has come to light since 2015. In a separate case, FIFA's ethics committee has launched an investigation into alleged conflict of interest and financial mismanagement by the president of the Caribbean Football Union.

Lessons Learned         

Behind the immediate headlines of this story are revelations of two decades of corruption in which FIFA officials rigged World Cup bids and steered marketing and broadcast contracts in exchange for bribes paid out through convoluted financial deals or briefcases full of cash. Globally, football officials have been accused of match-fixing and money laundering, as well.

In response to stakeholder pressure and corruption charges brought against many senior FIFA officials, the organization announced a series of reforms to its governance and decision-making processes. The proposed reforms (PDF) include limiting top officials to three four-year terms, a defined division of powers between FIFA's day-to-day operational division and its strategic leaders, and increased gender diversity rules to promote women in the game, such as a requirement that each of FIFA's confederations elect at least one woman to the confederation's governing board. Although there will be independent members on selected advisory committees, reforms do not include adding independent members to a new executive committee.

Here are a few suggestions FIFA could follow to address corruption:

  • Eliminate governance gaps. First and foremost, in an organization that has been subject to widespread corruption activities, there should be independent members on every committee, including the executive committee. Individuals from government, regulatory/oversight bodies, academia, and professional organizations are among examples of potential independent members. Criteria for independence should include background checks to ensure members or their families do not have connections (paid or not) to particular soccer or media organizations. Audit, ethics, and financial oversight committees must have the powers and resources to independently investigate and report on suspicious matters of any kind, and to turn over their results to regulators and lawmakers. The executive committee also must set a tone of "zero tolerance" of corruption through its words, actions, and policies. The executive committee should not have control over the release of investigative reports.

     
  • Implement measures to prevent bid rigging and vote buying. Expand the list of bidders and voters to make it more difficult for collusion to be effective. Buyers should solicit bids from as many suppliers as economically possible. Having more voters increases the chances that one party will not be able to control the outcome of the vote as easily as it was done in the past. Both bid and voting packages should require bidders and voters to sign and submit a noncollusion affidavit. The packages also should inform bidders and voters of the penalties both for violating laws such as the U.S. Sherman Antitrust Act and for signing a false noncollusion affidavit. These statements should be verified routinely through audit and review processes.

    FIFA also should ensure that all purchasing department and voting oversight employees are familiar with the indicators of bid and vote rigging, price fixing, and other types of collusion. Employees also should be empowered to ask questions and raise flags when collusion is suspected. Voting and bidding processes should be well-documented and records should be maintained in the event they are needed for review when collusion is suspected.

     
  • Leverage the deterrence/detection effects of whistleblower mechanisms and tough sanctions for corrupt behaviors. The corruption in this story was in some significant ways uncovered by a whistleblower. FIFA should do more to support and protect whistleblowers. Moreover, its sanctions of proven perpetrators of corruption probably could be much stronger — a 90-day suspension from soccer sends a much less decisive message of deterrence than a ban of several years or a lifetime.
Art Stewart
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About the Author

 

 

Art StewartArt Stewart<p>​Art Stewart is an independent management consultant with more than 35 years of experience in internal audit, financial management, performance measurement, governance, and strategic policy planning.​​​</p>https://iaonline.theiia.org/authors/Pages/Art-Stewart.aspx

 

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