June 24, 2021

FIFA to make play for reform, but can it score?

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FIFABy Rebekah Mintzer, from Corporate Counsel

FIFA, the global governing body for soccer, seems to be stuck in a downward spiral of compliance and ethics disasters. In May, the U.S. Department of Justice had more than a dozen high level FIFA officials arrested, alleging that they engaged in systemic bribery and racketeering around soccer media and marketing rights, as well as the decision about where to host a recent World Cup. The situation only got worse earlier this month when the DOJ charged another set of officials.

Most everyone can agree that FIFA needs to change its ways—and soon. One small but significant step in this direction came in October when FIFA President Sepp Blatter was suspended from his position (and will likely get a long term ban from soccer). Ditching the boss sent a message, but FIFA is trying to prove that it can change the rest of the organization as well.

Part of this effort is the proposal of governance reforms, which were recently approved by FIFA’s executive committee. The proposed changes to FIFA’s governance structures will go before the world soccer body’s congress in February 2016 for approval. Perhaps not surprisingly, many parts of the proposal look a lot like the steps that corporations take to repair their broken or underdeveloped compliance systems. The question for FIFA, especially because it is such a large organization spread over so many regions, is whether or not the reforms will be able to succeed and permeate throughout.

Nothing will happen overnight. “At this point, we should be cautious in describing these as reforms,” says Michael Fine, member of the advisory Services practice at ethics and compliance firm LRN. “They are really aspirational at this point until they are properly implanted. That will take time, even in these circumstances.”

The FIFA plan’s objective is to bring more independence to the organization’s ranks. One idea is to bring independent members to the organization’s finance, development and governance committees, all of which make major financial decisions for FIFA. The reform document also emphasizes that audit committee and compliance committees must operate in a fully independent way to properly oversee the decisions made by the other arms of FIFA. The group seems to define “independent” as free of financial connections to FIFA or its member associations.

The proposal also provides for more renewal and turnover in FIFA’s upper echelon. The president would not be able to serve for more than 12 years. Members of the new FIFA Council—a replacement for what’s now the executive committee—would have the same term limit.

Fine says that, if implemented right, term limits can help keep organizations more honest. “Having rotation means you’re going to continue to get fresh eyes and more objective judgments being made,” he says, drawing a parallel between FIFA’s proposed reforms and the auditor independence rules under Sarbanes-Oxley. These SOX provisions require a periodic change in lead audit partners on company accounts.

Another step FIFA proposed is getting its first-ever chief compliance officer. Many companies are already wise to the idea of bringing on a CCO to handle their E&C program, and others are elevating the existing CCO to a more prominent position within the company. FIFA might be a bit behind the curve, but better late than never.

If this reform becomes a reality, the CCO hire could steer FIFA toward the more ethical culture it needs. “It should be someone who really knows what a good program looks like,” says Fine. “So that selection will be critically important. I think that it could be as important as the Blatter replacement in term of these reforms.”

The FIFA reforms also include a provision that casts the net wider to get more voices involved with governance. A new Football Stakeholders Committee would bring more players, clubs and leagues from around the globe into discussions, in hopes of increasing transparency and democracy.

Getting more stakeholders involved could have a positive effect by providing new perspectives and backstops against corruption, but it’s an area where FIFA may have to proceed with caution. “You don’t want to have what sometimes happens in some other multilateral contexts,” says Fine “where you get a logjam because there are so many different perspectives on how the problem has to be addressed.”

When it comes to compliance, it will be challenging enough for FIFA to deal with its own existing sprawling structure. It’s a federation of 209 member associations that spread out far from the organization’s Zurich, Switzerland headquarters. Corrupt activity can and has taken place far from the home office, and spreading compliance messaging to far flung places with their own internal leadership hierarchies often isn’t easy. ““That needs to be taken into account,” says Fine “in both shaping the implementation and judging the results.”

Illustration by Daniel Hertzberg

For more on this story go to: http://www.corpcounsel.com/id=1202745063520/FIFA-To-Make-Play-for-Reform-But-Can-It-Score#ixzz3uadvD5oW


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