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Insights into FIFA scandal at September Luncheon

Insights into FIFA scandal at September Luncheon

Tokyo (SCCIJ) – The almost 50 members and guests of the SCCIJ September Luncheon learned quite a lot about the scandal at the world soccer organization FIFA and how it affected the sports world by listening to the presentations of two eloquent, thoughtful and witty judicial experts from Switzerland. Professor Ulrich Haas and Stephan Netzle, both specialists in sports law, drew a differentiated picture of the scandal, its genesis, the underlying causes, evolution and resolution. The speakers also analyzed the changes and tools which have been introduced to improve the corporate governance of one of the most powerful sports organizations in the world. The background of their talk is that Switzerland is a power house in sports law because most international sports organizations are based in and operate from Switzerland.

“There were many scandals”

Professor Haas started the luncheon talk with the observation that there are no pre-established paths into scandals. “It is difficult to say when a bad governance spirals out of control into a scandal. There have been many incidents of bad governance throughout FIFA’s history,” he said. As an example, he cited the bankruptcy of the rights agency ISL in 2006 with paid bribes of CHF 160 million. Also, there have been many allegations of vote buying at presidential elections and of “deals” when awarding the FIFA World Cup to host countries for many years. The same is true with respect to allegations concerning the dictatorial leadership by FIFA presidents and abuses of power.

But Haas recounted that the organization FIFA had always reacted to scandal allegations and always attempted to improve its governance and structures. “Constant changes were being made in reaction to these wrongdoings,” Haas said. For example, the auditor KPMG was asked to check the books but never found any wrongdoings in the FIFA accounts. An ethics code was introduced, an ethics committee installed and an independent governance committee was set up to improve FIFA’s governance. Also, the FIFA statutes were changed in reaction to scandal allegations.

Insights into FIFA scandal at September Luncheon

SCCIJ Luncheon speaker Professor Ulrich Haas of the University of Zurich

Swiss “FIFA law” as turning point

According to the speaker, the turning point came at the end of 2012 when the Swiss legislature passed a bill on bribery and money laundering which was referred to as the “FIFA law”. This gave the clear impression that public authorities were no longer prepared to rely on the self-governance and autonomy of FIFA, but stepped in to protect the business and sport location Switzerland. A further turning point occurred in May 2015, when the U.S. Department of Justice indicted nine FIFA officials and talked of “endemic corruption” within the organization.

Only then, the pressure on FIFA gained momentum, in particular through media reports and protests of non-governmental organizations that mobilized public opinion. It is when things spiraled out of control that FIFA’s sponsors publicly voiced concern and called for structural reforms. As a result, most people who sat around the FIFA governing table in 2015 are no longer involved in the organization, because they were banned, imprisoned or pressured to resign.

Haas identified the “nature of the product” as one of the main causes that make governance in professional football particularly difficult. Unlike in most other industries the product is particularly sensitive and burdened with an inherent conflict of interests. “The revenues of a world cup are staggering, but if you try to sell football you cannot simply act as any other economic stakeholder. Instead, you must think about and protect also the underlying non-economical values of the product,” Haas analyzed.

Ethical rules vs. unethical leadership

These underlying values require you to promote ethical rules, in particular ensure fair play, combat match-fixing or fight against doping. All these activities, however, are not particularly helpful to market the economic side of the product. Thus, the economic side is in constant conflict with the ethical side of the product. Both aspects – in addition – can hardly be kept apart. Instead, there will always be spill-over effects.

“How can you say you are ethical when it comes to combating match-fixing, but not apply similar ethical standards in other fields of governance?,” Haas asked the audience. The slogan of FIFA would be “for the good of the game”, which reflects the idealistic view of society about sports where everybody has to abide by the same rules to ensure total equality of chances. “You have to keep this in mind when promoting the product and this double-standard was – in the end – the problem of FIFA’s leadership”, the speaker said.

Insights into FIFA scandal at September Luncheon

SCCIJ Luncheon speaker Stephan Netzle, founder of TIMES Attorneys

External factors also contributed

There were also internal and external factors which facilitated wrongdoings, corruption and power abuse within sports organizations including FIFA. Haas mentioned the lack of professionalism in the sports organization, the old boys’ network paired with a largely autocratic system (“Blatter was there for 20 years”), no limitations on terms of office, weak corporate governance, the monopoly character of international sports organizations like FIFA and an insufficient law system.

“It is also a very difficult product to manage because of the organizational structure”, Haas said. People are sent from 209 national organizations to FIFA and are accountable, in principle, only to their national federations. Since the national federations are completely independent entities, FIFA has practically no control how its money is being spent within or by the national federations.

Solutions and outlook

In the second part of the SCCIJ September luncheon, Stephan Netzle argued that FIFA had improved quite considerably by removing some temptations of power abuse. “Corruption and bribing in FIFA in the past worked rather like in a mafia organization because it did not leave any money trail”, he explained. FIFA itself would not pay any money but provided a system which allowed the officials benefiting from favors when supporting certain candidates or host countries. At the end of the FIFA scandals, there was a general mistrust, just like after the French revolution: Even the newly elected president had to face allegations of misconduct.

One source of problems was the presidential election. “The main goal of some officials seemed to be becoming president”, Netzle stated. But the way to the coronation was paved with corruption because the system supported misdemeanors in order to finally reach the top. The solution that has now been implemented is a thorough screening of the candidates by an external examination before they become eligible.

Another temptation for bribes was the awarding of the FIFA World Cup to host countries. Here, FIFA should focus on the best possible conditions for the players and the audience instead of being guided by power, prestige and marketing considerations. Netzle lauded the solution that the vote about the allocation of the FIFA World Cup is now taken by the FIFA Congress. “By increasing the number of people who take the decision you reduce the possibilities for corruption,” the speaker explained the reasoning behind the change.

Insights into FIFA scandal at September Luncheon

SCCIJ September Luncheon with speakers, members of the University of Zurich delegation and members of the SCCIJ Executive Committee and of the Embassy of Switzerland

Tougher audits, more transparency

At the end, a mix of solutions may help to avoid scandals. The legal environment has to ensure that bribery and corruption are criminal offenses, as it is now the case in the Swiss criminal code. “This also helps the organization and its leading members to gain credibility,” Netzle said. Furthermore, international sports organizations may need a special legal form taking their specific and unique nature into account. This may include tougher audit requirements.

Transparency may also help to reduce the corruption risks. In the past, FIFA acted behind closed doors and never published any reports, Netzle recounted. Other suggestions include a limitation on the terms of office to discourage “royal behavior”. Another point of criticism is the “one country – one vote” principle which makes it more attractive for delegates of small countries or countries where football does not play a significant role to offer their votes against favors or money. A balanced voting power depending on various criteria might help to reduce the temptation of vote selling.

Finally, whistleblowing should be encouraged and not punished. It takes a lot of courage to step forward and report misconduct of superiors. Many sports federations have therefore introduced internet-based systems which allow anonymous reporting, which will then be checked by an independent authority to prevent abusive denunciation. “This all ensures that those people who manage the wonderful thing called sports behave well,” Netzle concluded.

Biographies of the speakers

Professor Ulrich Haas is professor of law at the University of Zurich. Sports law as well as arbitration law are two of his major fields of research. He also acts as a practitioner in these fields of law. He regularly acts as an arbitrator under the ICC-Rules, Swiss Rules and DIS-Rules. Furthermore, he is a frequently appointed arbitrator with the Court of Arbitration for Sport (CAS) in Lausanne. In addition, Professor Haas served on the Code Project team that revised the WADC 2015 and was a member of the Cycling Independent Reform Commission (CIRC), entrusted by the UCI to investigate the doping history in professional road cycling. He was CAS-arbitrator at the Winter Olympics in Vancouver (2010) and the Summer Olympics in Rio de Janeiro (2016).

Dr. Stephan Netzle studied law at the Universities of Zurich, Switzerland and Virginia, USA. He has been practicing law since 1987. In 2008, he founded TIMES Attorneys. Dr. Netzle is a renowned sports law expert and was a judge with the Court of Arbitration for Sport (CAS) from 1991 until 2010. He served as an arbitrator at the Olympic Games in Sydney 2000 and Beijing 2008. He is advising and representing several international sports federations regarding commercial, organizational, disciplinary, doping and compliance issues. Dr. Netzle is a lecturer on international arbitration at the University of Zurich. He participated in two Olympic Games (1980 and 1984) as an athlete and became world champion in rowing in 1982.



Text and photos: Martin Fritz for SCCIJ

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