Avoiding Corruption: Lessons From the FIFA Scandal

How did the world’s governing body for football/soccer find itself in such a mess? Lately, the name FIFA, short for The Fédération Internationale de Football Association, has become almost synonymous with corruption and fraud. At a time when enthusiasm should be building for the 2016 World Cup, the news is still awash with updates on investigations, resignations and prosecutions. And this is likely to continue for the foreseeable future.

FIFA’s failure appears to be from the top-down. Sepp Blatter, president of the association since 1998, announced he will be resigning his post after critics accused him of turning a blind eye to corruption, or worse. While initial U.S./Swiss criminal investigations did not include Blatter, Swiss authorities announced in September that they had opened an investigation of Blatter stemming from a $2 million payment FIFA made to UEFA president Michel Platini. Platini is also under investigation.

This news comes after it was announced in May that more than a dozen FIFA officials and their connections have been arrested and/or put under indictment for fraud and corruption. The breadth of the investigation shows just how entrenched corruption can become when it goes unchecked for years, as appears to be the case with FIFA. Vendors, sponsors and suppliers may become involved in illegal dealings when that is part of the status quo or, as some people choose to characterize it, “the cost of doing business.”

While FIFA is an international body, there are lessons to be taken from the scandal that are important for any organization of any size or industry. The underlying factors in the scandal – greed, opportunity and rationalization – are not unique to FIFA, and could create a climate ripe for fraud anywhere.

So what should an organization do to protect itself? Here are a few crucial things business leaders should do today:

  1. Adopt a Code-of-Conduct. Every organization should have rules in place regarding ethical behavior by employees, contractors and vendors. Put into writing your policies against collusion, bribery, fraud and all manner of illegal and/or unethical business practices. Review the Code-of-Conduct on a regular basis and update it as necessary. 
  2. Communicate the Rules. Include the Code-of-Conduct in the employee handbook or other employee materials and require all personnel to review and sign it. Post reminders about it in employee newsletters or in meetings and trainings. Make clear that the organisation has a no-tolerance policy toward unethical behaviour, and will terminate and prosecute violators as necessary.
  3. Conduct Background Checks. Thorough checking of existing and potential employees or partners is required in order to protect your organisation from corruption and fraud. Use only expert services that fully check criminal, education, financial and employment records. Third-party partners should be fully vetted as well with public and legal records checks and an examination of their business history.
  4. Follow-Up on a Regular Basis. Conduct regular follow-up checks (yearly, at the least) on all third-party business partnerships and check them for red flags. Have billing procedures changed or become irregular or complicated? Have costs risen without reason? Have there been changes in management, ownership or location among any of your third-party partners that need further investigation?
  5. Consult the Experts. It is often critical to bring in professional help, especially when your organization: is performing pre-merger and acquisition research and pre-IPO due diligence, engages new clients; employs, contracts or retains foreign business partners; and/or requires a consistent and audit-worthy AML and anti-corruption compliance program. CRI Group's own exclusive brand of service, 3PRM™, our Third-Party Risk Management strategy, provides a proactive approach to mitigating risks from third-party affiliations, protecting an organization.

Just think: If FIFA had followed even a few of those guidelines, they might not be in such turmoil today. Unfortunately, there are still more stones being turned over in this scandal. Business leaders have a responsibility to do everything in their power not to suffer the same fate.