Insights on the anti-corruption trends that contributed to the Fédération Internationale de Football Association (FIFA) scandal, and six essential characteristics of organizations whose cultures help prevent bribery and corruption.
The U.S. Department of Justice rocked the sports world this week, indicting nine FIFA officials and five marketing executives on corruption charges. In one sense the news came as small surprise —allegations about FIFA officials taking bribes when awarding tournament sites and media rights have swirled for years. What was surprising, however, were the actions of Swiss authorities, who rousted FIFA officials from their Zurich hotels in the middle of the night, then indicated the officials would be extradited to the U.S. In addition, the Swiss government has launched their own investigation into potential corruption related to the awarding of the 2018 and 2022 World Cups in Russia and Qatar.
Switzerland, of course, has a long-earned reputation for staying clear of other countries' squabbles and criminal matters. But this level of cooperation from the Swiss signals that they, like the rest of the world, have a lessening tolerance for corruption. It’s also evidence of a growing spirit of cooperation between governments as they seek to rid the global economy of nefarious business practices.
FIFA's culture of corruption and bribe-taking, as detailed by U.S. Attorney General Loretta Lynch, stretches back 24 years and through "two generations of soccer officials." What started as small transgressions more than 20 years ago eventually enveloped an organization that, while watching its bank balances top $1.5 billion, still had grown into something of a punch line for corruption jokes.
"They did this over and over, year after year, tournament after tournament," Lynch said.
The Perils of an Organizational Culture That Tolerates Systemic Corruption
While it would be easy to dismiss as an outlier, FIFA's plight should be seen as an extreme cautionary tale for all organizations. All too frequently, small acts of self-dealing and enrichment, unchecked, grow into larger and more pervasive actions. As more leaders are involved, the more the general employee population sees that corruption goes unpunished. Ultimately, a culture of fraud and corruption becomes entrenched.
As a result, companies that don't have strong, ethical organizational cultures have to wake up to the urgent need to build and foster cultures in which corruption is not tolerated. Two of FIFA’s top sponsors have echoed this sentiment. In a statement this week, Adidas said that they are “fully committed to creating a culture that promotes the highest standards of ethics and compliance, and we expect the same from our partners.” Visa, another major sponsor of FIFA and the World Cup urged FIFA to start “rebuilding a culture with strong ethical practices in order to restore the reputation of the game for fans everywhere.”
Worldwide Anti-Corruption Enforcement Efforts Continue to Grow
The world's idea of what is normal, permissible and acceptable when it comes to bribery and corruption has drastically evolved during the last two decades. Corruption and bribery has been illegal in the U.S. and much of Western Europe for decades, and enforcement has been strong in many countries.
In the past decade, however, more and more countries have introduced anti-corruption laws in recognition of corruption’s corrosive and ultimately destructive effects. Countries as disparate as China, Brazil and Saudi Arabia—countries that many Westerners may think of as places where corruption and bribery is the norm—have introduced anti-corruption measures in the last few years. Moreover, broad swaths of populations around the world oppose—sometimes with popular protests—the corruption within their government institutions.
FIFA presents a stark example of what can happen to an organization that turns a blind eye to corrupt activities in this changed climate. Executives and other wrongdoers can no longer count on a simple fine and wrist-slap if caught. The FIFA example and the prison time handed out in 2014 to executives of a U.K.-based specialty chemicals company for their part in a bribery scheme are clear evidence that governments are ratcheting up the penalties for bribery and corruption. And increasingly, countries are working together to strictly enforce those laws, which increases the likelihood that leaders of corrupt organizations will be successfully prosecuted.
Reputational, Legal and Financial Damage Caused by Bribery and Corruption Scandal Can Be Devastating
As for FIFA, the damage done to its reputation will last for decades. And there’s likely more to be inflicted. The world will be riveted by the indictments that turn into courtroom trials. And there could well be more charges coming, and more officials felled by them. Indeed, the DOJ has vowed as much. That may indicate that the U.S. hopes to turn some of those indicted into witnesses against bigger FIFA fish —including, potentially, Sepp Blatter, FIFA's president of 17 years, who has denied any responsibility for the alleged actions of those arrested this week.
If FIFA didn't have such a grand sum in the bank, its authority, its overall existence, could be in real jeopardy, according to some observers. FIFA’s billions of dollars will allow it to stabilize and hire an all-star legal team. The soccer federation does not answer to shareholders or the market. This is a luxury that few other organizations have.
Organizational Cultures That Help Prevent Misconduct: Six Essential Characteristics
Following are six essential characteristics we have observed in companies whose ethics and compliance program and organizational culture are delivering significant value—and best mitigating legal, reputational and financial risk. (Get more resources and insights on this list in our related blog post.)
- Clear and consistent limits of acceptable behavior.
- Board and management are committed to ethics and compliance.
- No marginalization of ethics, compliance and legal requirements—or staff.
- Employees can comfortably ask questions and raise concerns.
- Goals and incentives do not exert pressure on employees to step over the line.
- Poor conduct is not tolerated.
A systemic culture of corruption, as displayed by this case, can quickly unravel most organizations. An effective ethics and compliance program helps prevent corrosive corruption and other unethical or illegal activity that puts organizations at risk. It’s never too soon or too late to build or strengthen an effective ethics and compliance program. As FIFA has learned, for organizations who fail to do so, the world is watching.