Sporting a culture of corruption

August 5, 2015

FIFA, the International Cricket Council (ICC) and the Fédération Internationale de l’Automobile (FIA) have each opted to structure their organisations in different ways. And, as with all companies, this has bred a different culture in each. However, none of them are without their controversies.

FIFA

Football’s governing body and World Cup organiser FIFA is a massive organisation that reportedly spreads its power equally among its 209 members. Each one of the member countries has an equal vote, regardless of size, power, finances or footballing ability.

According to Foreign Policy, FIFA’s current president Sepp Blatter ‘would lose badly to Dr Evil in a popularity contest but still manages to keep an iron grip on power’. Majority rule was on display recently when Blatter was voted in for another term just two days after the arrest of 14 FIFA officials. This was despite calls from the ‘more powerful’ nations, such as the United States and Europe, for FIFA to vote in a new leader. However, as scandal continued to rock the organisation, Blatter resigned a few days later stating that his election ‘[did] not seem to be supported by everyone’. He will remain in office until his replacement is selected at a special election (likely to occur sometime between December 2015 and March 2016).

Blatter defended himself and said that he was unable to monitor everyone in the organisation all of the time. Although this excuse was not deemed to be acceptable, because eventually the head of a corrupt organisation needs to be held accountable even if they did not engage in the corruption themselves, it is possible that FIFA had become too big to monitor under its current structure.

Marina Zaloznaya, an assistant professor of sociology at the University of Iowa, told Scientific American that ‘people tend to engage in corruption if they don’t think they’ll get caught and punished’. Too many autonomous elements at the massive organisation could quite possibly have made it difficult to monitor corruption.

Takeaway: Once corruption begins, a culture spreads, and personal morals can become irrelevant if employees are influenced by culture.

ICC

Although less than half the size of FIFA, with 105 members, international cricket’s governing body the ICC is by no means a small organisation. The ICC’s decision-making process is, however, much more centralised and manageable than that of FIFA. ICC chief executive David Richardson was so sure that the organisation’s model was working, he said, ‘I am absolutely confident that, in my time with the ICC, I haven’t seen any evidence whatsoever of any kind of backhanders or payment being made that shouldn’t have been paid, as seem to be alleged in the FIFA investigation.’

Although, on the face of it, the ICC’s centralised system may seem like a better option than FIFA’s system, it is not without its shortcomings. As The National satirically pointed out: although the ICC has 105 members, ‘only ten matter’.

‘The ICC knows democracy is great in theory but pointless in practice. It is happy to reinforce itself as a members’ club where the rules of membership are vague and arbitrary. It is happy to be run by an oligarchy of its three richest members. That arrangement streamlines decision-making and eradicates dissent and differing opinions,’ said The National.

In reality, sacrificing the voice of the many for the purpose of managing ethical behaviour is not justifiable, because the ICC is not without its own controversies. Even in recent times there have been numerous cases of match fixing. For example, Pakistani cricketers Salim Malik and Mohammad Aamir were found guilty of the practice in 2000 and 2010 respectively. To the ICC’s credit, it banned Malik from cricket for life, and imposed a five-year ban on Aamir.

Takeaway: There is middle ground to be struck between FIFA’s ‘power to all’ strategy and the ICC’s centralised power model. Although centralised power may make companies more manageable, it can also undermine some company goals (for example, promoting cricket). Furthermore, it is not a guarantee against corruption. However, the ICC is a good example of an organisation that is prepared to act decisively against perpetrators of unethical behaviour.

FIA

The FIA comprises members from over 235 motorsport associations in more than 140 countries. Representatives from each of the member associations make up the FIA’s General Assembly. On the subject of corruption at his organisation, President Jean Todt was equally as confident as his ICC counterpart, saying, ‘There is no way that the FIA could have the same problems with corruption that FIFA are experiencing.’

Formula One is the FIA’s largest income-generating event, with annual revenue of more than US$1.5 billion from races around the world. The commercial rights to Formula One, however, belong to the Bernie Ecclestone–headed Formula One Group, which is owned by various investment companies and Ecclestone himself.

So what happens if Ecclestone is involved in misconduct? Only last year he paid US$100 million to settle a high-profile bribery case in Germany.

Takeaway: Companies should not rely so heavily on one or two individuals for success. Anyone is capable of corruption or bribery. Unethical behaviour aside, if that individual should die unexpectedly, quit or retire, a company can become just as exposed to difficult times.

ooOoo

Compliance officers need to be aware of the challenges that each organisational structure presents, as well as the advantages. The business’s aims need to be taken into account so that they are not undermined by attempts to make the company more manageable.

These three sporting organisations serve as a timely reminder than even companies in similar, or the same, industry can approach company structures differently. Adopting an all-inclusive policy, such as the one in place at FIFA, may seem like a good idea but could mean sacrificing control. Alternatively, a more centralised model may make the organisation easier to govern but could come at the expense of business goals. Furthermore, a model that relies too heavily on a few key individuals can present many risks, even if red tape is not one of them.

Importantly, companies should be prepared to evolve as they grow and as context changes. For example, companies need to consider the autonomy of their various departments, and this may change as the company expands. A company the size of FIFA will need a different model to that of a company expanding into a foreign country for the first time. A structure that is applicable for a small business will not continue to be successful as that business opens more offices or evolves into a multinational organisation.

It is important to audit the compliance function to make sure that it continues to be suitable for an evolving business. Companies can become too large for their compliance model, leading them to either evolve or lose control of their culture.

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