Thursday, May 28, 2015

Malfeasance depends on wilfull blindness of many

Following arrests of top soccer officials, The Guardian called Wednesday the "ugliest day in the history of the beautiful game." However, at this stage, the criminal charges involve only the Americas, a small segment of FIFA's football world:
"U.S. authorities said nine officials and five sports media and promotions executives were charged in cases involving more than $150 million in bribes over a period of 24 years. They said their investigation exposed complex money laundering schemes, millions of dollars in untaxed incomes and tens of millions in offshore accounts held by FIFA officials."

Of course, Sepp Blatter, FIFA's aging Godfather, is shocked, shocked to find that corruption is going on in his organization. So too are the heads of 209 member associations around the world, including Victor Montagliani, Canada's top soccer official. A year ago, Jeff Gray reported in The Globe and Mail that Canadian soccer officials have apparently been "unfazed by the storm of bribery allegations."

Racketeering in large organizations relies on ineffective systems of accountability. Audited financial statements are a starting point and management with integrity and solid internal controls may protect assets of the enterprise. But, bribes and kickbacks are delivered in the shadows and, if leadership of an organization lacks virtue, dishonesty will flourish in ways that are unlikely to be revealed by auditors. The journal of Canada's professional accountants noted:
...fraud is less likely to be uncovered during an audit than error, and that fraud perpetrated by management is less likely to be uncovered than employee fraud.
While many international bodies consider major sports governing bodies to be quasi-public entities, few of them are subject to fundamental concepts like transparency and meaningful democracy. (Turks & Caicos has more influence at FIFA than does Canada, which has more than 25 times as many registered soccer players than the Caribbean nation has citizens.) Sport governing groups tend to be pyramidal in shape, with frequent personnel change at the base and little turnover among the well insulated hierarchy.

However, before exercing too much concern about FIFA, consider Hockey Canada, the governing body of Canada's national pastime. It doesn't deal in billions but it handles hundreds of millions and discloses little financial detail to the public. Some time ago, I tried repeatedly to acquire copies of Hockey Canada's audited financial statements and my requests were routinely ignored. Another journalist had to file an FOI with Heritage Canada to secure Hockey Canada financial statements for two years.

Like the soccer body, Hockey Canada receives substantial revenue from fees, sponsorship, licensing and major events. It has not been accused of widespread corruption but it lacks transparency and accountability to the public and that creates potential for corruption.


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