2015 FIFA Scandal - Case Study Example

2015 FIFA Scandal Name Course Instructor Date Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Description of the case 4 3.0 Case Analysis 7 4.0 Economic impact of corruption and FIFA 11 5.0 Conclusion 12 Reference 13 1.0 Introduction The Federation of International Football Association (FIFA) is the world football governing body, and it is based in Zurich Switzerland. The organization has 209 member countries, it covered six continents, and it is registered under the Swiss law. The main aim of the organization is to enshrine its status which includes developing, promoting and protecting the game of football globally. The body laws and regulations ensure that they aim of the organization is enforced and the organizing international champions are done according to laid rules and regulations (Rowe 2016). One of the commonly known competition is the world cup. The commercialization of the event since it was initiated in early 1970 has changed the role of the organization significantly. The body generates a substantial revenue from the sale of televisions licensing rights and other marketing, and hospitality rights of the world major tournaments. A Huge amount of revenue being generated not only make management of FIFA attractive but also makes the body a very powerful economic player across the globe. The responsibility of the body to award the rights of hosting, marketing and advertising of the event has attracted many people hand it has been a fertile breeding ground for corruption (Rowe 2016). Corruption can be defined as dishonest or a fraudulent conduct of individuals who are in power. It involve bribery or act of changing, this the initial part of contract without the knowledge of the other partner. This case deals with corruption at FIFA. This paper discusses the corruption is happening at the world football governing body, the reforms which have been taken to reduce the level of corruption in the body and also some of the economic impacts of the corruption before giving a conclusion of the major events which has taken place within the organization. 2.0 Description of the case The Federation International Football Association (FIFA) is the largest football governing body which is one of the most popular sport across the globe. The corruption in the FIFA was first noticed in 2010 when the 2018 world cup was awarded to Russian, and that of 2022 was awarded Qatar to host the tournament (Jennings 2016). The manner in which the two world cup hosting was awarded was suspicious. This is because Russian for instance has a long history of racism in the world of football and at the same time was still being grilled over its involvement in the hot water crisis in Ukraine. To make matters worse, the win of Qatar was quite unexpected since it has unlimited football history. What raises the eyebrow much more was the time and temperature at which the football will be played in Qatar, and unlike other competitors, Qatar has no existing football infrastructures like United State or any other competitors. The outcome of these two incidences rose suspicion in the manner at which the world football governing body is being managed, and suspicion of voter bribery arose giving the potential of high scale corruption taking place in the management of the FIFA body (Rubin, Chen and Conroy 2015). Independent body which is the US attorney Michael Garcia was tasked with unearthing happening at the world governing body. Michael Garcia was to give an independent report on the bidding process. In September 2014, Garcia released a damning report contained in a 350-page document which was not released by FIFA after its submission but instead decided to release a 42-page summary which indicated that Qatar and Russian did not have any wrong doing in the process. After the releasing the report, Garcia resigned in protest citing that the summary was materially incomplete with several erroneous representations of facts and conclusion while associate press describes the summary as a whitewash. The US criminal investigation department and the Switzerland opened an investigation into an allegation of the possible fraud and money laundering to the body. The actual happening and drama kicked off on May 27th, 2015 in Zurich during a meeting of FIFA executive members. The hotel where the members were living were raided by the criminal investigating department over claims and suspicion of receiving bribes and kickbacks. The plain clothed officers who were acting on behalf of the US authorities raided the Five-star hotel early Wednesday morning where five senior officials of FIFA were an indictment and five other media and marketing executives on corruption charges into the possible alleged bribery which was worth over $ 150 million took place (Jennings 2016). The investigation of this scandal was majorly centralized on the deals which were made between FIFA officials and the sports marketing executives who were alleged to be having a systematic payment agreement. The media houses were to pay kickbacks and in return were to be given lucrative marketing rights to the international football tournaments. Financial times reports that the investigation of this case was ongoing by the US department of justice for over three years. One of the former executive member Mr. Chuck Blazer assisted the US criminal department with the investigation of this case, and they made tremendous steps concerning the corruption deals which took place to the World football governing the body. In a separated event, prosecutors from Swiss also launched a criminal case into the bidding process for the world cup hosting rights of 2018 and 2022 (Rowe 2016). The charges in this cases were relating to the inquiry on the criminal happening of money laundering, bribery, and kickbacks in the process. They further investigated the possible mismanagement of the organization finances and financial misappropriation. The investigation further reveals that even the 2016 Copa America Centenario which was hosted the United States in 2016 was also bribed and advertisement rights were given. Furthermore, the indictment handed down by the US District Court in Brooklyn alleges that there was undue influence of the clothing sponsorship contract and bribery took place in the process of awarding the 2010 FIFA world cup. The investigation department further reveals that the 2011 FIFA presidential elections were not free and fair as bribery, vote buying, and undue influence was used to influence the presidential outcome (Bean 2016). The sports equipment company which was not named but most sources believe it is Nike was alleged to have paid a sum of more than $40 million to be the sole provider of the uniforms, accessories, equipment and other footwear during the Copa America to the Brazil national team (Bean 2016). Some of the people who were arrested during the raid include Eduardo Li, Costas Takkas, Jose Maria, and Julio Rocha among other people including former FIFA officials Nicolas Leoz, the Former vice president Jack Warner among four other sports and marketing executives. This was the epics of this case which rocked the world football governing body. Jeffrey Webb who was the CONCACAF president was also arrested on May 27th, 2015, and he pleaded guilty to the racketeering, wire fraud and money laundering where he also agreed to forfeit over $ 4.4 million. He did not contest his extradition to the United States to face criminal charges, and it is believed that he cooperated by the US investigation department by giving out crucial information concerning the case. Ricardo Teixeira who was the former Brazil Football Federation (BBF) president, Marco Polo were also among those football officials implicated in the corruption case and other criminal schemes which involved millions of dollars briberies and kickbacks. They were among over 92 count indictment who were alleged to have participated in the wire fraud, racketeering, and money laundering conspiracies (Jennings 2016). Other major culprits to this case include Alfredo Hawit who was FIFA vice president and also a member of the executive committee. The US prosecutor claims that Hawit involved in bribery and money laundering when he was the secretary general of the Honduran soccer federation that is the year 2008 and 2014. He contested the decision of him being arrested and instead requested to be placed under house arrest. UEFA President Joseph Sepp Blatter and his deputy Michel Platini were subjected to investigation by the Switzerland criminal investigation. This case resulted in overhaul of the world football governing body with a new group of leadership coming in the management. 3.0 Case Analysis Even though the case gives major mission statement that might have suggested that there is a power which goes beyond a mere inspiration. The power and function of FIFA are much more than one country. Its activity has much impact on the football sport and will be much significant on the global economy as being seen by its impact of the football related decisions across the global world business (Jennings 2016). For instance, the countries who have chosen to host the FIFA world cup have spent billions of investment when they are building the local infrastructure. There is also the aspect of lucrative broadcasting rights for the beautiful game of football and other games which have attracted major companies across the globe. Taking into consideration of the ability of FIFA to be able to stir an economical water, the legal status of FIFA as one of the nonprofit organization might surprise many. Within the FIFA alone, they are capable of generating over $6 billion for itself for a span of four years, its connection with major world economic players like sporting companies might have a major global economic impact if it's brought down by corruption (Pielke 2015). The value of sponsorships has increased in value in recent past due to increased commercialization and globalization of the football. The sale and broadcasting of football related items. From the case explained above, the FIFA suffered one of the most historic bribes in the world with the body to govern the soccer in regions, localities and across the globe becoming increasing intertwined with one another. The corruption enterprise becomes knocking and flourished within the organization. Though Putin of Russia was not happy with the development, the other Europe members were euphoric with the indictment are believed that FIFA has long been a cesspit of corruption and was in dire need for fresh face and reform (Pielke 2015). The serious change started to take shape in world governing body in 2016 when Blatter announced that he is going to resign and the extraordinary congress was to take place and elect his successor. The seven serious candidates who were to succeed Blatter had history with FIFA, and they were considered as "Seven dwarves with no Snow." To explain their uninspiring nature to lead world football governing the body. Platini who was expected to succeed Blatter is also under investigation current, and he was suspended in a reform aimed at cleaning up the world governing body. Some reforms were adopted immediately the current president Gianni Infantino was elected, and we expect that in the coming years we will be able to see whether the world football organization and governing body will stay free from corruption. The internal reform was the only way which could save the image of the world football governing body (Bean 2016). The reforms which were put forward was aimed at moving FIFA forward by improving governance, enhance transparency and more accountability among the management. The reforms were a milestone on the path towards restoring FIFA's image and credibility among the modern business partner, increased professionalism in the management of sports body. Some of the initial reforms proposed include:- Term limit: - The governing council passed a term limit for a presidential candidate where the FIFA president will have a three term limit of four years as well as the members of its council. Other bodies with term limit include the audit and compliance committee and other judicial bodies. This will enhance transparency, accountability and reduce autonomy in the world football governing body (Pielke 2015). Separation of the political and management function: - This was another major reform which was initiated during the new era of the FIFA. They proposed that there must be a clear separation of political and management functions. The FIFA executive committee was replaced by the council and this body will solely responsible for the setting and establishing the overall organization strategies and direction while the general secretariat will focus on the operational and implementation of the strategies set by governing council. The members of the council of the governing council will be elected by the association members within their respective regions using the guidelines and policies of FIFA with the FIFA review committee to be able to conduct the comprehensive and integrity checks and enhancement in the process. They should also build concrete steps to help in increasing the role and participation of women in the governing council and football in general FIFA body with a minimum of one female representative post in the council. These will help improve the credibility of the election process and will ensure that people elected to the office are people of integrity. The enhancement of the management in its entity is important (Pielke 2015). Enhanced the efficiency of the Committee: To improve the efficiency of the Committee, it was proposed that the number of the committee was to be reduced from twenty-six to nine only. This will help in improving the efficiency of service provision to the communities while at the same time ensuring that all members association are involved in a more meaning and effective way of managing the organization (Rowe 2016). Integrity checks: This is a compulsory rule to all candidates to be subjected to into the integrity checks by the standing committees. This integrity checks will be done by the independent FIFA review committee. This will be very important in ensuring that the integrity starts with the individual members of the council before it moves to other members managing the welfare of the football governing body (Rowe 2016). The principal of transparency, inclusion and broader representation among stakeholders was another radical surgery which was to be undertaken by the football governing body. The creation of a more dedicated football stakeholders committee which will compose of members of key football stakeholders like players, clubs and major leagues across the globe. The committee further committed to building a FIFA which is committed to the human rights, which was recommended by the executive committee for approval. These radical changes were mainly aimed at improving the image of the body and enhance a more accountable football governing body. FIFA was organized under Swiss law with some aspect of international law like European football federation laws. The body is classified as a nonprofit making organization. It is governed by article 60 through the article 79 of the Swiss Civil Code of the nonprofit association. The association is prohibited to distribute any accrued profit to its members and any revenue generated must be used for the furtherance of the organization aims and objectives. Therefore, the new secretariat is allowed to employ people to manage its affairs as per the Swiss laws and regulations. These regulations were further echoed by new reforms of the body. The reform was further aimed at the disbandment of the structure which encouraged the corruption at the body. Rowe (2016) argues that most corruption at FIFA have gone caught free because FIFA has been perceived as separate from politics. Nevertheless, global event as world cup should be treated as political and subjected to public debate as it provides a chance for the global community to decide events that affect them. The activities of the FIFA has serious implication to the global economy and should not be left in the hand of few individuals hence need for global involvement. 4.0 Economic impact of corruption and FIFA It is important to note that global soccer is one of the multi-billion dollar industry and the body which presides over this dollar is non-other than FIFA. The body itself hold a cash reserve of over $ 1.52 billion. These amount of money is a company by the ability to make powerful decisions and among them is where football world cup will take place next. It has an impact on the host country since over 14 million jobs could have been created between 2011 and 2014 and most of these jobs have been created in the host countries (Jennings 2016). The resulted revenue due to the investment of the world cup tournament in Brazil alone is over USD 7.2 billion tax revenue alone as reported by Earnt & Young audit firm. The impact of FIFA can also be seen in small economies by granting the permission to host the world cup and also supporting smaller leagues by granting them financial assistance to manage their football activities. These bonuses have a great impact on the economy and supporting small economies to run and manage sporting sector in their respective economies. This an important role played by world football governing body (Rowe 2016). This level and magnitude of corruption taking place and the helm of world football governing body, it threatens the sustainability of football activities across the globe. Corruption threatens the economic development and growth, threatening principles of governance and behavior both in governmental, nongovernmental and provide sector. It degenerates the ethical values which have been inculcated in younger generations and pave the way for the poor community, inequality and a society of just a few people. The level of corruption threatens the development of young talents across the globe and enhance the happening if white collar crimes which should not be allowed to thrive in the society. It creates a lawless society a man eat man society. A society which does not hold value for the future. This should be rejected by all means, and the new reforms are in place to help to bring back the image of the FIFA (Bean 2016). 5.0 Conclusion The epics of corruption at FIFA was publicized in the year 2015 on 27th may when the US criminal investigation department raided the five-star hotel in Zurich and arrested FIFA officials. The kind of rot was further exposed after that more specifically on the award of 2018 and 2022 world cup hosting to Qatar and Russia respectively. Since then, most of the officials were arrested and charged with money laundering activities. The new management team came with reforms which could help in redeeming the image of the organization, and the reform includes issues like integrity check and term limit. The corruption has far-reaching economic implications across the globe and should be discouraged by all means. Reference Bean, B.W., 2016. An Interim Essay on FIFA's World Cup of Corruption: The Desperate Need for International Corporate Governance Standards at FIFA. Jennings, A., 2016. The dirty game: Uncovering the scandal at FIFA. Random House. Pielke Jr, R., 2015. Obstacles to accountability in international sports governance. available online at: www​. tr​ ans​ par​ enc​ yo​ rg/​ fil​ es/​ con​ ten​ t/f​ eat​-ure​/1.​ 2_O​ bst​ acl​ esT​ oAc​ cou​ nta​ bil​ ity​ _Pi​ elk​ e_G​ CRS​ por​ tp​ df; last accessed, 5. Rowe, D., 2016. Sports Journalism and the FIFA Scandal Personalization, Co-optation, and Investigation. Communication & Sport, p.2167479516642206. Rubin, V.L., Chen, Y. and Conroy, N.J., 2015. Deception detection for news: three types of fakes. Proceedings of the Association for Information Science and Technology, 52(1), pp.1-4. Read More