FIFA corruption raids demonstrate important lessons for global businesses

02 Oct 2019 3:42 am by Mark Dunn

It is unlikely that the FIFA officials arrested at the Baur au Lac hotel in Zurich yesterday morning expected such a rude awakening.  The seven FIFA officials that were arrested at the hotel were only half of the defendants charged with racketeering, wire fraud, money laundering and corruption as part of a joint US/Swiss operation to investigate decades of alleged corruption within the organisation.

Why the US pursued FIFA?

One of the most intriguing aspects of this action is the involvement of US officials. Whilst it is well-known that football (or soccer as it is known in the US) is not as high profile a sport as American Football, baseball or basketball in the US, there is some history of soccer in the US.  The country hosted the tournament in 1994 and has an improving international team as well as a high profile league – attracting the likes of David Beckham and Stephen Gerrard away from the UK Premier League.

Speaking to reporters after the arrests were made, FBI Director James Comey commented: "If you corrupt our shores with your corrupt enterprise, whether that is through meetings or using our world-class financial system, you will be held accountable for that corruption. Nobody is above or beyond the law."

In the past the US authorities have seemed prepared to investigate sporting corruption when other bodies have not.  An example is the case against Lance Armstrong, the cyclist, who received no investigation from the cycling authority, the UCI but was instead first pursued by a Federal Inquiry, and later by the US Anti-Doping Agency (USADA). Following evidence from USADA, Armstrong admitted doping.

US anti-corruption policy

This is not to say that this approach is limited to the business of sport.

A White House Fact Sheet entitled The US Global Anti-Corruption Agenda, published on 24th September 2014, seems prescient following yesterday's actions. It stated: "The United States continues to take action to prevent the U.S. legal and financial systems from being exploited by those who engage in, or launder the proceeds of, corruption. We will continue to work with key allies and partners, including in the Open Government Partnership, the G-7, the G-20, and the OECD Working Group on Bribery, to improve transparency, integrity, and accountability worldwide."  This is a clear statement that the US will not tolerate corruption regardless of geography, and that it will take a proactive stance towards stamping out corruption wherever it takes place.

Implications for global businesses

This has significant implications for business.  Whilst it is obvious that business is global today, the responsibility for anti-corruption or anti-bribery investigations, has historically been seen as limited to geographical boundaries.  What interest would the US authorities have, for example, in an Australian mining company sponsoring foreign Government officials to attend the Olympics in Beijing?  In the case of BHP Billiton, a great deal as they paid a $25 million fine to settle this case in 2015, having violated the Foreign Corrupt Practices Act (FCPA).  In fact one-third of the prosecutions against companies under the FCPA in 2014 were against non-US companies or practices taking place outside of the US.

As Mark Dunn, LexisNexis' Due Diligence Segment Leader explains: "The investigation into alleged misconduct at FIFA is just the latest example of an increasing drive by enforcement agencies across the world to tackle bribery and corruption wherever it may occur."

The fact that the US authorities are prepared to go into battle with FIFA, a global organisation, headquartered in Switzerland, with enormous resources, should be a demonstration to every country, wherever they are headquartered and operate that we do not live in a world where a blind eye will ever be turned to bribery and corruption.

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