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In the few weeks since Swiss police arrested seven FIFA executives on fraud, money laundering and racketeering charges, the once-untouchable organization has seen its standing decline drastically. FIFA, the governing body of international soccer, faces allegations that there was "rampant, systemic, and deep-rooted" corruption throughout the organization. As the public watches, high-ranking members are turning on each other to place blame.
Even for in-house counsel who can't tell soccer from synchronized swimming, the FIFA scandal is something worth watching. As always, there are important lessons to learn from the organization's ignominy. Here's 3 FIFA scandal take-aways for corporate counsel -- and you don't even have to bribe us to get them!
Google famously adopted the corporate motto of "don't be evil." That may be more of an aspiration than a reality, but it certainly beats what Inc. magazine describes as the unofficial slogan of FIFA -- "Evil But Effective." Like Swiss collaborationists, the organization under former President Sepp Blatter was widely loathed, but able to operate effectively for years before the law caught up to them.
Indeed, reputational harm was already massive before the first FIFA arrests occurred. Critics had savaged FIFA for human rights abuse in its Qatar World Cup construction -- 1,200 construction workers are alleged to have died already. A self-aggrandizing bio-pic was openly mocked on late night T.V. -- American late night T.V., where soccer politics aren't exactly ratings gold. Long before the arrests, FIFA should have acted to address the wide perception that it was a corrupt, "evil" organization.
If you smell smoke, check for fire. An internal audit -- not a rubber stamp -- into the frequent allegations of FIFA corruption could have helped identify and address risks long before they lead to DOJ indictments. Monitoring for corruption should be a year-round activity, but extra scrutiny is needed when allegations are widespread.
Some warning signs are easy to spot, too. Breaking up bank deposits and withdrawals so that they are under $10,000 -- and thus don't have to be reported -- is a good sign that someone is trying to hide their activity. It's a serious red flag, and it doesn't even work, often exposing businesses to increased scrutiny from banks and law enforcement, according to Reuters.
Most talk of anti-corruption legislation focuses on the Foreign Corrupt Practices Act, the United State's anti-bribery law. While the FCPA is a strong law, no FIFA charges were filed under it. That's because the FCPA only covers bribes of payers, not recipients like FIFA. Instead, the U.S. used good old-fashioned RICO charges, a reminder that largely domestic legislation can have a far reach.
It's not just the U.S. law that has a long arm, either. Canada and Brazil both have strong anti-bribery laws that parallel the FCPA, while the U.K.'s Bribery Act is stronger than America's, according to Internal Auditor magazine. Indeed, Brazil's investigation into Petrobras could become one of the largest anti-corruption enforcement actions in the world. That means G.C.s need to stay cognizant not just of traditional anti-corruption enforcers, but of the increasingly strong anti-corruption legislation being adopted throughout the world.
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