Analysis of the 2015 FIFA Corruption Case

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23/09/19 Business Reference this

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2015 FIFA Corruption Case

 

Background:

FIFA stands for Fédération Internationale de Football Association and was founded in 1904. FIFA is the governing body of association football, futsal, and beach soccer and is also responsible for all major international tournaments including the World Cup. It’s headquarters are in Zürich, Switzerland, and currently has 211 associations affiliated to FIFA. The Supreme body of FIFA is the FIFA Congress which represents each affiliated national federation. These individuals in Congress have the right to make changes to FIFA’s by-laws. The Congress elects the President of FIFA, its Secretary-General, and the other members of FIFA’s Executive Committee. The President and Secretary-General are the main office holders of FIFA, and are in charge of its daily administration, carried out by the General Secretariat, with its staff of 208 members (FIFA.” Ohio River – New World Encyclopedia). The main decision making body of the organization is the FIFA’s executive Committee, as well as the FIFA President. FIFA games are played throughout the world and have created confederations that oversee the games in different continents and regions. The laws of soccer that govern the game are maintained by the International Football Association Board (IFAB). FIFA has a 50 percent representation on the IFAB board (four representatives); the other four are provided by the football associations of England, Scotland, Wales, and Northern Ireland, in recognition of the unique contribution to the creation and history of the game by the nations now comprising the United Kingdom (FIFA.” Ohio River – New World Encyclopedia).

 

Management & Governance

As a world governing body, FIFA must full fill numerous different requirements. The FIFA Code of Ethics is responsible for watching over the entire football community and helping tackle current challenges in football such as illegal betting, bribery and other prohibited activities. Under the Code of Ethics, disciplinary sanctions can be imposed on offending officials, players, players’ agents and match agents (Governance – How FIFA Works).

President

The FIFA president holds the highest position who is elected for four years by the FIFA Congress. The FIFA Congress are eligible to vote, and the President of FIFA can also be re-elected.

FIFA Congress

The FIFA Congress is the supreme body of the organization. There are 211 members and have the right to vote in congress. They are also able to propose candidates for the World Cup Hosts, as well as the Presidency of FIFA.

FIFA Committee

The FIFA Executive Committee, as well as the FIFA President determines by the strategy which could influence decisions. These decisions are guided by the recommendations of some 22 specialist standing committees, in which representatives from the confederations and associations are able to express their various views and requirements (Governance – How FIFA Works).

 

2017 Financial Structure:

At the end of 2017, FIFA had a 98% of Budget Revenue signed by the end of 2017 and were on track to exceed the target of the 2015-2018 financial cycle. The savings against budget totaled USD $180 and the successful sales and effective operations delivered a result before taxes and financial result of USD $300 million over budget, ensuring sufficient financial resources for football development. This in return brought a promising outlook for the upcoming years and foresee a strong growth in revenue.

 

Revenues and investments

With strong financial results, FIFA foresees a promising outlook in the next 4 year cycle.

 

USD Revenue for FIFA amounted to $734 million which was up USD $120 million compared to budget. Investments amounted to USD $923 million which was $180 million compared to budget. There was an inflow of $479 million in cash flows. In conclusion, 2017 was a healthy year and the future remains promising.

 

Expenses

FIFA’s total expenses amounted of USD $923 million.

 

These expenses included an investment of $37 million on the Marketing and TV Broadcasting, $477 million on Development and Education, $165 in FIFA’s governance and administration, $219 million in Competitions and Events, $25 million in Football Governance

 

Funding Streams:

FIFA is a non-profit organization and invests its funds back into the game. The earnings come from many of the major international competitions, including the World Cup. FIFA receives revenue from TV Broadcasting rights, licensing rights, hospitality rights, ticket sales, and other. The Partners of FIFA are ADIDAS, Coca-Cola, WANDA, GAZPROM, Hyundai, Qatar Airways, Visa, FIFA Play Fair, and FIFA.com

2015 FIFA Corruption Case

The investigation took place around the month of May where the US indicted fourteen current and former FIFA officials and associates on charges of “rampant, systemic, and deep-rooted” corruption following a major inquiry by the Federal Bureau of Investigation (Fifa Corruption Crisis: Key Questions Answered). This entailed wire fraud, racketeering, and money laundering. The investigation took place with the collusion between the officials of continental football bodies CONMEBOL (South America), CONCACAF (Caribbean, Central and North America), and the sports marketing executives.

Significant compliance and accountability issues

As of October 2018, FIFA has held its second Compliance Summit at the Headquarters. This discussed compliance concerns and challenges dealing with FIFA. This also discussed best practices with the process of risk management and due diligence. The Summit provided an opportunity for the FIFA Compliance team to explain the overall approach of the organization, as well as the many measures that have been introduced by FIFA in recent years to fully embed compliance into the organization’s day-to-day activities (FIFA Holds Compliance Summit).

How to Avoid the situation:

The tools and resources to provide a positive future direction on pathways to excellence would first be to demonstrate ethical practice and to always share accurate data about your performance. To measure effectiveness, an organization should provide ongoing  assessments on its effectiveness in achieving its mission. FIFA’s mission is to promote the game of football, protect its integrity and bring the game to all. FIFA will need to ensure that the organization has defined its measurable goals and objectives in place and a defined process in place to evaluate the success and impact of the program. The committee can execute an effective policy that will allow the individuals to assess the board policy every two years to determine future actions required to achieve FIFA’s mission. FIFA can also have a board oversight where it provides adequate oversight of its operations and its committee members.

Recommendations:

FIFA and the corruption scandal in 2015 has turned a lot of attention to this non-profit organization. With the fourteen individuals charged with racketeering, wire fraud, and money laundering, there has been a lot more investigation on ethical practices throughout the years to ensure  best practices. In this section, I will be discussing what professional and ethical practices the FIFA organization can do to thrive in the future. These recommendations and solutions will allow themselves to execute the following best practices.

Per the Harvard Law School Forum on Corporate Governance and Financial Regulation, good governance starts with the Board of Directors. They oversee everything throughout the organization, as well as ensuring the organization fulfills its mission. With heavy the decision making powers from the Executive board, they will need to discuss ethical practices to be able to monitor and guide good management. The  FIFA Organization can execute corporate policies and strategic goals that will focus on short-term and long-term challenges. To strengthen good governance, they will need to promote ethical conduct and hold more compliance meetings to discuss concerns and challenges with football and the allocation of revenue. It should include discussions on everything compliance related such as an implementation process for risk assessment as well as evaluating and managing risk.

The next important step to promote best practices for the FIFA Organization would be to always publicize their accurate and up-to-date data. This will allow transparency into the publics eyes so that they can understand the revenue allocations. FIFA will need to oversee all revenues and expenses to make sure everything is accurate when they publicize the data. The FIFA organization should provide a detailed revenue and expense breakdown in their reports that will include finical statements showing where the portion of the revenues and expenses are allocated.

            FIFAOrganization can also establish human rights in football. This Organization moves people all around the world and is a very influential non-profit organization. FIFA is committed to protecting the dignity and the rights of everyone. Per FIFA Best Practices, FIFA therefore committed to respecting all internationally recognized human rights and striving to promote the protection of them in its key set of regulations, the FIFA Statutes, in February 2016. This commitment was embodied in its Human Rights Policy, which was approved by the FIFA Council in May 2017 and which embeds and strengthens its resolution to protect human rights in all of its activities (FIFA Food Practice Guide).

Conclusion

            In conclusion, the Fédération Internationale de Football Association (FIFA) will be able to thrive in the future if they can execute best practices. They will need to be very transparent with accurate data in order to ensure ethical practices with revenue allocation. There has been a lot of attention placed on the FIFA Organization after the 2015 FIFA scandal. If the FIFA Organization can accomplish these

 

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